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    "title": "1975/04/29 - Farm Veto Message Meeting",
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    "ocrText": "The original documents are located in Box 44, folder \"1975/04/29 - Farm Veto Message\nMeeting\" of the James M. Cannon Files at the Gerald R. Ford Presidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nDigitized from Box 44 of the James M. Cannon Papers at the Gerald R. Ford Presidential Library\nApril 28, 1975\nTo the House of Representatives:\nI am returning without my approval H.R. 4296, referred\nto as the Emergency Agricultural Act of 1975. Although the\naim of this bill is laudable, its results would be counter-\nproductive for farmers, other taxpayers, and for America's\neconomic recovery and world market position.\nThe bill would remove a considerable amount of economic\nindependence from farmers while burdening consumers with\nhigher prices and boosting the already overly-inflated Federal\ndeficit.\nApproval of this bill would, therefore, not be in the\npublic interest.\nIn the conduct of the Government's fiscal affairs, a line\nmust be drawn against excesses. I drew that line in my address\nto the Nation on March 29. I promised all Americans that,\nexcept where long-range national security interests, energy\nmatters, or urgent humanitarian needs were involved, I would\ntake action to hold our fiscal year 1976 deficit to no more\nthan $60 billion.\nNew spending programs which the Congress is considering\ncould easily raise the Federal deficit to an intolerable level\nof $100 billion. This must not happen.\n2\nH.R. 4296 is an example of an intolerably high spending\nprogram. In fiscal year 1976, it could add an estimated $1.8\nbillion to the Federal deficit. If used as a point of departure\nfor longer-term legislation -- as was strongly indicated during\nits consideration -- it could lead to an excalation of farm\nprogram subsidies in succeeding years.\nApproval of this bill would undermine the successful market-\noriented farm policy adopted by this Administration and the\nCongress. It is a step backward toward totally discredited\npolicies.\nProspects for farmers, it is true, are not as bright this\nyear as in the recent past. Farm production costs have been\npushed upward by the same inflationary pressures that have\naffected other industries. At the same time, demand for\ncertain farm products has slackened because of the recession.\nFortunately, however, current agricultural laws are\nworking well. In spite of the financial difficulties many\nfarmers are experiencing, farm exports, farm net income and farm\ncash receipts are at high levels.\nThis Administration has taken a number of positive: steps to\nassist farmers. The 1976 wheat acreage allotment was recently\nincreased by 8 million acres to 61.6 million acres. This action\nprovides wheat producers with additional target price and disaster\nprotection. We have also increased the 1975 crop cotton price\nsupport loan rate by 9 cents a pound. And we recently announced\nan increase in the price support level for milk, which, combined\n3\nwith easing feed prices, should assist dairy producers.\nWithin the past several days, we have completed negotiations\nwith the European Community to end the export subsidies on\nindustrial cheese coming here -- a step that ensures that surplus\ndairy products will not be sold in the U.S. market at cut-rate\nprices At the same time, we have worked out arrangements which\nenable the Europeans to continue selling us high-quality table\ncheese. This solution has enabled us to keep on mutually\nagreeable trading terms with our best customers for American\nfarm exports.\nWe have also taken action to protect our cattle producers\nagainst a potential flood of beef imports from abroad. The\nDepartment of State is completing negotiations with 12 countries\nlimiting their 1975 exports of beef to this country. These\nvoluntary export restraint agreements are intended to keep\nimports subject to the Meat Import Law to less than 1,182 million\npounds.\nIn contrast to the development of the Agriculture and Consumer\nProtection Act of 1973 -- which was the result of considerable\nthought and study -- H.R. 4296 was hastily conceived with\ninadequate hearings and without sufficient opportunity for\nconsumers and taxpayers to have a voice in its preparation.\nMost farmers have already made their plans and bought their\nseed, Many are well into their planting season. These plans\nhave obviously been completed without any dependence on the\nprovisions of H.R. 4296.\n4\nIn the long haul, this bill ultimately would lead to\nconstraints on production, resulting in loss of jobs in food-\nrelated industries. It would induce farmers to grow more cotton --\nalready in surplus -- and less soybeans -- badly needed for\nfood. The bill would jeopardize the competitive position of our\ncotton in world markets.\nAmerican farmers have responded magnificently during the\npast several year to produce food and fiber for this Nation\nand the world. This has made agriculture our leading source\nof foreign exchange. This year, despite very trying circumstances,\nmost farmers are again going for all-out production. They have\nmy support for a vigorous export policy for their products. Our\nfarm products must have unfettered access to world markets.\nThe act, in short, is anti-consumer, anti-farmer, anti-taxpayer,\nand even anti-humanitarian:\n--It is anti-consumer because it would cause higher prices\nand result in crops produced for Government storage instead of\nfor the demands of the marketplace.