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Subsidies to Uncertainty

December 17, 1985

President Reagan is not rushing into any commitment on the five-year farm bill that emerged from a House-Senate conference during the weekend, nor should he.

The bill essentially is a high-cost perpetuation of subsidies that will cost, in the first three years, an estimated $52 billion. That is a staggering amount of money, justifiable only if it will ease the present crisis as it affects full-time family farms, and if it will facilitate the enormous adjustment to the new world market situation that faces American farmers. There is no certainty that the bill as now written will achieve those purposes.

Conference committee members at least put the emphasis on direct farmer income subsidies rather than on subsidies that drive up prices. Their efforts fell far short, however, of the original proposals of the Reagan Administration that would have accelerated the price cutting that is essential to export growth--the key to long-term farm economic health. And most of the costly special-interest programs, including sugar, were maintained, while the dairy compromise fell short of the reductions that are required.

Some useful progress was made on food stamps. Additional funding of about $500 million over the five-year term of the bill is included. The total package is "very modest" but a step in the right direction, according to Robert Greenstein, director of the Center on Budget and Policy Priorities. Congress had the wisdom to defeat, and defeat soundly, the President's proposals to experiment with block grants to states as an optional food stamp alternative.

The White House has promised a careful study of the budget implications before the President decides whether to sign or veto the bill. More than dollars need examination. There are two matters that require especially close evaluation. One is the issue of equity--making sure that the farm crisis and the distress of some farmers are not used to justify perpetuation of programs that benefit huge farm operations and neglect the full-time family farm that should be the beneficiary of rescue operations. The other issue is competitiveness--making sure that the American farmer, who sells 40% of his production overseas, is not barred from the world market by high prices inflated by subsidies.

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