They are wondering why the same standards of economy and efficiency are not being applied to our military programs as well; why the administration is complaining about insufficient revenues when it does nothing to eliminate tax loopholes for wealthy individuals and corporations that are costing the Treasury billions of dollars a year.

It is interesting to observe the President's understanding of rural America and rural development.

At yesterday's news conference, the President supported elimination of the 2 percent REA loans because 80 percent of them go to (and I quote) "country clubs, dilettantes, for example, and others who can afford living in the country." (End quote.)

I think the President's statement speaks more clearly than any of us could in defense of the wisdom our constitutional founders used in granting all legislative power to the Congress.

Clearly the President does not have the vaguest notion of what the Rural Electrification Act of 1936 does, even though he took it upon himself to abolish this law.

Secretary Butz is about to testify before this committee. I am sure he will want to comment on the President's expressed wisdom of yesterday with regard to 80 percent of REA loans being used for country clubs and dilettantes. I know his candor and avowed position as defender of America's farmers will not allow him to ignore such a presidential pronouncement.

[Reprint from American Forests, January 1973 speech delivered by J. Phil Campbell, Under Secretary of Agriculture]

ACCENT ON COOPERATION

Cooperation is the key to maintaining the great tree resources of the American

people.

Many times over the years, this nation has demanded that we act wisely in the management of our great forestry resources and both government and the private sector have responded. Were it not for the combined efforts of the Forest Service, the state foresters, and the private timber industry, many of the trees which pseudoconservationists have now decided to protect would not even exist. Since the Forest Service was established in 1905, it has provided leadership to preserve and rebuild the forests of this country, as well as to establish new forests. Our nation's foresters-state, federal, and private-deserve praise rather than the largely unjustified criticism being heaped on them in some quarters. From the beginning, the conservation of our tree resources has been a cooperative effort-from necessity as well as from good will. After all, more than three-fourths of the nation's 519 million acres of commercial forest lands is in private, state, and local public ownership. This cooperation must not only continue but be strengthened in the years ahead if we are to properly manage our forestry

resources.

As I see it, the federal government has five major roles to play in meeting our various forest needs.

The first of these roles is in the field of incentives and cost-sharing. The Agricultural Act of 1966, which provided for payments to encourage tree planting, resulted in a tremendous increase in such planting. The new Rural Environmental Assistance Program, with its emphasis on community-wide benefits and long-range protection of resources, provides an opportunity for increasing tree planting and timber stand improvement through cost-sharing. Cost-sharing programs helped plant about 143,000 acres last year, but that is not enough. The broad community benefit from tree planting suggests a higher priority for programs which encourage it.

Another important role of the federal government in tree planting is in its management of the forest acres which fall within its jurisdiction-the National Forests and other lands. Within the National Forests there are about 4.8 million acres in need of reforestation. These are acres burned over by large fires or acres that were nonstocked at the time of acquisition. While the majority of planting

within National Forests should be aimed at timber production, there are many acres of forest land which are not presently rated as commercial that need examination in terms of planting for esthetic, erosion control, or wildlife purposes. A third important role for the federal government lies in the areas of research and education. Several agencies of the federal government have active research programs which could provide useful information to the tree planter. USDA scientists are working to develop trees that are resistant to diseases and insects, trees that grow faster, and trees for special uses. They are searching for improved seedling protection methods, improved nursery practices and mechanization, and the best conditions for seedling growth. Still others are developing trees to better tolerate smog, salt, and other adverse environmental conditions. They are searching for species to grow on difficult sites such as spoil banks. Throughout the nation, scientists funded through USDA are working on disease and insect control methods, tree genetics, nursery problems and seedling growth Through USDA, too, the results of this research effort are brought to the public. Meetings are called to help landowners in forest management and to provide services in some areas of entomology, pathology, soils, horticulture and forestry. Fourthly, USDA cooperates with States to provide technical assistance to landowners in all phases of large scale tree planting projects. We look forward to our newly-authorized role in urban and community forestry. We will be interested primarily in greenbelts, shade trees and buffer strips along roadways, community parks and forests, as well as other residential, industrial and commercial areas.