\n--It is anti-farmer because it would price our farm commodities\nout of world markets, and lead to cutbacks in production.\n--It is anti-taxpayer because of the cost of subsidies for\nexport purposes, for crop loans, for storage of inventories of\nGovernment-controlled farm commodities, and for not growing crops.\n--It is anti-humanitarian because once our export markets\nare cut and our farmers are denied the profits of full production,\nthen consumers in a world stalked by hunger would face higher\n5\nfood costs caused by reduced world supplies.\nI cannot, in good conscience, approve this act. I return\nit herewith.\nMr. Cannon: This is a retyped version of\nthe 2a page which was marked \"to omit\" on\nthe draft.\nJudy\n(Note: This section on page 2a needs a policy decision.)\nTo help relieve current financial difficulties for producers,\nI am today directing the Secretary of Agriculture to take action\nto increase price support loan rates for wheat, corn, and other\nfeed grains.\nIn addition, I realize that farmers face serious problems\nin producing food ; and fibers that the rest of us depend upon. I\nsincerely seek to solve these problems -- not aggravate them. That\nis why I have taken the action earlier described to help the wheat\nand feed grain farmers adjust to the severe increase in the cost of\nproduction occurring since the 1973 farm bill was enacted.\nI would like to be as responsive to cotton growers as well,\nbut unfortunately, the law is not as clear nor as flexible in the\ncase of cotton as in the case of grain. I therefore have directed\nthe Secretary of Agriculture to thoroughly reexamine existing cotton\nlegal authority both in regard to calculating and establishing loan\nlevels and in the exercise of authority to make open market purchases.\nThis we will do in an effort to help insure the confidence of cotton\nproducers that this Administration does indeed concern itself with\ntheir vital interests.\n(MORE)\nApril 28, 1975\nTo the House of Representatives:\nI am returning without my approval H.R. 4296, referred\nto as the Emergency Agricultural Act of 1975. Although the\naim of this bill is laudable, its results would be counter-\nproductive for farmers, other taxpayers, and for America's\neconomic recovery and world market position.\nThe bill would remove a considerable amount of economic\nindependence from farmers while burdening consumers with\nhigher prices and boosting the already overly-inflated Federal\ndeficit.\nApproval of this bill would, therefore, not be in the\npublic interest.\nIn the conduct of the Government's fiscal affairs, a line\nmust be drawn against excesses. I drew that line in my address\nto the Nation on March 29. I promised all Americans that,\nexcept where long-range national security interests, energy\nmatters, or urgent humanitarian needs were involved, I would\ntake action to hold our fiscal year 1976 deficit to no more\nthan $60 billion.\nNew spending programs which the Congress is considering\ncould easily raise the Federal deficit to an intolcrable level\nof $100 billion. This must not happen.\n2\nH.R. 4296 is an example of an intolerably high spending\nprogram. In fiscal year 1976, it could add an estimated $1.8\nbillion to the Federal deficit. If used as a point of departure\nfor longer-term legislation -- as was strongly indicated during\nits consideration -- it could lead to an excalation of farm\nprogram subsidies in succeeding years.\nApproval of this bill would undermine the successful market-\noriented farm policy adopted by this Administration and the\nCongress. It is a step backward toward totally discredited\npolicies.\nProspects for farmers, it is true, are not as bright this\nyear as in the recent past. Farm production costs have been\npushed upward by the same inflationary pressures that have\naffected other industries. At the same time, demand for\ncertain farm products has slackened because of the recession.\nFortunately, however, current agricultural laws are\nworking well. In spite of the financial difficulties many\nfarmers are experiencing, farm exports, farm net income and farm\ncash receipts are at high levels.\nThisAdministration has taken a number of positive: stepsi to\nassist farmers. The 1976 wheat acreage allotment was recently\nincreased by 8 million acres to 61.6 million acres. This action\nprovides wheat producers with additional target price and disaster\nprotection. We have also increased the 1975 crop cotton price\nsupport loan rate by 9 cents a pound. And we recently announced\nan increase in the price support level for milk, which, combined\n3\nwith easing feed prices, should assist dairy producers.\nWithin the past several days, we have completed negotiations\nwith the European Community to end the export subsidies on\nindustrial cheese coming here -- a step that ensures that surplus\ndairy products will not be sold in the U.S. market at cut-rate\nprices At the same time, we have worked out arrangements which\nenable the Europeans to continue selling us high-quality table\ncheese. This solution has enabled us to keep on mutually\nagreeable trading terms with our best customers for American\nfarm exports.\nWe have also taken action to protect our cattle producers\nagainst a potential flood of beef imports from abroad. The\nDepartment of State is completing negotiations with 12 countries\nlimiting their 1975 exports of beef to this country. These\nvoluntary export restraint agreements are intended to keep\nimports subject to the Meat Import Law to less than 1,182 million\npounds.