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I have co-sponsored Senator Humphrey's bill, S. 394, which would amend the Rural Electrification Act of 1936, as amended, to reaffirm that such funds made available for each fiscal year to carry out the programs provided for in such act be fully obligated.

As you may know, I am co-chairing hearings on the general issue of impoundment and I expect to have Secretary Butz before us soon. I intend to ask him to point out where the Constitution gives the President the right to repeal a statute by refusing to carry out its terms. For I believe this is exactly what President Nixon has done with respect to the Rural Electrification Act of 1936. I have argued recently that it is not so much the usurption of power by the President, but rather the abdication of power and responsibility by the Congress that has brought us to this critical point in the history of our government-a point where the Constitution is being drastically changed without amendment at the discretion of the President.

REAP, REA, Water Bank, and other programs I support are not all that is at stake. It is, rather, the larger issue of whether or not Congress will put a halt at last to this President's blatant abuse of impounding and respond positively to the contempt he has shown for Congress.

The termination of the direct loan programs of the REA for rural electric and telephone system is a Congressional-not an Executive prerogative. I support S. 394 because it is an expression of Congress' unwillingness to allow the President's unauthorized power to be exercised.

Hon. HERMAN E. TALMADGE,

WASHINGTON, D.C., February 6, 1973.

Chairman, Committee on Agriculture and Forestry,
U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: The Senate Committee on Agriculture and Forestry currently is conducting comprehensive hearings on recent actions of the U.S. Department of Agriculture curtailing expenditures for specific agricultural programs, including the Rural Environmental Assistance Program (REAP). Among the several bills which have been referred to your committee relative to these programs is S. 459 by you and Senator Aiken, to require the Secretary of Agriculture to carry out a rural environmental assistance program.

The official voting delegates of the member State Farm Bureaus at the 54th annual meeting at Los Angeles in December, 1972, established Farm Bureau's 1973 national and international policies. In speaking to the issue of government spending and inflation this policy states:

"The most pressing need for the future economic stability of America is a balanced federal budget. We must be willing either to reduce expenditures or to pay additional taxes. We prefer reducing expenditures. The Congress, as well as the Executive, must accept major responsibility in this area."

Under date of December 26, 1972, the United States Department of Agriculture announced as follows:

"Funding of cost-sharing activities under the Rural Environmental Assistance Program (REAP) and for further contracting under the Water Bank Program (WBP) is being terminated."

In response to the announcement the American Farm Bureau Federation President, William J. Kuhfuss, issued the following statement:

"Farm Bureau favors fiscal responsibility which will require reduced federal spending but insists that the cuts be made across the board so that agriculture and rural people will not be required to carry an inequitable portion of the burden in the reductions.

"When effective programs are cut, the resulting reduction in expenditures should not be nullified by the initiation of new and costly programs.

"Under the REAP program, annual payments have been offered landowners covering part of the cost of installing approved conservation and pollution control practices which benefit all people. The program is cost-sharing and not an income supplement.

"Such investments in the future of America are not subsidies solely for the benefit of the landowners, and the program has been quite effective in its intended purpose. We believe that a federal program of cost-sharing should be continued for those soil and water conservation practices and structures which

contribute to the attainment of pollution prevention, enduring conservation, and environmental enhancement.

"Farmers and ranchers are substantial taxpayers. In proportion to their incomes, they pay higher taxes-including income, sales, and property taxesthan any other major segment of our economy. They are interested in fiscal responsibility, in balanced budgets, in control of inflation and reduced federal expenditures since the root cause of inflation is excessive government spending. "Nothing jeopardizes net farm income more than inflation which tightens the cost-price squeeze as farm costs rise faster than farm prices in an inflationary period.

"The Administration's determination to cut expenditures must be experienced by all departments of government and not just the Department of Agriculture. "Agriculture is ready and willing to bear its fair share of the necessary cuts in federal expenditures, but we ask the Administration not to impose an inequitable burden upon agriculture."