Through participating State foresters, USDA would provide this assistance to qualified clients such as local governments and agencies, soil conservation districts, private organizations and corporations, consultants, and developers of residential and commercial areas. Services of the Extension Service are available to the homeowner who is seeking information about the planting and care of trees. Finally, the federal government can help local and state jurisdictions in planning for the best use of land in terms of forest resources. A balance among the various demands for land is essential if America is to maintain a high quality of life. Forestry can be a key element in a plan which seeks to balance the demands of urban, rural, agricultural, industrial, residential, recreational, transportation and so many other needs. The federal role is quite complex but essential in helping America produce more forest products while at the same time helping to restore and maintain a vigorous and enjoyable environment.

To accomplish such goals requires the cooperation of all concerned.

STATEMENT OF HON. CARL T. CURTIS, A U.S. SENATOR FROM THE STATE OF NEBRASKA

Senator CURTIS. As you know, Mr. Chairman, we share a belief that for too long the Federal Government has lived beyond the means of the American taxpayer.

We also hold the common view that the farmers, ranchers, and other residents of rural America deserve equality of Government services with their urban cousins and just as much consideration as the citizens of foreign countries which have benefited as a result of this Nation's concern for all mankind.

Since Congress has obviously not exercised the necessary fiscal restraint to prevent even greater budget deficits and the accompanying inflation or a tax increase it was left up to the President to take some drastic steps.

I do not wish to infer that I agree with all the actions the President has taken. However, I have refrained from cosponsoring any of the bills we have before us because I would like to maintain an open mind throughout these days of hearings. Naturally, I have a bias in favor of the farmers of my State and the Nation. But there is some question in my mind whether our farmers will be best served by Congress forcing the administration to restore the cuts which have been announced

for 1973 and 1974, and perhaps contributing to another inflationary spiral in which farmers will again be the big losers.

I would hope that each of the witnesses who appear before this committee during the next 4 days might address themselves to this concern. In closing, I would like to thank you, Mr. Chairman, for proposing these public hearings in order that we may have a full airing of this situation and I know that all the witnesses will make their case based on facts and not emotions which always surround this type of action. STATEMENT OF HON. ROBERT DOLE, A U.S. SENATOR FROM THE STATE OF KANSAS

Senator DOLE. Mr. Chairman, your cooperation in calling these hearings to examine the recent cutbacks in our farm programs is greatly appreciated. We also appreciate that Secretary of Agriculture Earl Butz is with us today in response to our request for an explanation of these cutbacks.

In examining Secretary Butz' prepared remarks, much of his comments are in agreement with our farmers. I have been receiving mail for years from my Kansas farmers and in talking with them back in Kansas *** they ask why their tax money has to pay for the sustenance of the lazy and unmotivated with welfare programs that perpetuate themselves. These farmers agree that fiscal responsibility is long overdue. In addition to being the hardest working segment of our economy, our farmers have to pay their bills *** They can't spend more than they take in and have found it difficult to understand how their government can operate with increasing yearly deficits and growing national debt.

Our farmers want the budget balanced *** but let's not throw out the good farm programs with those that are outdated. Let's not do away with the REA direct loan system just because the interest rate may need adjustment. Let's not do away with sound, sensible, costsharing contour farming practices that conserve the soil and its nutrients because there are some practices that are not necessary. Let's not abandon the flood control and water supply benefits of watershed projects by stopping the cost sharing in water retention dams. Let's not do away with important emergency loans for natural disasters because one provision of the program needs correction.

These programs are important to the farmers of Kansas and the Nation.

CONSERVATION

I have always supported soil conservation practices. Western Kansas was part of the Dust Bowl, but now, through the permanent erosion control practices of REAP and its predecessors, that erosion has been minimized and some land converted to irrigation. Other areas of Kansas have stopped the loss of their top soil through the REAP program's contour and terracing practices. Many water retention dams provide water supplies and control erosion. These are permanent improvements, but all the work is not completed and many farmers are in the middle of long-range plans that depend on REAP for part of the costs. Often the cost-sharing portion contributed by REAP is the motivation

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he needs to continue this conservation program. Termination of the entire REAP program is a mistake. I would urge the Secretary to reinstate the conservation practices encompassed by the program.

REA AND RTA

Loans from the Rural Electrification Administration have formed the foundation of the rural electric cooperatives (REC) and rural telephone associations and companies throughout the Nation. Our farmers have lights, power, and communications as a result of this program. Much remains to be done to provide these rural residents with the same service that urban dwellers enjoy *** and our rural residents are entitled to comparable service.