\nIn contrast to the development of the Agriculture and Consumer\nProtection Act of 1973 --- which was the result of considerable\nthought and study -- H.R. 4296 was hastily conceived with\ninadequate hearings and without sufficient opportunity for\nconsumers and taxpayers to have a voice in its preparation.\nMost farmers have already made their plans and bought their\nseed, Many are well into their planting season. These plans\nhave obviously been completed without any dependence on the\nprovisions of H.R. 4296.\n4\nIn the long haul, this bill ultimately would lead to\nconstraints on production, resulting in loss of jobs in food-\nrelated industries. It would induce farmers to grow more cotton --\nalready in surplus -- and less soybeans -- badly needed for\nfood. The bill would jeopardize the competitive position of our\ncotton in world markets.\nAmerican farmers have responded magnificently during the\npast several year to produce food and fiber for this Nation\nand the world. This has made agriculture our leading source\nof foreign exchange. This year, despite very trying circumstances,\nmost farmers are again going for all-out production. They have\nmy support for a vigorous export policy for their products. Our\nfarm products must have unfettered access to world markets.\nThe act, in short, is anti-consumer, anti-farmer, anti-taxpayer,\nand even anti-humanitarian:\n--It is anti-consumer because it would cause higher prices\nand result in crops produced for Government storage instead of\nfor the demands of the marketplace.\n--It is anti-farmer because it would price our farm commodities\nout of world markets, and lead to cutbacks in production.\n--It is anti-taxpayer because of the cost of subsidies for\nexport purposes, for crop loans, for storage of inventories of\nGovernment-controlled farm commodities, and for not growing crops.\n--It is anti-humanitarian because once our export markets\nare cut and our farmers are denied the profits of full production,\nthen consumers in a world stalked by hunger would face higher\n5\nfood costs caused by reduced world supplies.\nI cannot, in good conscience, approve this act. I return\nit herewith.\nThis section on page 2a needs a policy decision.)\nTo help relieve current financial difficulties for producers,\nI am today directing the Secretary of Agriculture to take action\nto increase price support loan rates for wheat, corn, and other\nfeed grains.\nIn addition, I realize that farmers face serious problems\nin producing food ; and fibers that the rest of us depend upon. I\nsincerely seek to solve these problems -- not aggravate them. That\nis why I have taken the action earlier described to help the wheat\nand feed grain farmers adjust to the severe increase in the cost of\nproduction occurring since the 1973 farm bill was enacted.\nI would like to be as responsive to cotton growers as well,\nbut unfortunately, the law is not as clear nor as flexible in the\ncase of cotton as in the case of grain. I therefore have directed\nthe Secretary of Agriculture to thoroughly reexamine existing cotton\nlegal authority both in regard to calculating and establishing loan\nlevels and in the exercise of authority to make open market purchases.\nThis we will do in an effort to help insure the confidence of cotton\nproducers that this Administration does indeed concern itself with\ntheir vital interests.\n(MORE)\nTHE WHITE HOUSE\nWASHINGTON\nApril 29, 1975\nJMC:\nYou may want to see\nthese before the\nFarm Bill Meeting.\np\nApril 25, 1975\nDear Mr. Chairman:\nThis is to acknowledge and thank you for your\nletter to the President urging that he approve\nand sign into law H.R. 4296, the Emergency Farm\nBill\nI have made sure that your letter was called to\nthe attention of the President, and he appreci-\nates and understands your concerns. However,\nI believe his decision was already made.\nwith kind regards,\nSincerely,\nWilliam T. Kendall\nDeputy Assistant\nfurelarm Bill\nto the President\nEng\nThe Honorable John C. 2 Stennis\nUnited States Senate\nalook\nWashington, D.C. 20510\nbee w/inc to Max Friedersdorf - FYI\nbec w/inc to Jim Cannon - FYI\nWTK:EF:jk\nI 1017 CHALD E. IORO\nJOHN C. STENNIS, MISS., CHAIRMAN\nSTUART SYMINGTON, MO.\nSTROM THURMOND, S.C.\nHENRY M. JACKSON, WASH.\nJOHN TOWER, TEX.\nHOWARD W. CANNON, NEV.\nBARRY GOLDWATER, ARIZ.\nTHOMAS J. MC INTYRE, N.H.\nWILLIAM L. SCOTT, VA.\nHARRY F. BYRD. JR., VA.\nROBERT TAFT, JR., OHIO\nSAM NUNN, GA.\nDEWEY F. BARTLETT, OKLA.\nJOHN c. CULVER, IOWA\nUnited States Senate\nGARY HART, COLO.\nPATRICK J. LEAHY, VT.\nCOMMITTEE ON ARMED SERVICES\nT. EDWARD BRASWELL, JR., CHIEF COUNSEL AND STAFF DIRECTOR\nWASHINGTON, D.C. 20510\nApril 23, 1975\nThe President\nThe White House\n16.00 Pennsylvania Avenue\nWashington, D.C. 20500\n{ne\nDear Mr. President:\nI wish respectfully to urge very strongly that you give your\napproval and signature to the Farm Bill.\nThe distinguished Secretary of Agriculture has been quoted\nin the press to the effect that he intends to recommend to you that\nyou veto the bill. He has said in substance that the farmers are\ndoing reasonably well, and that the farm support programs should\nbe left alone, and the free market system be relied upon to work\nthe problems out.\nBased upon extensive personal contacts with experienced\nfarmers, it is my considered judgement that the farmers are\nin deep trouble this year, with constantly. rising costs for what\nthey must buy, decreasing prices for their crops, and eroded\ncredit after a bad year.