Farmers

The Export-Import Bank showed how group pressures could limit spending cuts. Legal Services showed the ideological limits on Reagan's revolution. The farm bill, later in 1981, showed why both budgeting and politics are very difficult. Sometimes you just can't tell who will ally with whom or what a proposal will do if it passes.

Agriculture is the nation's largest industry and, going back to clipper ship days, a major export industry. Modern agriculture is very capital-intensive; for most crops, tractors, land, and feed cost far more than the labor employed. Farmers often carry considerable debt, so they are at risk in bad years. Bad years come fairly frequently because prices fluctuate greatly. Prices depend on supply, which depends on weather, not only in the United States, but in the rest of the world. The only thing as bad for a wheat farmer as bad weather at home is really good weather in Argentina.

Farmers, therefore, always want assurances of what they consider reasonable

prices. Since the Depression, the government has tried to help. Economists have argued all along that these attempts to help farmers could only make them inefficient. They have been wrong and right: American agriculture gets steadily more productive and efficient, meaning the number of farmers continues to decline. No generation has been quite willing to take the economists' advice. The result has been a complex system whose terms change as market conditions change or costs get too high or some crop's supporters come up with a new idea.

The variety of programs and crops makes farm subsidy politics a fragmented arena. There are, however, some natural alliances by region: cotton, sugar, tobacco, and peanuts from the South; wheat, corn, and soybeans from the North. Certain crops, particularly the grains, are more vulnerable than others to the vagaries of weather and international markets. The combination of regional histories and crop peculiarities has divided the farm bloc into a liberal/radical side (the National Farmers Union and, somewhat, the Grange) and a wealthier conservative side (the Farm Bureau).

Farm Bureau types were more likely to look to export markets for higher profits; the Reagan administration hoped to reduce costs while helping their constituents by promoting exports. Many farmers, however, saw no need to take risks; if the government wanted to help exports, that was great. But if prices went down, those farmers wanted to preserve the existing system, built from a series of logrolls. They stuck together, recognizing their individual weakness: tobacco helped corn, cotton helped soybeans, and milk helped peanuts.

One more giant logroll lay at the heart of farm policy. Nonfarmers had at best a mixed interest in high prices for farmers because, after all, nonfarmers had to pay for the farmers' food. Also, farmers, in spite of their risks, were frequently quite well-off and distinctly Republican. Even the more liberal farmers tended to come from areas, like the Dakotas, of traditional Republican loyalty. So the big city liberals and the farm representatives made a deal; the former would support farm programs if the latter would support food stamps. Food stamps and farm programs were authorized every four years or so in the farm bill. It was an unstable marriage because, although the partners did not much like each other, they needed each other.

The farm bill came up again in 1981. Its consideration was shaped by events during the battle over reconciliation. When a number of farmstate legislators made food stamp cuts real by voting for Gramm-Latta 2, they broke the alliance with urban liberals. The liberals would remember.

The farm bill was already in trouble when it hit the House floor in October. It originated in the Senate, where Agriculture Chairman Jesse

Helms was not likely to ask for, or get, much help from his more liberal colleagues and Republican leaders were leery of the deficit. "We've never had such a hard time, believe me," said one peanut lobbyist. "Agriculture needs to stand together, but we seem to be getting nothing but splinters."^[16] First, the Senate cut the milk price support level from 80 to 70 percent of "parity." (Parity is quickly defined as the price when times were very, very good.) That was what the Reagan administration wanted. Then, even though the administration sat on the sidelines, as it had promised Georgia House members in the reconciliation fight, Richard Lugar (R-Ind.) led an attack on the peanut allotment system. Despite Howard Baker's support, a motion to table Lugar's proposal was beaten 56 to 42. A senator commented that the vote reflected antagonism against Helms. Only a hastily drafted compromise preserved a weakened peanut support system. The farm coalition barely protected sugar and tobacco. Robert Dole led a move to trim back increases that the Agriculture committee had mandated for wheat, rice, corn, and cotton. "I'll be criticized by some in my wheat-growing state for this," Dole explained, "but the farmers want us to stop spending, and they are willing to make some sacrifices."^[17] Senate events made farm block House members justifiably nervous.

The House then passed a bill that was more generous than the Senate's. The key consideration was that the administration, in cutting deals with the southern Democrats on sugar, peanuts, and tobacco, so as to pass the tax cut and reconciliation, lost its ability to ask midwestern Republicans to sacrifice their programs on the altar of deficit reduction. Therefore, they allied with northern Democrats to (a) protect the North and (b) take revenge on those southern crops whose programs were protected in the earlier deals.^[18] Diehard liberals, Frostbelt moderates, and responsible conservatives led the charge to repeal the peanut allotment system and sugar price supports. Diehard liberals had no reason to support fellow Democrats, like the Georgians and Louisianians, who had deserted them on food stamps. Only on tobacco, where the North Carolina delegation had supported the Speaker on the big budget votes, did the diehard liberals have no reason to take revenge. And enough of them supported the program for it to go unscathed.

The bill went off to conference. Tobacco, peanuts, and sugar survived, but, by the standards of previous years, the compromise seemed favorable for the Reagan administration.

Democratic leaders did object to giving Reagan another shot at the farm bill in 1983. So after a series of mostly nonpartisan votes, as Frostbelt moderates and diehard liberals cooperated to cut subsidies, the proposal to cancel FY84–85 reauthorizations resulted in nearly party-line division. Democrats won 201 to 188, picking up 9 Republicans and losing

only 22 Democrats. The farm bill then passed 205 to 173, with mostly Democratic votes. The administration was unhappy with its totals; some liberals thought it was too generous; some moderates felt things had worked out just right; and some Sunbelt conservatives decided they had better take what they could get.^[19]

The greatest irony in the farm story was yet to come. The administration, which had not quite understood how farm programs worked, made some mistakes. As the year went on, it became clear that the farm economy was in a serious depression. Prices slumped; farmers defaulted on their loans; and the federal government spent three times more than planned on aid to farmers.^[20] All the permutations of ideology and interest, ambition and revenge, had far less effect on spending than did the inexorable workings of the economy.