The direct loan program at 2-percent interest has been the basis for this service. I would say that every member of this committee agrees with you that the 2-percent interest rate deserves close scrutiny and possible increase. But I urge that you and the committee examine the full circumstances of how this program is being used before greatly increasing this rate.

Present 2-percent loans by the REA are being blended with funds from the Cooperative Financial Corporation (CFC) at 7- to 8-percent interest to effect a considerably higher rate. The amount of higher interest loans is restricted because of the limited funds the REC's have been able to contribute to the CFC. The continued growth of the CFC is dependent on the continuation of a reasonable interest rate. Some reference has been made that REA's average 14 meters per mile and that certainly doesn't represent a sparsity of population. This figure is an average for the Nation, however, and Kansas still has several areas, as does Nebraska, Wyoming, Colorado, and the Dakotas, which have only 1 meter per mile. This is the type of area for which the 2 percent direct loan program was originated and if the intent of the original legislation is fulfilled, these areas deserve further consideration for low-interest rates until they obtain comparable service to other areas.

Again, Mr. Chairman, I think that all the members of the committee agree that some adjustment comparable to present economic levels is justified.

EMERGENCY LOANS

Your recent action to terminate the emergency loan program of the Farmers Home Administration is another unfortunate action. The action does serve to point up the weakness of the $5,000 forgiveness provision of the Emergency Disaster Act of 1972. This provision should be eliminated as it makes no provision for the need of the individual affected by the disaster and the intent of the bill was to assist those who had no other means to recover when disaster struck.

I urge that you take action to reinstate the disaster loan program as it is greatly needed in the areas struck by torrential rains and damaging storms this past year.

OPPOSE TAX INCREASES

Mr. Chairman, these actions by the administration have served to point out the need for the Members of Congress to accept their obligation to pass responsible legislation. It is time we accept that respon

sibility and work out the necessary compromise that will enable the administration to administer our laws without increasing the taxes paid by our citizens.

Our laws require constant review and updating. All of the members of this committee have long-standing records of supporting legislation that promotes soil conservation. It is my hope that we can work out a compromise that will enable the important conservation practices of the REAP program to continue by providing sufficient costsharing funds to motivate our farmers to continue these important conservation practices.

The Rural Telephone Bank Act contains some provisions for the blending of low-interest capital with other funds to arrive at an equitable interest rate according to the needs of the loan applicant.

Again, Mr. Chairman and Secretary Butz, I am pleased we are having these hearings and hope the Senate and the administration can work together to assure our farmers that they will not be denied the worthwhile provisions of these important programs.

STATEMENT OF HON. HENRY BELLMON, A U.S. SENATOR FROM THE STATE OF OKLAHOMA

Senator BELLMON. Mr. Chairman, the critical nature of inflationary pressures on the Nation's economy is well known to all of us. As one who has long advocated more fiscal responsibility in Federal Government, particularly as a means of combating inflation, I am pleased the administration is placing controls on Federal spending. This is a responsibility Congress should have accepted.

If the rapid increase in the level of Federal expenditures is to be curtailed, many programs must be trimmed and still others eliminated. Agricultural programs must accept their fair share of cutbacks. I emphasize "fair share" because I feel some cuts have been too deep and have ended or seriously damaged programs which are vitally important to the continued progress of agriculture and to the long-term interests of the country.

Among those programs which I consider vital is the Farmers Home Administration emergency loan program. Because of the nature of modern farming operations, large financial resources are required to operate profitably. Many farmers who have been hit by flood and drought have exhausted their financial resources. When natural disasters strike, assistance is often not available from conventional so farmers must have an emergency credit source to

sources

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which they can turn.

Historically, the FHA emergency loan program has worked well and has been of very great value to farmers. Further, it placed no great burden on the Federal Government until last year when Congress broadened the program, principally to provide for a $5,000 forgiveness feature and 1-percent interest on the balance. It has been my experience that such Government giveaways are open invitations to abuse; and that is not the type of program American farmers need. What is needed is a substantial and responsible source of emergency credit providing loans in times of disaster, which will be fully repaid in a timely manner.