\nIn the State of Mississippi there is general agreement within\nthe financial community that farmers are having to borrow more\nmoney to produce their crops than ever before. In some areas\nthe loans are as much as 35 percent higher than last year. The\naverage increase around the State is 15 to 20 percent. Farmers\nare having to use their equities in their land and equipment to\nget sufficient credit. They have watched the prices of farm\ncommodities drop for the fifth straight month. Prices are 15\npercent lower than they were a year ago, and costs are 10 per-\ncent higher. Any business endeavor facing these conditions\nmust be acknowledged to be in difficulty.\nThe President\nApril 23, 1975\nPage Two\nThe purpose of the Farm Bill is to lend stability to the prices\nfor farm commodities. It does so by providing a safety net under\nthe prices, in the form of target prices and loan rates. This is\nfor the good of both the consumers and the producers.\nMr. President, I believe the Senate tried to be cooperative\nabout this bill. We gave up much of what we voted for here on\nthe floor. We did so in an effort to meet the administration\nat least half way.\nI believe that it would be imprudent for the government to\nstand by and let events run their course, in the face of current\ncircumstances in agriculture. I strongly urge that you give the\nI\nFarm Bill your approval and signature.\nRespectfully yours,\nJohn STENNIS C. Stennis\nUnited States Senator\nJCS:mls\nFarm Bill\nApril 24, 1975\nDear Don:\nThank you for the April 22 letter to the\nPresident in which you and 24 of your\ncolleagues urge that he sign into law\nH.R. 4296.\nI have made sure that it was called to\nthe attention of the President, and he\nappreciates and understands your concerns.\nmade. However, I believe his decision was already\nWith kind regards,\nVernon\nDeputy\nto the\nSincerely, Assistant President C. Cend Candace Loen 70 FarmBill\nThe Honorable Don Young\nHouse of Representatives\nWashington, D.C. 20515\nbec: w/incoming to Max Friedersdorf - FYI\nw/incoming to Jim Cannon - FYI\nVCL:EF:mlg\nIdentical letters to all signees.\nFORD :- 078830\nCHARLES THONE\nCOMMITTEES:\nAGRICUL TURE\n1ST DISTRICT, NEBRASKA\nSUBCOMMITTEES:\n1531 LONGWORTH HOUSE OFFICE BUILDING\nLIVESTOCK AND GRAINS\nFORESTS\nHOUSE OF REPRESENTATIVES\nDAIRY AND POULTRY\nWASHINGTON, D.C. 20515\nGOVERNMENT OPERATIONS\nSUBCOMMIT\nFOREIGN OPERATIONS AND\nGOVERNMENT INFORMATION\nApril 22, 1975\nSPECIAL STUDIES\nThe President\nThe White House\nWashington, D. C.\nDear Mr. President:\nIt is requested that you support the farmers of our nation by\nsigning into law H. R. 4296.\nThis bill, as passed by the House and Senate, applies solely to\nthe 1975 crops. This legislation represents an earnest attempt to\nfind a solution to our farmer's problems with high production costs\nand one that will not place an undue burden on our consumers. This\nlegislation will lend stability to the market for farm prices. Without\nthis stabilizing influence of realistic target prices and loan levels the\nfarmers face severe uncertainty because of higher production costs.\nWe, the undersigned, feel that this would be a serious threat to\nnot only agriculture but to our total economy, and urge your signing this\nlegislation into law.\nMores Sincerely, Thone\nAlbert H. Quie\nCharles Thone\nMark Andrews, North Dakota Tom Tom Hazedorn Hagedorn, Minnesota\nJames Abdnor, abdm South\nBill Goodling\nDakota\nBill Goodling, Pennsylvania\nW. Henson Moore, Louisiana\nBill Bill Wampler, Wample Virginia\nTHIS STATIONERY PRINTED ON PAPER MADE WITH RECYCLED FIBERS\nThe President\nThe White House\nApril 22, 1975\nB Jer Thad Cophan\nCharlesE Bill Gene Charles Steiger, Taylor, E. Jaylor Grassley, Missouri Grassley Iowa James Cary Thad James A. Cochran, Jeffords, Myers, Mississippi Vermont Pennsylvania\nJohn Y. McCollister, J me Nebrask Collist Larry Larry Pressler Pressler South\nDakota\nKeith G. Sebelius, Sebeline Kansas\nMam Saus Delbert L. Latta, Ohio\nGarryle Dan Jan Larry Winn Jr., Kansas minh J Shuty Joe\nSkubitz Miner Kansas\nalaved Young, C. Alaska Treen\nRobert McEuen, New York\nBud Hillis\nDavid C. Treen, Louisiana\nBud Hillis, Indiana\nVizia Virginia Smith, Nebraska Smith\nApril 25, 1975\nDear Senator:\nThis is to acknowledge and thank you for your\nletter to the President urging that he approve\nand sign into law H.R. 4296, the Emergency Farm\n0111.\nI have made sure that your letter was called to\nthe attention of the President, and he appreci-\nates and understands your concerns. However,\nI believe his decision was already made.\nwith kind regards,\nSincerely,\nWilliam T. Kendall\nPuniled\nDeputy Assistant\nto the President\ntoon Urging sign 4arm\nThe Honorable James B. Allen\nUnited States Senate\nWashington, D.C. 20510\nbee, w/inc to Max Friedersdorf - FYI\nbee w/inc to Jim Cannon - FYI\nWTK:EF:jk\nFORD is STYLE LIDE\nHERMAN E. TALMADGE, GA., CHAIRMAN\n424\nJAMES O. ASTLAND, MISS.\nCARL T. CURTIS, NEBR.\nGEORGE NC GOVERN, S. DAK.\nGEORGE D. AIKEN, VT.\nJAMES F/ ALLEN, ALA.\nMILTON R. YOUNG, N. DAK.\nHUBERT H. HUMPHREY, MINN.\nROBERT DOLE, KANS,\nWALTER D. HUDDLESTON, KY.\nHENRY BELLMON, OKLA.\nDICK CLARK, IOWA\nJESSE HELMS, N.C.\nUnited States Sena\nCOTYS M. MOUSER, CHIEF CLERK\nCOMMITTEE ON\nAGRICULTURE AND FORESTRY\n43\nSignab HR\nWASHINGTON, D.C. 20510\nHAND DELIVERED\nApril 24, 1975\nThe President\nThe White House\nWashington, D.C.\nDear Mr. President:\nI wish to urge you to sign into law H.R. 4296, the Emergency\nme\nFarm bill. This legislation is desperately needed to provide\nAlabama and other farmers throughout our nation with the\nmost minimum of income protection.