This statement is supported in the 1973 policies, not only in the quotation previously cited relating to government spending and inflation, but also in the section relating to conservation programs which states:

"We oppose government payments to farmers for annual conservation practices. Government expenditures for land reclamation, drainage, tiling, liming, fertilization, and other practices where the primary objective is to increase production should be eliminated.

"We recommend, however, that a federal program of cost-sharing be continued for those soil and water conservation practices and structures which contribute to the attainment of pollution prevention, enduring conservation and environmental enhancement."

S. 459 provides no opportunity for a careful analysis of old statutes and present programs under the authority of the Soil Conservation and Domestic Allotment Act as amended (Public Law 46, 74th Congress, 49 Stat. 163, approved April 27, 1935) which was earlier known as the Agricultural Conservation Program (ACP) and more recently designated as the Rural Environmental Assistance Program (REAP). It is our understanding that S. 459 proposes two very short amendments which would (1) remove all latitude on the part of any Secretary of Agriculture for constructive administrative judgment needed to meet changing conditions and (2) mandate the full expenditure of all funds appropriated under this authority by the Congress in each fiscal year, including expending the 1973 appropriation balance of about $210 million in the weeks remaining between enactment and June 30, 1973.

This legislation fails to offer any opportunity for a constructive review and revision of the REAP program which we believe is timely and necessary. Because of this, and in view of the far-reaching fiscal implications-including the forced spending aspect-of S. 459, the American Farm Bureau Federation is opposed to the enactment of this legislation.

We respectfully request that this letter be made a part of the hearing record on this legislation.

Sincerely yours,

CLIFFORD G. McINTIRE,

Legislative Director, American Farm Bureau Federation.

WASHINGTON, D.C., February 8, 1973.

Hon. HERMAN E. TALMADGE, Chairman, Committee on Agriculture and Forestry, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: On December 27, 1972, the Secretary of Agriculture announced that emergency loans to farmers and rural homeowners had been virtually terminated by administrative decision as of that date. It was stated that this action was taken to bring under control rapidly expanding and unacceptable expenditures under the Agnes-Rapid City Act of 1972 (P.L. 92-385), specifically the $5,000 "forgiveness" and one percent interest features of that legislation.

Although fully realizing the need to bring these expenditures under control, Farm Bureau believes that there exist serious situations which justify extension of emergency loans to farmers suffering serious economic losses due to natural disasters. This view was expressed in a telegram from Mr. William J. Kuhfuss,

President of the American Farm Bureau Federation, to Secretary of Agriculture Earl L. Butz, dated January 8, 1973, as follows:

"Farm Bureau recognizes the need to reduce excessive government expenditures. Farmers and ranchers realize that the cost-price squeeze results primarily from inflation-feeding deficit spending. We reiterate our insistence that spending cuts be 'across the board.'

"Curtailment of the special emergency loan program of the Farmers Home Administration leaves some farmers and ranchers with urgent credit needs resulting from losses due to natural disasters. Such losses, at the same time, seriously jeopardize their ability to qualify for credit from customary commercial sources and the regular operating loans of the Farmers Home Administration.

"Every effort should be made to provide credit to deserving farmers and ranchers who have no other source of credit. We recommend that present programs be restructured to meet legitimate emergency needs in clearly identifiable hardship cases."

Among the bills recently referred to your Committee are S. 418 by Senator Bellmon of Oklahoma and S. 760 by Senator Brock of Tennessee.

These bills would repeal the $5,000 "forgiveness" clause and the one percent interest provisions of the Agnes-Rapid City Act.

These proposed bills would reinstate the emergency loan program available over past years through the Farmers Home Administration with modification granting authority to the Secretary of Agricuture to establish the interest rate at "not to exceed five percent per annum."

The American Farm Bureau Federation recommends enactment of legislation embodying the principles of S. 418 and S. 760. We recommend, however, that it be established clearly in the language of the legislation or in the Committee Report that the Secretary of Agriculture cannot at any time require a rate of interest in excess of the cost of money to the federal government as established periodically by the Secretary of the Treasury.

