May 14, 1982
The President. Well, ladies and gentlemen, this is once where I could really open by asking, ``Who's tending the farm?'' [Laughter]
You know, I'm delighted to be here, and I'm not going to take too much time on a monolog. You recognize, of course, I'm sure, in addition to our fine host here, Jack Block, the Secretary of Agriculture. I brought him along for the tough questions. [Laughter] But, you know, I have said many times in public addresses that in all of this recession time -- but in all of these past years of growing inflation, there's no part of our economy that's been caught harder in the cost-price squeeze than agriculture. And I even have a personal example of that.
I've got a ranch of my own, and now the tax people call it a hobby ranch, because since I'm doing what I'm doing, living in public housing in Washington -- [laughter] -- I can't do much farming.
Mr. Wilkinson.\1\ (FOOTNOTE) He wants to put on some cows, but I don't know whether that's a good idea or not. [Laughter]
(FOOTNOTE) \1\Farmowner Leon Wilkinson, the President's host.
The President. But I do -- I've got a tractor out there that I bought secondhand. It's a 1953 tractor, and I bought it not too much later than 1953 for $1,200. And one night at a dinner Nancy happened to be sitting beside a fellow who was the head of a tractor company, and she was telling him how I kind of moaned a little bit now about keeping this thing running and the fact that it -- I wish it had a skiploader on the front, which it doesn't. We got a lot of rocks on our farm. And he said, ``Why he ought to have'' -- he says, ``I'll send a man up that'll make him a real good offer, and he can have the kind of tractor he wants.'' And that's when I learned about, firsthand, the cost-price squeeze.
The fellow did make a very good offer. He offered me -- and this is just, I'm talking about a year or so ago -- he offered me $4,000 for that $1,200 secondhand tractor that goes back to 1953. And then all I'd had to do was give him $13,000 more, and I could have a -- [laughter] -- --
But listen, seriously, I just would like to take a minute to talk about something in Washington and -- to you as Americans -- because it fits any one of us in whatever line of activity in this country. There are any number of industries and kinds of work that have been affected by the problem that confronts us today.
When our administration began, interest rates were 21\1/2\ percent. Inflation was 12.4. Unemployment had been increasing; it had been going on, increasing since 1979. Today we know that continues to increase, and that is the one part of a recession that is the last and the slowest in turning up.
But interest rates, we brought down some, but not enough. They're down about 20 percent -- down to 16, 16\1/2\. And inflation, however, has come down from that 12.4 to where, as you know, last month for the first time in 17 years it broke zero and was actually -- prices were going down instead of just increasing at a lower rate. But the actual rate for the last 6 months has been 3.2 percent inflation.
Now, if you look at the gap between inflation and where the interest rates are, you come down to the problem that I think is your biggest problem and is the biggest problem for the recovery of the economy.
I have been meeting in these last few days with leaders from every type of business and industry and of the financial world and the bankers and so forth on this interest question, and one answer keeps coming from every one of them. It is pessimism based on past experience that over the years we've had seven to eight recessions since World War II. And every time the government has gone for the quick fix, artificial stimulant of the money supply, artificial government spending, supposedly, programs that'll stimulate the economy. And the result has been that up goes inflation. It does have a temporary effect on helping unemployment, but it's like trying to treat a fever by eating the thermometer. And the result is about 2 years later we're into another recession. And if you look at the chart back over the years, every recession is getting bigger, worse. And this one is the worst one of all.
Every one of these people that I have met with said the same thing that I feel myself. They're pessimistic, those who lend money. They fear that even with that low recession rate that the government will follow the old pattern, and up will go inflation again. Well, it's not going to follow the old pattern. We're battling to prevent that and to see that it doesn't happen.
But all of them said, if the Congress will vote this budget that you want with, again, the continued cut in spending, interest rates will come down. Well, we're going to hold firm on that.
We're supporting the bill that has come out of the Senate, has some tax increase there, but it's not going to interfere with the tax relief program that we put into effect last year. That's going to continue.
But the main thing is when we took office, the cost of government was increasing 17 percent a year. We have that down now to less than 7 percent a year, in view of next year's budget. And we believe that the answer, the main answer to your problems, to the automobile industries, to steel, to the construction industry, is the reduction of the interest rates.