\nFarm costs, since 1972, have risen by 35 percent. Alabama\nfarmers have been selling their cotton since the first of\nthis year for well below the cost of production. Many of\nthese same farmers have been suffering from extremely low\ncattle prices these past several months and, more recently,\nhave seen prices drop precipitously for their soybeans,\ncorn or wheat.\nMr. President, American farmers are among the hardest\nworking, most productive people, in our nation. We must\nalso remember what it is that our American family farm\nsystem produces, namely, food and fiber, the most basic\nof products relating to human needs.\nConsidering these factors, Mr. resident, I ask you not\nto turn your back on our nation's farm families. I urge\nyou instead to acknowledge the great contribution that\nthese good citizens continue to make to our nation's\nhealth and well-being, and sign into law H.R. 4296. A\nveto of this emergency legislation will have a deep and\ndemoralizing effect on our nation's farmers--and on those\nwho finance them!\nMr. President, Americans recently have been called upon,\nonce again, to provide tremendous additional funds to aid\nthe people of Vietnam. The generosity of the American people\nThe President\nPage Two\nApril 24, 1975\nin this regard over the years has been almost limitless.\nSurely, they would not want their government to turn its\nback now on its own farmers, especially when the probable\ncosts that might be involved are so modest.\nMr. President, on behalf of the farm families of Alabama\nand myself, I urge you to sign into law H.R. 4296. By\ndoing so you will also greatly insure that both this nation\nand much of the world can look forward to a return to food\nand fiber abundance during this next year.\nWith best wishes.\nRespectfully submitted,\nJanes. James B. Allen allen\nJBA/pf\nApril 25, 1975\nDear Senator:\nThis is to acknowledge and thank you for your\nletter to the President urging that he approve\nand sign into law B.R. 4296, the Emergency Farm\nBill.\nI have made suro that your letter was called to\nthe attention of the President, and he appreci-\nates and understands your concerns. However,\nI believe his decision was already made.\nwith kind regards,\nSincerely,\nWilliam T. Kendall\nDeputy Assistant\nto the President\nfarmbill\nfor\nThe Honorable Strom Thursend\nUnited States Senate\nWashington, D.C. 20510\nbee w/ine to Max Priedersderf - FYI\nbee w/ine to Jim Cannon - FYI\nWTK:EF:jk\nFORD is LIBRARY STUDIE\nJAMES O. EASTLAND, MISS., CHAIRMAN\n4. 24\nJOHN L. MC CLELI AN, ARK.\nROMAN L. HRUSKA, NEBR.\nPHILIP A. HART MICH.\nHIRAM L. FONG, HAWAII\nEDWARD M. KENNEDY, MASS.\nHUGH SCOTT, PA.\n:-\nEARCH BAY IND.\nSTROM THURMOND, S.C.\nQUENTIN N. BURDICK, N. DAK.\nCHARLES MC C. MATHIAS, JR.. MD.\nROBERT C. BYRD, W. VA.\nWILLIAM L. SCOTT, VA.\nUnited States Senate\nJOHN V. TUNNEY, CALIF.\nJAMES ABOUREZK, S. DAK.\n14R\nPETER M. STOCKETT\nCOMMITTEE ON THE JUDICIARY\nCHIEF COUNSEL AND STAFF DIRECTOR Nign\nWASHINGTON, D.C. 20510\nApril 22, 1975\nThe President\nThe White House\nWashington, D.C.\nDear Mr. President:\n\"\"\nAs you know, the Senate approved the Conference Report on\nH.R. 4296, the Emergency Price Supports Farm Bill, on\nApril 17, 1975, and it is my understanding that the House\nhas today cleared that measure for your consideration.\nIt is my sincere hope that you will sign this bill. I\nfind the version finally approved by Congress to be most\nreasonable for farmers and consumers alike. In fact, I am\ndisappointed that it does not go far enough to meet the\ncritical needs of Southeastern cotton farmers and does nothing\nto address the worsening cost-price squeeze facing tobacco\nproducers. Nevertheless, the farm communities in my region\nwill welcome the modest relief afforded by this legislation.\nOn the other hand, they will be bitterly disappointed if you\ndecide to veto this bill.\nMr. President, I have previously emphasized to you (in my\nletter of March 14, 1975) the necessity of your Administration\ndoing all it can to meet the legitimate needs of the Agricultural\ncommunity. I reiterate that deep concern to you now and urge,\nin the strongest possible terms, that you approve this emergency\nfarm legislation.\nWith kindest regards and best wishes,\nRespectfully,\nstrom Thurmond\nStrom Thurmond\nST/ed\nApril 25, 1975\nDear Senator:\nThis is to acknowledge and thank you for your\nletter to the President urging that he approve\nand sign into law H.R. 4296, the Emergency Farm\nBill.\nI have nade sure that your letter was called to\nthe attention of the President, and he appreci-\nates and understands your concerns. However,\nI believe his decision was already made.\nWith kind regards,\nSincerely,\nWilliam T. Kendall\nDeputy Assistant\nto the President\nFortarm Beel\nThe lienorable Dewey F. Bartlett\nUnited States Senate\nWashington, D.C. 20510\nbee.w/ine to Max Friedersdorf - FYI\nbee w/ine to Jim Cannon - FYI\nWTK:EP:jk\nFORD is GIVENO LIBRARY\n4-2-4\nGAYLORD NELSON, WIS., CHAIRMAN\nJOHN SPARKMAN, ALA.\nJACOB K. JAVITS, N.Y.\nTHOMAS MCINTYRE, N.H.\nJ. GLENN BEALL, JR., MD.\nSAM NUNA, GA.\nWILLIAM V. ROTH, JR., DEL.\n3. BENNETT JOHNSTON, LA.\nBILL BROCK, TENN.\n4296\nWILLIAM D. HATHAWAY, MAINE\nLOWELL P. WEICKER, JR. CONN.\nJAMES ABOUREZK, S. DAK.\nDEWEY F. BARTLETT, OKLA,\nFLOYD K. HASKELL, COLO.\nPAUL LAXALT, NEV.\nDICK CLARK, IOWA\nHR\nUnited States Senate\nWALTER F. MONDALE, MINN.\nSELECT COMMITTEE ON SMALL BUSINESS\nWILLIAM B. CHERKASKY, STAFF DIRECTOR\nRAYMOND D. WATTS, GENERAL COUNSEL\n(CREATED PURSUANT TO S. RES. 58, 81ST CONGRESS)\nWASHINGTON, D.C. 20510\nApril 23, 1975\nThe Honorable Gerald R. Ford\nPresident of the United States\nThe White House\nWashington, D.C.