Statement of Administration Policy: H.R. 5015 - Drought Relief

(House)
(de la Garza (D) Texas and 76 others)

The Administration supports legislation to protect America's farmers from excessive losses caused by the current drought, subject to the five points cited by the President in his meeting with farm leaders on July 13th and his letter of July 25th to the congressional leadership on this legislation. The introduced version of H.R. 5015 would be generally consistent with the President's objectives if amended to delete the emergency feed assistance provisions. While the Administration is encouraged by the amendments made yesterday by the House Agriculture Committee to these provisions which will substantially reduce their costs, H.R. 5015 as ordered reported on July 26th would be a major departure from three of the President's criteria:

—    Budget costs must not trigger automatic budget sequestration cuts required by the Gramm-Rudman-Hollings Act if the deficit exceeds $146 billion for 1989.

—    Relief should be strictly limited to those who need it most.

—    This effort should not be used as a vehicle to enact special interest spending provisions or others not related to drought relief.

Accordingly, the Administration urges adoption of amendments to:

—    Include a spending ceiling in the bill to ensure that the overall cost of this legislation will be kept below the amount that would trigger automatic budget sequestration cuts under the Gramm-Rudman-Hollings Act. Otherwise, as stated by the President, such cuts "would take back from farmers with one hand what we are providing in drought relief with the other." Such cuts, which currently appear very likely to be required given the cost of this and other pending legislation, would also reduce important program activity levels throughout the government.

—    Delete the provision that would allow producers who did not purchase Federal crop insurance to receive emergency disaster relief loans from the Farmers Home Administration. This provision.would place insured producers at a substantial disadvantage and would increase the cost of the bill by approximately $475 million. Extension of disaster loan eligibility to uninsured producers reduces the incentives for producers to purchase Federal crop insurance.

—    Delete the provision that would increase the dairy support price. Dairy farmers' increased feed costs due to the drought are already being offset by feed assistance efforts being made under existing law. This provision would add approximately $300 million to the cost of the bill.

—    Amend the bill to reduce or offset the cost of the provision providing a higher drought relief payment rate for farmers who have incurred high crop yield losses. While the Administration supports the intent of this provision, to concentrate a greater portion of relief to those who have suffered the largest losses, Congress must find a way to pay for it. The cost of achieving the targeting objective by increasing the payment rate for high-loss farmers — a cost of $250 to $500 million — is too high. A less costly way to achieve the targeting objective would be to lower the payment rate for farmers with low crop yield losses. Alternatively, other provisions could be modified to reduce thier cost to offset the cost of this provision.

—    Delete other provisions that are not directly related to protecting farmers from excessive losses caused by the current drought, including provisions that would (1) require a new price support program for cottonseed under certain conditions; (2) expand the eligibility for relief to include losses due to "hail or other natural disasters;" (3) require new export promotion programs for sunflowers and cottonseed; (4) require assistance for certain tree farmers; (5) require the establishment of an Agricultural Weather and Climatology Office in the Department of Agriculture to administer a National Agricultural Weather Information System, including grants for weather research; (6) require relief for losses of cotton producers due to "hail or other related conditions;" and (7) require relief for reseeding of pastures damaged by drought. Together, these provisions would unnecessarily add more than $500 million to the cost of this legislation.