It would be appreciated if you will make this letter a part of the record of hearings before your Committee pertaining to FHA disaster loans and other matters.

Sincerely,

CLIFFORD G. McINTIRE, Legislative Director, American Farm Bureau Federation.

STATEMENT OF KENNETH D. NADEN, EXECUTIVE VICE PRESIDENT, NATIONAL COUNCIL OF FARMER COOPERATIVES

The Nation's farmer-owned cooperatives are deeply concerned over recent Administration curtailment of Federal aid programs affecting farmers. This major step, taken under the guise of stabilizing the Federal budget, could have far-reaching and detrimental effects for U.S. farmers.

The National Council of Farmer Cooperatives, representing more than 130 farmer-owned cooperatives and nearly 1.3 million farmer members in 49 states, wishes to file this statement of concern and exception.

No single business group is pressed as tightly in the cost-price squeeze as is the U.S. farmer. In the face of still another major salary increase for Federal employees, the Nation's farmers are told that they must again tighten their belts-and accept less Federal help during 1973. Farmers find themselves being crushed between spiraling production and overhead costs, and nearly stabilized receipts for their farm products. It is in light of this serious financial situation that the National Council files this statement of concern.

It is imperative that America's farmers be assisted and allowed to increase farm productivity. Leading Administration spokesmen, including those from the Departments of Agriculture and Treasury-and the President's Council of Economic Advisors-have agreed that rising food costs are a serious problem in the Nation's economy. They have also agreed that the only feasible way to hold farm prices steady is to increase farm output and productivity.

Now Federal Government moves have seriously hampered this ability of farmers to increase their production efficiency. Curtailment or impairment of Federal aid programs threaten not only this productivity, but the long-term outlook for U.S. farm production. There is little doubt that any such action that reduces

farmers' incentives to increase production, will also adversely affect total future production and productivity.

Little or no warning was provided to farmers or their organizations that major programs were to be curtailed or abolished. There was no effort made by the Administration to hear farmers' views on program cuts. Indeed, most farmers and their representatives were caught completely by surprise at the abrupt Administration announcements.

Farmer cooperatives are also vitally concerned about the probable closing of hundreds of local offices of the U.S. Department of Agriculture. With the immediate termination of the generation-old Rural Environmental Assistance Program (REAP), it is estimated that more than 800 local offices of the USDA's Agricultural Stabilization & Conservation Service (ASCS) may be ordered closed. These vital local offices have served farmers well, through crop and weather reporting, surveying, and as local liaison centers for the U.S. Farm Census. Closing of these offices will further weaken this important channel of USDA-farmer communications.

The National Council of Farmer Cooperatives fully appreciates the desire of the President and his Administration to hold FY 1974 spending within defined limits. Such spending limitations should be taken in light of spiraling inflation across the Nation.

But the National Council and its farmer cooperative members strongly feel that priorities must be carefully established before such cuts are finalized. The ability of, or incentive for, farmers to produce food and fiber must not be impaired in any way.

It is for these reasons that the National Council of Farmer Cooperatives asks the Senate Committee on Agriculture and Forestry to request this Administration to re-examine its budget priorities. We respectfully request that this Committee take an immediate and active role in guilding agricultural programs to assure U.S. farmers of fair and equitable income from their farming enterprises.

INDEPENDENT BANKERS ASSOCIATION OF AMERICA,
Newman Grove, Nebr., February 1, 1973.

Hon. HERMAN TALMADGE,
Chairman, Committee on Agriculture and Forestry,
U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: The Independent Bankers Association of America, representing 7,085 independent, community-owned and managed banks in 40 states, is deeply concerned about the announced cutbacks in federal agricultural programs. Two-thirds of our member banks are located in towns of 5,000 or less. and 90 per cent are in communities of less than 30,000. These banks are directly dependent upon agriculture and the family farm.