\nDear Mr. President:\nme\nI respectfully urge you to reconsider your intention to veto the\nEmergency Farm Bill, H.R. 4296. I recognize and support your efforts\nto hold down inflationary spending, but I believe the present\neconomic uncertainties faced by agriculture pose a greater danger\nthan the budget increase that would accompany this measure.\nAs you may know, the cost of production for our farmers has increased\nan alarming thirty-five percent in the last two years, resulting in\na major decline in farm income last year, and projections for further\ndecline this year. The consumer's cost of farm-produced foods has\nincreased, but higher prices certainly cannot be attributed to\nfarmers. This is evidenced by a fifteen percent increase in the\ndifference between prices paid to farmers, and prices paid by con-\nsumers, from the fourth quarter of 1973 to the fourth quarter of 1974.\nIt should be obvious that American farmers have already made great\nsacrifices due to inflation. I believe it would be unfair to ask\nfor the additional sacrifice implied by a veto of this legislation.\nAs America's largest and most important industry, agriculture will\nplay an increasingly vital role in the nation's progress toward\neconomic recovery. To guarantee full production, we must assure\nfarmers of a fair return on their investment. The emergency farm\nbill offers this assurance, and again, I respectfully urge you to\ngive H.R. 4296 further consideration.\nSincerely,\nDenry 7. Bartlett\nDewey F. Bartlett\nU.S. Senate\nOKLAHOMA\nDFB/jaj\nEXECUTIVE OFFICE OF THE PRESIDENT\nOFFICE OF MANAGEMENT AND BUDGET\nWASHINGTON, D.C. 20503\nAPR 2 y 1975\nMEMORANDUM FOR THE PRESIDENT\nSubject: Enrolled Bill H.R. 4296 - Farm commodity price\nsupports\nSponsor - Rep. Foley (D) Washington and 24 others\nLast Day for Action\nMay 5, 1975 - Monday\nPurpose\nIncreases target prices and loan and purchase levels on the\n1975 crops of cotton, corn, wheat, and soybeans while\nproviding price support for milk at 80 percent of parity\nwith quarterly adjustments through March 31, 1976.\nAgency Recommendations\nOffice of Management and Budget\nDisapproval\nDepartment of Agriculture\nDisapproval (Veto\nMessage attached)\nDepartment of State\nDisapprova[(Informally\nDepartment of the Treasury\nDisapproval\nCouncil of Economic Advisers\nDisapproval\nCouncil on Wage and Price Stability\nDisapproval\nDiscussion\nUnder the current law, farm producers of wheat, feed grains\n(primarily corn), and cotton are eligible for Federal support\nin three ways:\n-- Producers may borrow funds using these commodities\nas collateral at the lowest current Treasury interest\nrate (presently 6.125%). If they desire, they may\n2\nforfeit this collateral in lieu of repaying the loan.\nThe present loan levels (noted below) for wheat and\ncorn are statutory floors which can be raised\nadministratively, but cannot be lowered or eliminated.\nHowever, present law requires that cotton loan levels\nbe set at 90% of the 3-year average world price. In\nthe case of soybeans, the Secretary has administrative\ndiscretion to have a loan program and to establish the\nlevel for such loans - - soybean loan programs have\nbeen in effect for many years, but were terminated\nfor the 1975 crop.\n-- If market prices over a specified period of time\naverage below the \"target\" price, producers receive\na payment equal to the difference. These target\nprices are established in law as noted below.\n-- If because of a natural disaster a producer is unable\nto harvest a normal crop, he is eligible for a payment\nequal to 1/3 of the target price.\nIn addition, the statutory floor for the support price of milk\nis not less than 75 percent of the parity price, although on\nJanuary 3, 1975, the Administration announced that milk would\nbe supported at 80 percent of the December 1974 parity price\nthrough March 31, 1976 ($7.24/cwt).\nH.R. 4296 would increase loan and target prices for only the\n1975 crop as follows:\nLOAN LEVELS\nTARGET PRICES\nPresent\nH.R. 4296\nPresent\nH.R. 4296\nWheat\n$/bu.\n$1.37\n$2.50\n$2.05\n$3.10\nCorn\n$/bu.\n$1.10\n$1.87\n$1.38\n$2.25\nCotton\n$/lb.\n$0.34\n$0.38\n$0.38\n$0.45\nSoybeans $/bu.\n$ -0-\n$3.94\n$ -0-\n$ -0-\nThe enrolled bill would also provide price support for milk\nat not less than 80 percent of parity with quarterly adjustments\nto reflect changes in the index of prices paid by farmers for\nproduction items, interest, taxes, and wage rates.\n3\nThe Department of Agriculture estimates that H.R. 4296\nwould increase fiscal year 1976 outlays by approximately\n$1.8 billion:\n-- Of this amount $500 million would be in the form\nof direct payments. Over $300 million would go\nto cotton producers because cotton prices are\nalready below the current target price.\n-- Loans to producers would increase by about $1.3 billion\nlargely because of the increase in the loan rate and\nthe attractive interest rate. Most of these loans\nwould eventually be repaid unless market prices fell\nto these levels. (This could easily happen in the\ncase of cotton because the bill's new loan levels\ngive cotton a competitive advantage over soybeans\nin terms of net profit per acre, and thus encourages\na shift from soybean to cotton production).\n-- There would be some increase, about $30 million, in\ndairy purchases.