The Reagan administration on Friday rushed to firm up details of its expanded agricultural credit package, even though many in Congress, including Republicans, say it still isn`t enough to avert a fiscal disaster for farming and rural areas of the nation.
White House spokesman Larry Speakes said the administration was considering ”some modifications” in the proposal in the wake of reaction to it in Congress on Thursday, when Agriculture Secretary John Block and Budget Director David Stockman met with Republicans in the House and Senate.
In addition, support for the plan was lukewarm within the administration. ”It is a bailout of the banks,” a senior official said. He said that it was designed to help only farmers who can show some profit from their operations, not the most severely strapped producers, who cannot show a
”positive cash flow.”
The plan is designed to assist about 320 small banks handling farm loans in the nation`s heartland, he added.
The administration was trying to work out details of the program while Congress was preparing for the annual ritual of the presentation of a federal budget. Various congressmen and officials were preparing for a series of weekend briefings on President Reagan`s budget plan for fiscal 1986.
Reagan`s fiscal 1986 budget will call for total spending of $973.7 billion, a 1.5 percent increase, according to White House officials. If Reagan`s $50.8 deficit-reduction package is accepted, the federal deficit would fall to $178 billion, according to administration projections.
The President`s budget over three years would fall about $45 billion short of his goal of cutting the deficit to $100 billion.
The administration told Republicans that it would agree to the expanded farm-credit program only if the GOP in Congress agreed to accept its proposals to phase out most farm subsidies.
A spokesman for Block said Friday that the final package, which will not require congressional approval, is expected to be announced in a few days. But an administration source said the size and scope of the plan are subject to negotiation with GOP members. ”We did not make them a unilateral offer,” he said.
”There will be some help coming,” Block said Friday morning after he and Stockman met on Capitol Hill with several farm state senators, including Majority Leader Robert Dole (R., Kan.), and Farm Bureau presidents from four Midwestern states.
Even Dole conceded that the package won`t cure all the financial problems facing farmers, agribusiness and rural America: ”Again, it`s a Band-Aid. It`s not a solution.” He said the original plan announced by Reagan in September was ”not effective,” but he predicted that there would be ”a lot of interest” in the program.
Only about $25 million of the $650 million in the original program has been obligated. And banks and other lending institutions have been pressing for a liberalization of the program that would cost them less.
The revised credit aid proposal allows banks and other lenders to reduce interest rates on farm loans in return for a federal guarantee of up to 90 percent of the loans. It also sets up a special committee that includes Block and federal banking regulators that could expand the current $650 million to be available for federal loan guarantees.
Kenneth Gunther, executive director of the Independent Bankers Association of America, said that the $650 million should be increased to the ”2, 3, 4 billion-dollar range.”
As was the case Thursday, the new proposal continued to get only a cool reception on Capitol Hill, and the administration`s effort to trade concessions on farm credit for support for its forthcoming four-year, market- oriented farm proposal has apparently failed.
”I don`t think anybody is buying that (linkage),” said Sen. Charles Grassley (R., Ia.), and Dole said no one has made a commitment to ”doing anything” to boost the new legislation in return for administration concessions on farm credit aid.
”Our plan is to just keep talking until we get the kind of deal we want,” an administration source said. But, asked what would happen if GOP members planted their feet firmly and said there would be no deal, the source said, ”We`re paddling like mad to avoid that.”
On the House side, Rep. Edward Madigan (R., Ill.), top-ranking Republican on the House Agriculture Committee, reported little enthusiasm for the program outlined for a group of 20 farm-district members late Thursday. Madigan said the new plan was more than generous to banks.
After the Friday morning meeting, Sen. Tom Harkin (D., Ia.), one of the harsher critics of Reagan administration farm policies, lashed out at Stockman for proposing the ”most reprehensible form of blackmail” by seeking support for the new legislation in return for concessions on farm credit.