When you stop to think that the deficit has built up over the years, that a hundred billion dollars or more of our annual budget -- that's enough to wipe out the deficits completely -- is just interest on the national debt. Our goal is to bring government down to the balanced budget.
It can't be done overnight. They didn't get this way overnight. And when we do that, then to work out a plan, no matter how small it is, but to begin making some installments on that national debt so our kids'll know that we don't intend to leave that as their inheritance of America.
Now, we'll get back to your business and to the questions. I told Jack Block here -- I warned him a little bit about the job he's got. I told him about Ezra Taft Benson some years ago -- went out and there were some problems then. And in one particular gathering, there was a fellow that was really giving him a bad time. And Ezra kind of turned to one of his aides and looked at some figures and things and turned back, and he said, ``Well, you didn't have it so bad.'' He said, ``Now, listen, last year you've had 29 inches of rain.'' And the fellow said, ``Yes, I remember the night it happened.'' [Laughter] So, let's have that dialog.
Hey, I see a lot of friends over here from your State, but I'm sure you've already met them before we arrived here.
Yes?
Interest Rates
Q. Mr. President, I have a question. I'm Bill Moore, a local dairy farmer. As you know, farmers need a lot of credit -- borrow billions of dollars collectively over this country. We're concerned with the national projected deficit, how we're going to be able to continue to get this supply of money that we need and at reasonable interest rates.
The President. And a good question. It's something I should have touched on when I was talking about the budget.
The budget that has come through the Senate Budget Committee, and the one that we have approved, will reduce the projected deficits over the next 3 years by $416,000 -- thousand! -- billion. I was still talking like a civilian there for a minute -- [laughter] -- $416 billion.
The projected deficits, if we do nothing -- and let me be honest with you and tell you that I am one who -- some -- I question the ability of even the best of economists to project more than a few months ahead. But even so, there is enough agreement that it would look like a deficit of $182 billion for next year. That goes up to 216 billion in '84, 233 billion in '85. The program that we're talking about would bring those down to 100 -- about 106 -- 69 and 39, which shows you that we're coming down. And you only have to go, at that point, a couple of years further, and you see that we reach the balanced budget.
But, as I say, even these bankers and these men from the finance firms and the investment firms and all, all said that interest rates will start coming down again when that budget is passed, and they know that the Congress is not going to obstruct our efforts to deal with those deficits.
Jack?
Secretary Block. May I just add on this particular issue of credit for agriculture, a lot of people talk, ``Well, what are you doing for agriculture? Agriculture isn't getting any help.'' But I'll tell you the truth, the facts are that there is some $5 billion more money going into agriculture this year from commodity credit loans, which are part of our program. And the farmers are taking advantage of that to tide the farmers through these tough times, $5 billion more in commodity credit loans. We have some increases in the farmers home operating loans.
And just a little additional note: That money that is so badly needed and provides so much help in commodity credit loans is available only to the participants in the Farm Acreage Reduction program. And next year, those that do not participate, that have been used to farm commodity credit loans, they're not going to qualify if they choose not to participate, because those are the rules of the game.
So, there's ample credit; the credit's there. As the President points out, it's just too expensive for us in agriculture. We can't make ends meet at these prices. But we're looking for it to come down.
Q. What will the interest rates be on that -- --
Secretary Block. Commodity credit loans? They're about 14 percent now. They change every month. So, that means -- you know, if you can get a loan on your corn -- and we hope they're coming down. And it looks like they are.
Dairy Products Surplus
Q. Mr. President, I have a question here. I'm Art Hershey, Chester County dairy farmer. What can the government leaders and the dairy farmers do to work together to solve this surplus problem? I'm here at the front door, sir.
The President. Well, we're trying very hard with that. And, as a matter of fact, we recognize that that problem was created by government, not by the farmers. It is costing us about $2 billion a year. But what we're seeking is legislation that will allow the Secretary of Agriculture at his discretion to set the support level and to work with you, the dairy farmers, on this particular problem in getting rid of the present surplus.