\nIn reporting to the Agriculture Committees in the House and\nSenate, Agriculture vigorously opposed enactment of H.R. 4296\non the grounds that it would: (a) be far too costly;\n(b) undesirably substitute government intervention for\nmarketplace incentives as a guide for farm production;\n(c) inevitably price U.S. farm commodities out of world\nmarkets; (d) lead to Federal production controls; and\n(e) produce higher consumer prices. Agriculture further\nadvised the Congress that enactment would not be in accord\nwith the President's program.\nHowever, in its report on H.R. 4296, the House Agriculture\nCommittee argued that:\n\"Because of the tremendous increase in the cost of\nproduction of agricultural commodities, the legislation\nenacted in 1973 no longer affords the protection to the\nproducer that is necessary to insure maximum production.\nAccording to Department of Agriculture figures, farm\nproduction expenses, at $74.8 billion for 1974 were up\n$10 billion from 1973. Prices paid for production\nitems, interest, taxes, and wage rates jumped 15 percent\n4\nlast year. A huge cost increase occurred for fertilizer\nas prices averaged some 70 percent above 1973. Fuel\nprices also zoomed upward, resulting in much higher\noutlays by farmers. Seed prices, reflecting tight\nsupplies, were up one-third. This increase in production\nexpenses offset a gain in gross income and resulted in a\ndrop of $5 billion in realized net farm income from 1973.' \"\nH.R. 4296 originally passed in the House by 259-162 and a\nmore costly version passed in the Senate by 57-25. The\nConference report was approved in the House by 248-166 and by\nvoice vote in the Senate.\nWe strongly concur in Agriculture's analysis and veto\nrecommendation. In summary, the unacceptable features of\nH.R. 4296 are:\n-- It contradicts established Administration policy\nof maximum use of the marketplace.\n--- It threatens to add $1.8 billion to budget outlays\nin 1976.\n-- It is certain to be used as the point of departure\nfor longer term legislation which will undermine\nmarket-oriented policy and further escalate farm\nprogram expenditures in subsequent years.\n- It could hold U.S. prices above world levels\nand make the U.S. a residual supplier, thereby\nreducing foreign exchange earnings.\n- It will almost inevitably force the Government\nonce again to impose production controls.\n- It will undoubtedly (because of production\ncontrols) result in substantial increases in\nfood costs.\nA draft Veto Message, representing a revision of the one\nsubmitted by Agriculture, has been prepared by this Office\nand forwarded separately for your consideration.\nJa Director L.Ly\nEnclosures\nEXECUTIVE OFFICE OF THE PRESIDENT\nCOUNCIL ON WAGE AND PRICE STABILITY\nWASHINGTON, D.C. 20506\nApril 24, 1975\nMr. J.F.C. Hyde, Jr.\nActing Assistant Director for\nLegislative Reference\nOffice of Management and Budget\nWashington, D.C. 20503\nDear Mr. Hyde:\nThis is in reply to your request for our views on H.R. 4296,\nan enrolled bill to increase target prices and loan levels\non certain agricultural commodities. In our judgment, this\nbill contains several highly objectionable provisions.\nThe most objectionable feature of the bill is the increase\nin target prices and loan levels for cotton. The surplus\nof cotton is already very large, while food stocks are at\nlow levels and need rebuilding to insure against future\ninflationary price rises. Higher prices for cotton would\ndivert acreage from badly needed food crops, especially\nsoybeans, into cotton.\nWe also object to the mandatory 80 percent of parity support\nprice for milk. Although the support price is currently at\nthis level, large and potentially burdensome stocks of dairy\nproducts are being accumulated. The Secretary of Agriculture\nshould be free to lower the support price to 75 percent as\npermitted by existing law if stocks continue to accumulate.\nThe increased target prices and loan rates for grains and\nthe new loan rate for soybeans are unlikely to have much\nimpact in 1975, unless there is a very large crop and weak\nexport demand. However, they would set a very bad precedent\nfor 1976, since it is unlikely that Congress would permit\nthese levels to decrease. In the event of two successive\ngood crops, the impact on the Federal budget and on food\nprices to consumers could be substantial. We would neverthe-\nless favor some increase in the loan levels for grains based\non increases in production costs other than land costs.\nSuch increases in loan levels could serve to encourage\n2\nmaximum production. In the event of two successive good\ncrop years, they might lead to some Government acquisition\nof stocks, but such stocks might be useful in averting\nsharp price rises in subsequent years.\nWe strongly recommend that the President veto H.R. 4296 on\nthe grounds that it would raise the price of food, curtail\nfood production, and contribute to inflation.\nSincerely yours,\nCelbert Rees\nAlbert Rees\nDirector\nTHE CHAIRMAN OF THE\nCOUNCIL OF ECONOMIC ADVISERS\nWASHINGTON\nApril 24, 1975\nDear Mr. Frey:\nThis is in response to your request for the Council =\nEconomic Advisers' views on H.R. 4296, which adjusts target\nprices, loan and purchase levels on the 1975 crops of certain\nagricultural crops and contains additional provisions for the\nprice support of milk. The Council strongly recommends that\nthe President veto this bill. If signed into law it promises\nto be the first step in a return to the discredited farm\nprograms of the past. It will raise the floor under farm\nprices, with the potential of raising food prices to consumers\nand pricing us out of the world market for some agricultural\ncommodities. Moreover, it is not in the best interest of U.S.\nlivestock producers, and will raise budget outlays by an\nestimated $1.8 billion on the 1976 budget.