Statement of Administration Policy: H.R. 1096 - Farm Emergency Credit Act/African Famine Relief

(Revision)

(House)

(Rep. Weiss (D) New York and 34 others)

The Administration strongly opposes enactment of H.R. 1096 because it is unnecessary in the short-run and detrimental to long-run economic solutions for the American farmer. The President has publicly stated that he will veto this legislation if it is presented to him.

The Administration has in place both a current Federal lending program for spring planting for eligible farmers and a program of debt adjustment assistance for those in debt to private lenders, which appropriately share the credit burden among farmers, lending institutions, States, and the Federal Government. Secretary Block announced the provisions of the Administration's Emergency Credit Program for American farmers on Friday, February 22. Further actions proposed in this bill are unwarranted.

This bill includes measures which would cause excessive increases in Federal spending:

— It requires the Government to assume an unwarranted 90 percent of the risk on all new loans made by private lenders through its $1.85 billion debt adjustment program.

— It provides unprecedented and unjustified advance Commodity Credit Corporation loans on unplanted crops at time of program signup. This has the potential for putting the farmer at greater risk of cash short-falls during the time when he is marketing the crop.

— It substantially and unnecessarily increases the level of loan guarantees for debt adjustment of borrowers served by private lenders above the Administration's $650 million program.

— It establishes a $100 million program of payments to rural banks to induce them to lower interest rates on existing farm loans.

The total spending impact of these measures could be as much as $7.4 billion in fiscal year 1985 and a net impact of $1.3 billion in fiscal years 1985-86.

H. R. 1096 would also authorize emergency food aid for disaster assistance in the drought-stricken countries of Africa. However, the total funding authorized by this bill, $175 million ($137.5 million in disaster assistance and $37.5 million for migration and refugee assistance), substantially exceeds the $25 million authorization for disaster assistance requested by the Administration and provides unnecessary authorization for Refugee assistance.

The Administration has made a total commitment for fiscal year 1985 of over $1 billion for Africa famine assistance. For emergency food aid alone, the Administration has volunteered that the United States will provide 50 percent of 1.5 million tons of food for 1985, Only the requested $25 million of additional authorization is needed to meet the $1 billion commitment. Accordingly, the Administration is opposed to enactment of H.R. 1096. It provides a significantly higher authorization than is needed and can be effectively used for disaster assistance. The Administration urges Congress to provide only the amounts required by the Administration.