Remarks and a Question-and-Answer Session With Farmers From the Landenberg, Pennsylvania, Area

The President. Well, ladies and gentlemen, this is once where I could really open by asking, "Who's tending the farm?" [Laughter]

You know, I'm delighted to be here, and I'm not going to take too much time on a monolog. You recognize, of course, I'm sure, in addition to our fine host here, Jack Block, the Secretary of Agriculture. I brought him along for the tough questions. [Laughter] But, you know, I have said many times in public addresses that in all of this recession time—but in all of these past years of growing inflation, there's no part of our economy that's been caught harder in the cost-price squeeze than agriculture. And I even have a personal example of that.

I've got a ranch of my own, and now the tax people call it a hobby ranch, because since I'm doing what I'm doing, living in public housing in Washington— [laughter] -I can't do much farming.

Mr. Wilkinson. ¹ He wants to put on some cows, but I don't know whether that's a good idea or not. [Laughter]

¹ Farm owner Leon Wilkinson, the President's host.

The President. But I do—I've got a tractor out there that I bought secondhand. It's a 1953 tractor, and I bought it not too much later than 1953 for $1,200. And one night at a dinner Nancy happened to be sitting beside a fellow who was the head of a tractor company, and she was telling him how I kind of moaned a little bit now about keeping this thing running and the fact that it-I wish it had a skiploader on the front, which it doesn't. We got a lot of rocks on our farm. And he said, "Why, he ought to have"—he says, "I'll send a man up that'll make him a real good offer, and he can have the kind of tractor he wants." And that's when I learned about, firsthand, the cost-price squeeze.

The fellow did make a very good offer. He offered me—and this is just, I'm talking about a year or so ago—he offered me $4,000 for that $1,200 secondhand tractor that goes back to 1953. And then all I'd had to do was give him $13,000 more, and I could have a— [laughter] .—

But listen, seriously, I just would like to take a minute to talk about something in Washington and—to you as Americans—because it fits any one of us in whatever line of activity in this country. There are any number of industries and kinds of work that have been affected by the problem that confronts us today.

When our administration began, interest rates were 21 1/2 percent. Inflation was 12.4. Unemployment had been increasing; it had been going on, increasing since 1979. Today we know that continues to increase, and that is the one part of a recession that is the last and the slowest in turning up.

But interest rates, we brought down some, but not enough. They're down about 20 percent—down to 16, 16 1/2. And inflation, however, has come down from that 12.4 to where, as you know, last month for the first time in 17 years it broke zero and was actually—prices were going down instead of just increasing at a lower rate. But the actual rate for the last 6 months has been 3.2 percent inflation.

Now, if you look at the gap between inflation and where the interest rates are, you come down to the problem that I think is your biggest problem and is the biggest problem for the recovery of the economy.

I have been meeting in these last few days with leaders from every type of business and industry and of the financial world and the bankers and so forth on this interest question, and one answer keeps coming from every one of them. It is pessimism based on past experience that over the years we've had seven to eight recessions since World War II. And every time the government has gone for the quick fix, artificial stimulant of the money supply, artificial government spending, supposedly, programs that'll stimulate the economy. And the result has been that up goes inflation. It does have a temporary effect on helping unemployment, but it's like trying to treat a fever by eating the thermometer. And the result is about 2 years later we're into another recession. And if you look at the chart back over the years, every recession is getting bigger, worse. And this one is the worst one of all.

Every one of these people that I have met with said the same thing that I feel myself. They're pessimistic, those who lend money. They fear that even with that low recession rate that the government will follow the old pattern, and up will go inflation again. Well, it's not going to follow the old pattern. We're battling to prevent that and to see that it doesn't happen.

But all of them said, if the Congress will vote this budget that you want with, again, the continued cut in spending, interest rates will come down. Well, we're going to hold firm on that.

We're supporting the bill that has come out of the Senate, has some tax increase there, but it's not going to interfere with the tax relief program that we put into effect last year. That's going to continue.

But the main thing is when we took office, the cost of government was increasing 17 percent a year. We have that down now to less than 7 percent a year, in view of next year's budget. And we believe that the answer, the main answer to your problems, to the automobile industries, to steel, to the construction industry, is the reduction of the interest rates.

When you stop to think that the deficit has built up over the years, that a hundred billion dollars or more of our annual budget—that's enough to wipe out the deficits completely—is just interest on the national debt. Our goal is to bring government down to the balanced budget.

It can't be done overnight. They didn't get this way overnight. And when we do that, then to work out a plan, no matter how small it is, but to begin making some installments on that national debt so our kids'11 know that we don't intend to leave that as their inheritance of America.

Now, we'll get back to your business and to the questions. I told Jack Block here—I warned him a little bit about the job he's got. I told him about Ezra Taft Benson some years ago—went out and there were some problems then. And in one particular gathering, there was a fellow that was really giving him a bad time. And Ezra kind of turned to one of his aides and looked at some figures and things and turned back, and he said, "Well, you didn't have it so bad." He said, "Now, listen, last year you've had 29 inches of rain." And the fellow said, "Yes, I remember the night it happened." [Laughter] So, let's have that dialog.

Hey, I see a lot of friends over here from your State, but I'm sure you've already met them before we arrived here.

Yes?

Interest Rates

Q. Mr. President, I have a question. I'm Bill Moore, a local dairy farmer. As you know, farmers need a lot of credit—borrow billions of dollars collectively over this country. We're concerned with the national projected deficit, how we're going to be able to continue to get this supply of money that we need and at reasonable interest rates.

The President. And a good question. It's something I should have touched on when I was talking about the budget.

The budget that has come through the Senate Budget Committee, and the one that we have approved, will reduce the projected deficits over the next 3 years by $416,000—thousand!—billion. I was still talking like a civilian there for a minute- [laughter] —$416 billion.

The projected deficits, if we do nothing-and let me be honest with you and tell you that I am one who—some—I question the ability of even the best of economists to project more than a few months ahead. But even so, there is enough agreement that it would look like a deficit of $182 billion for next year. That goes up to 216 billion in '84, 233 billion in '85. The program that we're talking about would bring those down to 100—about 106—69 and 39, which shows you that we're coming down. And you only have to go, at that point, a couple of years further, and you see that we reach the balanced budget.

But, as I say, even these bankers and these men from the finance firms and the investment firms and all, all said that interest rates will start coming down again when that budget is passed, and they know that the Congress is not going to obstruct our efforts to deal with those deficits.

Jack?

Secretary Block. May 1 just add on this particular issue of credit for agriculture, a lot of people talk, "Well, what are you doing for agriculture? Agriculture isn't getting any help." But I'll tell you the truth, the facts are that there is some $5 billion more money going into agriculture this year from commodity credit loans, which are part of our program. And the farmers are taking advantage of that to tide the farmers through these tough times, $5 billion more in commodity credit loans. We have some increases in the farmers home operating loans.

And just a little additional