Now, is there more that you'd like to add there? Also, we are looking at the situation of foreign exports to the United States -- our imports of casein that is subsidized by other governments, which, again, is something that is unfair and that we want to do something about.
Q. Amen to that, Mr. President.
Secretary Block. No, we really think that the program we're offering is a program that is sound. Once again, there are some quick fixes floating around for the dairy problem, and you've seen them and read about them. But I'll tell you something. They are not in the long-range, best interests of the dairy industry. They are Mickey Mouse plans of two-price systems, higher price for domestic than we have for exports. And they are ridiculous. And they're going to destroy the whole dairy program if the industry doesn't see the light and adopt a plan that is sound, reasonable, and gives a future for the dairy industry and for the young people that were talked about here this morning that want to come into the dairy industry.
So, I urge you to look at this. And I sincerely pledge to you that I will work with the dairy industry, that we will appoint a board that will give us advice -- principally made up of producers -- to help us in attacking and solving this problem.
The President. You know, we never look back. Maybe someone in the choir has a question. [Laughter] Yes?
Agricultural Exports
Q. Mr. President, I'm in the cattle business. I'd like to know what is being done to help cut down the barriers for foreign trade, especially in Japan. Now, they've sent all their products over in the area, and we do not put any restrictions on their products, and yet they put the restrictions on our products. And I feel that your administration, which I know is doing a lot, but I feel there should be a lot more done.
The President. This gentleman is talking about cattle farming and the restrictions that are put on our exported cattle, for example, to Japan, and yet the unlimited way in which they can come in here. He says he knows we're doing something but not sure that it's enough.
Well, maybe one of the reasons is because we believe in what I've called quiet diplomacy. Instead of putting some fellow on the other side on the spot, and holding him up to public view, we have been working very hard -- and both here, in their visits to us, and there with the Prime Minister and with others in his Cabinet, to change some of these and to tell them that the only alternative is start to go down the road of protectionism, which we don't want to do.
But I think if you've got anything to add, Jack, about that, because we have, I think, been making some progress.
Secretary Block. Let me point out that in the last 10 days, last week, Under Secretary Seeley Lodwick for International Affairs and Commodity Programs was in Geneva with Ambassador MacDonald of our U.S. trade office, met with the Japanese, met with officials in Geneva, and we're hammering away. We gave them a shopping list of what we're looking towards to open up that market. And it's only reasonable to think that it should be opened.
This idea that it's an advantage to have high beef prices in Japan, for melons to cost $30 apiece, for apples to cost to $4 dollars and beef $30 -- it doesn't make any sense. The Japanese people can profit, and certainly it helps our producers. And we need to work towards freer trade. That's the President's policy. Open up these trade channels.
All the countries of the world can profit if the countries do what they do best. And you know something? We're best at farming in this United States of America, right? [Applause]
The President. Jack, things are getting better. When we were there in 1971, the melons were $40. [Laughter] We'd better not talk that way, or maybe some of these people will start leaving us and farming in Japan -- $4 apples.
Yes?
Mushroom Imports
Q. Do you realize you're in the mushroom capital of the world right here -- --
The President. Yes.
Q. We are being devastated by imports from Communist China. They are dumping mushrooms in the United States. I don't know whether you're aware of that.
The President. Yes, I am. And I'm also aware that Jack Block is getting into this and having some meetings about this very problem with the import of mushrooms.
Thank you.
Agricultural Exports
Q. Mr. President.
The President. I'm not -- oh, go ahead.
Q. Excuse me.
The President. No, go ahead.
Q. The United States farmer can produce their product at a lower price than any other nation, but yet we're not competitive in the world market. Is there a reason why? And I also understand that we have an agreement with some nations that we cannot sell them dried milk and dairy products. Is this true?
Secretary Block. What was the first part of your question? We couldn't hear it?
Q. The United States farmer can produce their product at a lower price than most other nations, but yet we don't seem to be competitive on the world market.
The President. Here again, this is something that we promised in the campaign and that we're trying to do, and that is to -- with government's help -- instead of trying to run your farms for you, as they've done some years in the past, is to try and stimulate and open up the export market, because we're one of the few countries in the world that really is not only able to feed more people per farmer than anyone else in the world, but we have a surplus that can be sold and help a hungry world.