With a series of uneasy compromises 1981 drew to an end. In late November, the House passed a DOD appropriation. Support for the military was still high as the House gave the administration almost all it wanted. Proposals to delete funds for the MX missile and B-1 bomber received only 143 and 148 votes, respectively. Yet a 2 percent cut in procurement and R&D lost by only 204 to 209, with northern Republicans, such as Bill Frenzel, using the opportunity "to warn the Defense Department that, unless it demonstrates a real commitment to reduce wasteful, unnecessary spending, it will lose the strong coalition that now supports the strengthening of our defense."^[21]

Congress also faced the embarrassing task of passing a second budget resolution. Senate Budget reported out a second resolution that, as the Congressional Quarterly reports, "merely reaffirmed the first…. The report accompanying the resolution was a long disclaimer for the committee's action. 'Approval of the resolution, without recommendation, is a stopgap solution to a problem that the committee found intractable at this time.'"^[22] The resolution passed 49 to 48. Democratic and Republican budget leaders cooperated in getting the Senate's resolution passed on the House floor, 206 to 200. The leaders all admitted they were just trying to get rid of the darn thing. "There should be no confusion that this will get us through the year," said James Jones. "But this is the only thing upon which we can reach agreement."^[23] When the only thing people can agree on is pure fantasy—budget balance without budget action—they are in trouble.

As Congress passed this pro forma budget on December 11, it also finished work on a third continuing resolution. H.J.Res. 370, as passed, followed negotiations among administration and congressional Republican leaders, particularly Mark Hatfield and Silvio Conte, moderate leaders of Republicans on the two appropriations committees. The resolution cut discretionary spending by 4 percent from the levels in Senate or

House pending bills, whatever that meant; the provisions as to which bill applied were as complicated as those in the aborted second CR. The package also increased spending for education block grants, railroad retirement pensions, and low-income energy assistance—sweeteners for gypsy moths like Hatfield and Conte. All in all, H.J.Res. 370 was estimated to reduce domestic outlays by $3.7 billion from previous estimates of the totals for the bills included.

Work continued on regular appropriations. The HUD bill totaled $1.7 billion more in budgetary authority than the president's September request for $58.7 billion, but it also allowed Reagan to cut by 5 percent any budget account that exceeded the September request. It therefore was essentially a victory for the president.

The most complicated battle at the year's end involved foreign aid. The foreign aid bill had not passed in either 1979 or 1980, in part because Congress thought it was in the domestic aid business and in part because of bitter partisan divisions over the proper balance between military and economic assistance. The tortuous bargaining process within both the House and the conference committee ended in a compromise that not only preserved the usual balance between economic and military assistance but actually produced a bill. If there was a hero in the process, it was Jack Kemp, who designed and fought for the crucial compromise on International Development Association funding.

Thus, the year ended with three bills still financed by a CR (Labor-HHS-Education, State-Justice-Commerce-Judiciary, Treasury-Postal-General Government), while Ronald Reagan, Jack Kemp, and Tip O'Neill worked together for a foreign aid spending increase!

The CR and foreign aid compromises might encourage the moderates who hoped all good men could agree on a responsible deficit-reduction package. The budget resolution sham could only discourage them. In retrospect, the signs were discouraging, but that is more obvious now than it was then.

The gypsy moth-boll weevil coalition had already been pushed as far as it could go. Without that coalition, there was no governing majority in the House. The politicians, however, could not know as much. Take the Democrats. They could see that the gypsy moths' ideology and district interest should keep them from supporting further social spending cuts, but the trouble was that the moths, by that logic, should not have supported Reagan to begin with. When you have been clobbered three times in a row, it is hard to believe that won't happen again.

Reagan's victories, even though they had ended five months before, were so dramatic, so different from results in previous years, that no one could be sure of their calculations. Stockman had lost a lot, but he had won some, too. The Republican budgeters in the Senate had been

thwarted in the fall. But they controlled their chamber; they had won smashing victories on spending earlier; Reagan had not been around long enough for the senators, or even his staff, to appreciate the depth of his preference for tax cuts and a defense buildup over budget balance. The shifting coalitions we have detailed in the House could mean many things; on peanuts, for example, the House floor had gone beyond the Reagan administration's efforts to cut programs.

The forces of responsibility could also be encouraged by 1981's budget processes. The first resolution was enforced as fully as could be reasonably expected; as CBO later reported, deficits stemmed from the economy, not from congressional failure to keep budget promises.^[24] Reconciliation obviously provided a means to package major deficit reductions. If agreement could be forged, it could be enacted.

Carter's January 1980 deficit projection had been $15 billion; Reagan's December 1981 projection, based on the evident recession, was ten times as much. The problem kept getting larger; agreement, so fervently desired, was growing correspondingly more difficult. And the Republicans were divided. Howard Baker pressed for reductions in the defense budget: "I cannot believe that out of a budget as large as the Pentagon budget … we can't find $5 billion or maybe $10 billion that we can save."^[25] He was skeptical about further cuts to discretionary programs: "We may have overdone it already with some of them."^[26]

Taking in the deficit prospect and the cleavages in his own party and the rest of Congress, Silvio Conte concluded, "What we really need is a magic wand. There's going to be a hell of a crunch here."^[27]