The rural bank concern was previously conveyed in letters to President Nixon from our association and from the Independent Bankers of Minnesota, both dated January 3, 1973 (enclosed). As these letters point out, we wholeheartedly support efforts to achieve economy and efficiency in government.

However, in this instance, the Administration abruptly curtailed programs which were beginning to enhance rural income, improve the environment, provide decent rural housing and enable farmers devastated by disastrous weather conditions to begin anew.

We commend Congress for recognizing the interdependence of urban and rural America by passing agricultural legislation which has contributed to the prosperity and quality of life not only in rural America but in the entire Nation. Without these programs, the rural sector would have suffered economic and environmental disintegration much more costly to our nation in the long run. The Congress cannot permit the discontinuation of these needed programs and the deterioration of rural America.

To reverse the improvement process would be false economy and also would seriously undermine the credibility of the United States Government with a major segment of our society.

Many family farm owners who are now denied disaster loans were entitled to receive assistance. Unfortunately, many of them relied on the advice of government officials to delay application. The same family farm owners have endured not only the disaster damage but have been denied disaster assistance because of their reliance on government policy, practices and advice.

Our Government has boldly supported economic salvage of corporations such as Lockheed Aircraft and Penn Central Railroad. Now, under the veil of economic concern, it is denying economic assistance to those individuals who are least able to afford damages from disasters.

With the national concern on environmental matters, the Administration has reversed its direction by eliminating the cost-share program under REAP on the rationale that this program is a dinosaur, enjoying limited farmer participation in very few areas of the country. Must America relearn the lessons that justified the REAP program in the first instance?

We are also concerned with the termination of Farmers Home Administration housing loans that require subsidized interest and assist the nation's low income families to enjoy better housing. The Administration contends that an 18-month evaluation is necessary. While other segments of the population enjoy the benefits of Federally-subsidized housing, rural America is told to wait at least 18 months more for a bureaucratic finding on the merits and need for such programs. Eighteen additional months means many older and low income rural Americans must endure inadequate housing. The withholding of funds for subsidized rural housing is not the way to solve rural housing problems.

We respectfully suggest that the Congress of the United States has not only the authority but the responsibility to restore the programs previously enacted and now cut back. This is not only for the sake of the rural sector, but for the whole society.

We sincerely thank you and members of your committee for conducting hearings on agricultural program cutbacks, and ask that this letter and enclosures be entered in the record as our testimony.

Thank you.
Sincerely,

H. L. GERHART, Jr.,
President.
PAT DUBOIS,

Chairman, Agriculture-Rural American Committee.

(The attachments follow :)

Hon. RICHARD M. NIXON,

President, The White House,
Washington, D.C.

NEW MAN GROVE, NEBR., January 3, 1973.

DEAR MR. PRESIDENT: The Independent Bankers Association of America is deeply concerned over the termination of needed existing agricultural programs. Specifically, we refer to the termination of REAP, the Water Bank, and Emergency Loans in disaster areas. The cancellation of these programs and other cutbacks could well have far-reaching adverse effects on rural people and their communities.

We as bankers recognize the need for economy and efficiency in government, but to do so at the expense of the American farmer and a reduction in environmental programs is, in our judgment, a mistake.

Respectfully yours,

H. L. GERHART, Jr.,
President,

Independent Bankers Association of America.

THE PRESIDENT OF THE UNITED STATES,
Washington, D.C.

JANUARY 3, 1973.

DEAR MR. PRESIDENT: It is with great respect and admiration that we observe the courageous efforts taken by your administration to correct the fiscal disparities that plague our national economy. But it is with profound disappointment that we receive the December 27, 1972, announcement of the Department of Agriculture halting emergency loan relief to farmers who sustained substantial crop losses last year due to severe weather.

On the strength of the original promise, to extend this disaster relief to June 30, 1973, merchants and bankers have advanced credit and loans to aid farmers in the affected areas of Minnesota, in order for them to continue operating in the face of heavy losses. The average loss in just two of the 23 counties so designated is running over $7,000.00. The average net income of family farms in this area is only $4,500.00.

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