Secretary Block. Are you talking about the surplus or talking about selling the other commodities right off the farm?
Q. Selling our -- at foreign -- exports. I mean, we don't seem to be competitive in the world market. We -- --
Secretary Block. Let me address that. It is true. It bothers me. I am troubled to realize that the United States of America can produce grain and forage and everything else, virtually everything, competitive with any country in the world, but in dairy, we've got some problems in terms of exports. We're losing domestic markets, and we're losing export markets. And we have, like I said, the best of grains to feed the cows, the finest facilities, the best of management in the dairy industry that you can buy -- the finest cows in the world, people all over the world buying our cows, but we cannot compete with other countries. And one of the biggest problems is, in my opinion, is the rigidity of the government program. I think it has put the dairy industry into a hole the way it has been handled and managed in the past few years.
Q. Do we have an agreement with other nations that we cannot export dairy products to them at this time?
Secretary Block. We can export any dairy products we choose to if they are exported at domestic prices.
Now, if we are to talk about exporting the surplus dairy products that the government has bought up, we can export those at world prices or at our domestic prices, which are even higher than world prices. But we cannot undercut the world market by selling them at a discount. We have done that some, but we have to be very careful in doing it, because we are breaking international trading rules when we sell -- when we subsidize the exports of our dairy products into the world market.
The President. And they're trying to use a lot of that, as you know, however, where it wouldn't be competitive with the market, but in feeding the hungry, both here and abroad.
Now, I'm going to interrupt for a second so that you won't -- and then I'll get to you -- so that you won't think that I'm using notes here. And I wouldn't be able to see them that close. [Laughter] Funny how your arms get shorter.
No, I thought -- and then I did an injustice -- I just assumed that our visitors here had probably been on and been introduced here before we arrived. But I think you'd like to know that your good Governor Thornburgh is here. Your Senators, John Heinz and Arlen Specter, are here. And your own Congressman from this district, Dick Schulze, and his wife, Nancy. Say, you're going to have to name that new calf ``Nancy-Nancy.'' [Laughter]
Mr. Wilkinson. No, I am going to name her Nancy. We had a new calf this morning. We're going to name it ``Number 1 Nancy.'' [Laughter]
The President. And Congressman Bob Walker. Congressman Larry Coughlin. And we also have two members of our -- other members of our Cabinet here, the Secretaries of Transportation and Health and Human Services, Drew Lewis and Dick Schweiker.
Now, did I miss anybody?
Mr. Wilkinson. Mr. President, could I invite the people who made this possible today, my family? I'd like to invite my -- introduce my family.
The President. Well, for heaven's sake, yes. [Laughter]
Mr. Wilkinson. Paul and Tom -- they're the ones that made this possible -- and my wife, right between them. My other two sons -- Louis and Larry. They have farms of their own. And I'm backing Mr. Hershey for our State legislature. [Laughter] My two county commissioners -- Earl Baker and Bob Thompson.
Q. Bud Burton.
Mr. Wilkinson. Bud Burton -- I'm sorry. Stand up -- another -- get up here.
The President. Now we've got a question back there.
Mushroom Imports
Q. Mr. President -- [inaudible] -- my father's a mushroom grower, and it seems like year after year, it seems mushroom growers are just barely breaking even. Is there something the government's trying to do for that?
Secretary Block. ``I'm a mushroom grower, and'' -- --
The President. Ah. Well, again, as I say, we recognize this -- this is literally the mushroom capital, but we also recognize that there is a great import problem and -- --
Secretary Block. I'm going to invite -- --
The President. Jack is inviting the leadership here in that sector of agriculture for meetings and going to take up this problem of what we can do about this threat from imports.
Q. We want these young fellows to be able to stay in business.
The President. Yes.
Dairy Price Supports
Q. I'm a young dairyman over at Kemp here. And I'm very concerned about the support program and the retention of the support program itself. It's been a very helpful tool over the years, and I don't think it was really out of hand. Even into '79, things were relatively under control. We had an increase in a parity to 80 percent, and it seems like everything has gone wrong. So, the stage has been set for increased production. And they just can't turn the spigot off.
