Statement of Administration Policy: S. 2631 - Drought Relief

(Senate)
(Leahy (D) Vermont and 46 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. While the introduced version of S. 2631 would be generally consistent with the President's objectives if amended to delete the emergency feed assistance provisions, S. 2631 as ordered reported on July 26th would be inconsistent with 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 requiring the Secretary of Agriculture to sell stocks of corn acquired by the Commodity Credit Corporation (CCC) to ethanoi producers at prices that are below market levels and far lower than CCC's acquisition costs. The ethanol industry already receives Federal subsidies amounting to approximately $25 per barrel. This provision would cost $450 to $900 million annually, including additional annual subsidies to a few ethanol firms of $100 to $130 million.

—    Delete the provisions that would substantially expand the current emergency feed assistance programs beyond those farmers most in need, which would increase Federal costs by $1.6 to $2.3 billion.

—    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 their 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 (l) require new export promotion programs for sunflowers and cottonseed; and (2) require assistance for certain tree farmers. Together, these provisions would unnecessarily add $35 to $60 million to the cost of this legislation.