The Reagan administration came into office vowing to restore fiscal sanity to government farm programs. It got caught up in a risky Payment In Kind (PIK) cropland retirement program and a Congress all too beholden to powerful farm lobbies. Consequently, the supposed champions of fiscal conservativism ended up quadrupling the cost of farm income support programs to a record $20 billion in one year.
With deficits now expected to reach $240 billion in 1987, the administration is dealing with this runaway welfare scheme with much more severity. After some wrangling between Budget Director David Stockman and Agriculture Secretary John Block, the White House has produced a compromise budget proposal that seems to wed Mr. Stockman`s money sense with Mr. Block`s prudence and pragmatism.
The costly, wasteful and flagrantly unnecessary dairy subsidy program would be phased out over three years for a savings of nearly $8 billion, ending a government joke that has given the nation one million superfluous cows and staggering surpluses that cost hundreds of millions to store or give away.
In addition, the proposed changes would reduce target prices and support loans to market levels over the next five years, reduce the limit on deficiency payments from $50,000 to $20,000 and shift direct government operating loans to a loan guarantee program with private bank participation. Total savings in government farm credit reform would come to $5.5 billion by fiscal 1988.
Mr. Block had rightly urged a gradual implementation of these changes to ease the shock to a farm community that is in serious trouble. In dollars adjusted for inflation, farm income has fallen to levels rivaling the dust bowl days of the Depression.
But the changes must be made. This time, Congress had better stop fighting reality and cooperate, and not only because of budget deficits. Any farm program that quadruples in cost while helping to bring farmers their hardest times in half a century is clearly one that has to go.