I mean, out here, heifers -- we have a lot of heifers -- [inaudible] -- we got plenty of heifers. Come on, we're affected for the next 18 months, at least. I mean, you just can't stop -- you just can't turn anything back within that period of time. Now, I don't like to see the bottom, so called, pulled right out from under us, because it happened over a long period of time. So, you're going to have to take plenty of time. I mean, I'm all for you. I wish you were in office back in '76, 'cause I wouldn't be in the hole today if you were. [Laughter]
Secretary Block. We are not going to do anything until January 1, to give the dairy industry some time.
Q. I'm totally behind you, but the thing is, I don't want anything to happen too fast here. I would like to see the retention of the support system, and if the support on milk were down to $12, I think we might be able to survive. But we have no -- that the bottom pulled completely out from under us, we're going to go under. And I'll tell you, it doesn't take long to go under. We can go under.
Our young ones are committed. We've made commitments. I mean, we've had to deal with the seventies, had to deal with buying a farm in the seventies. I've had to deal with the cost of production in the seventies. And now, all of a sudden, we're -- just in the past couple of years, we've ran into what you call a difficult situation. [Laughter]
The President. Yes.
Q. Now we need some time to adjust. Now, I hope that you can see this and go ahead and give us something, some type of security, that we know if we're going to be able to survive, because I'm trying to build a future for my sons and all. I mean, I'm not really trying to get rich -- --
The President. No, right.
Q. -- -- I'm trying to have a respectable living with some type of guarantee. Now, I don't want these guarantees pulled out from under us, 'cause I feel we have a respectable system. And I am committed to trying to feed the people and trying to get along. So, I hope maybe they can get along with us. [Laughter]
The President. Yes, all right. I think -- did you all hear that? Let me just say that I think the quarrel with the system the way it is, is that the government is too rigid. But no one -- we all recognize the problem. You can't take a system that has been going on -- whatever it may be, and the people have geared themselves and their activities to -- and then pull the rug out all at once.
First of all, nothing is going to be done before January 1st. But this is why we want the Secretary of Agriculture to have the flexibility, instead of this rigid system that is set by legislation. And that will be taken into account -- that you can't, as I say, pull the rug out all at once, and that you're going to have a more realistic and less rigid system that will take care of just what you're talking about.
Secretary Block. Part of the concern was, are we going to lose the whole program? How low is the support going to go? We don't intend to destroy the program. In fact, we tried to keep it basically as it is. And I do not foresee going below $12. I hope we don't have to lower the support at all.
We're going to have time between now and January 1 to see some more adjustment take place. The crowd here today needs to know this dairy situation was talked about in two Cabinet Councils of Food and Agriculture. The President is the Chairman; I'm Chairman pro tem of that Cabinet Council. Most all the other Cabinet officers were in there. Drew Lewis was there, and Dick Schweiker was there -- and all the rest. Some of them heard more about dairy than they ever want to hear about. That's true.
But the President said just what this young man said -- it's almost verbatim. The President said, ``Well, we've been getting into this situation for a long time. We don't want to pull the rug out overnight. We want to give them time for adjustment.'' I tell you, there's the man that is listening and hearing from you, and he appreciates your concern.
Mr. Wilkinson. The man that's doing a great job here in Pennsylvania, advertisements and all, is our good secretary, Penrose Hallowell, and I'd like to introduce him at this time.
The President. They didn't have your name on the card. Well, we'll be working together.
I know that we're running out -- he says one more question. And there's one more question.
Q. Mr. President, my name's Ginger Myers. My husband, John, and I, we're one of those young couples that are struggling over in Adams County. And we do it because we love the farm, and we think we're turning out a quality product. But I get a little discouraged listening today about ``tide over, tide over.'' Like that gentleman back there, my bank notes come regular, regardless of being tide over.
Our concern was, do you think on the dairy price support that by raising the minimum standards on the fluid price on the market, that we can dry up some of this surplus product and at the same time provide a better product for the consumers?
Secretary Block. We talked about that in the Cabinet Council -- --
The President. Yeah, go ahead.
Secretary Block. We talked about it in the Cabinet Council meeting. It was adopted as part of the package. I talked to Secretary Schweiker about it.
Now, we don't pretend to think that we can order all the States to do this. But we do think that it would be very useful to encourage it. The milk tastes better when it's that way, in my opinion. So, we will be doing this. And part of the package of straightening out the dairy program -- and just as important as the part of adjusting supply and demand -- is the disposal of the surplus.
I assure you we'll be working in every way we can to do just that.
The President. And dispose it in such a way that it isn't going to be counter to the present production and to what you're doing.
Well, I guess we've run out of time. I'd like to get back to one thing, and it's -- you've mentioned it again -- on those notes at the bank. There is only one way to get that interest down, and that way is to continue on this program.
We think that -- I'm so tired of hearing from some of our opponents. They said that the program that they passed last summer -- they said it's failed. It hadn't started yet. [Laughter] The first part of it didn't go into effect until October 1st, and that was the smallest part.
But the continued tax cuts -- in July, when that money begins to hit the market -- but again, it isn't just the fact that July 1st you're now paying a lower tax. There has to be time for that money to begin to come into your pocket for it to then begin to have an effect. But even with that little tiny cut in October, we saw an increase in savings, the rate of savings.
Would it interest you to know that Americans, here in this great lush country of ours, have been saving at a lower percentage than any of the other industrial nations? And this means there isn't that capital pool that is needed for borrowing and investment and modernizing plants and equipment and so forth, research and development.
Other things have begun to happen now that -- I'm not going to tell you that now we've recovered. I am going to say that as they describe a recession of this kind, there is a trough and a bottoming out, and then you begin to rise. And there is every indication that that begin-to-rise is going to come in the latter half of this year. And the signs, the beginning signs are there in some instances.
We know that there has been an increase already in the hog market. We know that grain prices have shown the evidence that they're not continuing to do this now, that they're there at that trough and, maybe at the beginning of it, coming up. Cattle are showing the first sustainable profit since 1979. And even if you -- this morning's business news or yesterday morning's business news shows that even the automobile market is improving some, and for the last 3 months there has been a steady increase now in home construction. And all of these point to this fact.
But, again, you don't have to write to your Congressman. They've been here to hear. But if you know any others in any other States, lean on them, too. [Laughter] Or have your friends and neighbors lean on them. And that is to get this budget passed and get it passed quickly.
And now one more thing about that. You've heard all the horror stories, that you can't look at the screen without seeing them -- of that -- supposedly we're cutting the bottom out of all the help to the needy and the handicapped in our country. We have not cut a budget yet. We have only cut the proposed increase that the big spenders in Washington have set their eyes on. Each budget, including the one for next year, is bigger than the budget before -- and, of necessity. But it is not as much bigger as it was.
And I'll give you one figure that involves Dick Schweiker's department -- Health and Human Services. This is the department that deals with all those programs that help the people who have to have our help as neighbors. In 1980, in the last year of the previous administration, the budget for Health and Human Services was about $195 billion. We have proposed for next year $274 billion in that program. The percentage of the budget in 1980 for HHS was 33 percent. It's going to be more than 36 percent when we get this '83 budget passed. And the budget for defense, which those same big spenders -- that's the only thing they ever seem to want to cut -- well, that is only 29 percent of the total budget. In the Kennedy years it was 46 percent. So, we think that we've got a well-balanced budget. But we also think that we are meeting the humane needs of those people who have to have help, and the figures reveal it.
As a matter of fact, Dick's budget is bigger than the total national budget of every other country in the world except the Soviet Union and the United States. So, we think that we're keeping the safety net for those people who have needs. And that's why I was so angry at Mr. Moyers' show the other night -- was because it wasn't true. [Bill Moyers, CBS News correspondent, hosted a documentary entitled, ``CBS Reports, `People Like Us,' '' which aired April 21, 1982.]
Now -- thank you all very much.
They say I can't take any more questions, that time's up. Mr. Thornburgh and I are due at a luncheon in Philadelphia. And if this wasn't a nonpartisan gathering, I'd tell you it's a fundraiser for Dick Thornburgh. [Laughter]
Note: The President spoke at 10:47 a.m. in a haybarn on the Wilkinson & Son Farms. Prior to his remarks, he toured the farm with Mr. Wilkinson.