\nART Alan Greenspan\nSincerely,\nMr. James Frey\nAssistant Director for\nLegislative Reference\nOffice of Management and Budget\nWashington, D.C. 20503\nLUTION\nBICENTENNIAL\n76-1976\nSTATE MITED DEPARTMENT ) / ANTITITY SENTITURE\nDEPARTMENT OF AGRICULTURE\nOFFICE OF THE SECRETARY\nWASHINGTON, D. C. 20250\nHonorable James T. Lynn\nApril 24, 1975\nDirector, Office of\nManagement and Budget\nDear Mr. Lynn:\nThis report is submitted on enrolled bill H.R. 4296, \"To adjust target\nprices, loan and purchase levels in the 1975 crops of upland cotton,\ncorn, wheat and soybeans, to provide price support for milk at\n80 percentum of parity with quarterly adjustments for the period\nending March 31, 1976, and for other purposes\".\nThe Department recommends that the President veto the bill.\nThis 1-year \"emergency\" farm bill will add $1.8 billion to government\noutlays for the 1975 crop alone, besides forming the basis for much\ngreater costs in future years.\nThe bill, if approved, will create a greater financial hardship next\nyear--not only on the Federal budget, but also for taxpayers, farmers\nand consumers through increased costs. The higher target prices\nin H.R. 4296 will undoubtedly become the base in 1976 and 1977 for\nthe application of the target price escalator clause contained in\nthe Agriculture and Consumer Protection Act of 1973.\nThe loan and target prices in H.R. 4296 will encourage production\nfor an artificial market, i.e., the government, rather than for the\nreal market, thus reversing the policy direction embodied in the\nagricultural price support legislation of 1970 and 1973.\nA veto message is enclosed.\nSincerely,\nCampbell\nUnder Secretary\nEnclosure\nTo the House of Representatives:\nThere comes a time in the conduct of public affairs when special interest\nand political advantage must give way to the common good.\nThere comes a time when a line must be drawn against fiscal excesses.\nIn my address to the Nation on March 29, I drew that line. I promised\nall Americans that except where long-range national security interests are\ninvolved, or for urgent humanitarian need, I would take action to hold our\nfiscal 1976 deficit to no more than $60 billion.\nNew spending actions which the Congress is seriously considering could easily\nraise the Federal deficit to a wholly unacceptable level of $100 billion.\nThe so-called Emergency Agricultural Act of 1975 (H. R. 4296) is one\nof these spending actions. It could add an estimated $1. 8 billion to the\nFederal deficit in its first year, and, if used as a point of departure for\nlonger-term legislation, as strongly indicated by recent congressional\naction, it could sharply escalate farm program budget outlays in subsequent\nyears.\nBy signing this Act into law, I would not be holding the line on our fiscal\n1976 deficit. My signature would undermine the successful market-oriented\nfarm policy adopted by this Administration and the Congress. It would\nrepresent a step backward to the discredited and long since abandoned\npolicies of a decade ago.\nTherefore, I am returning H.R. 4296 without my approval.\nFarm production costs have been pushed upward by the same inflationary\npressures that have affected other industries. At the same time, demand\nfor certain farm products has slackened due to recession. The index of\nprices paid by farmers has increased 10 percent above year-ago levels.\nIn contrast, the index of prices received by farmers has declined for the\npast five months, and is now 15 percent below year-earlier levels.\nCotton and livestock producers, in particular, have been hard hit.\n- 2 -\nTo help relieve these economic difficulties, I am today directing the\nSecretary of Agriculture to take action to increase price support loan\nrates for wheat, corn and other feed grains.\nThis action follows a number of positive steps by this Administration\nto assist farmers. The 1976 wheat acreage allotment was recently increased\nto 61.6 million acres, up 8 million acres from the 1975 allotment. This\nprovides additional target price and disaster protection for wheat producers.\nAs provided for by current legislation, we have increased the 1975-crop\ncotton price support loan rate by 9 cents per pound.\nWe recently announced an increase in the price support level for milk,\nwhich, combined with more favorable feed prices, should improve the\nincome situation for dairy producers.\nWithin the past several days we have completed arrangements with the\nEuropean Community under which they agreed to cease exporting industrial\ncheese into the U.S. market with the aid of export subsidies. We have\nimpressed upon the Europeans that they cannot expect to dump their sur-\nplus dairy products into the U.S. market at cut-rate prices. At the same\ntime we have worked out a way which enables the Europeans to continue\nselling us high quality table cheese. This was a satisfactory solution\nto a difficult problem. It has enabled us to keep on satisfactory trading\nterms with our best export customer for American farm products.\nWe have taken action to protect our cattle producers against a potential\nflood of beef imports from abroad. The Department of State is about to\ncomplete negotiations with 12 countries limiting their exports of beef to\nthis country in 1975. These voluntary export restraint agreements are\nintended to keep imports subject to the Meat Import Law within 1, 182\nmillion pounds.\nWe have moved aggressively in the past several months to implement\nfood assistance programs under the Agricultural Trade Development and\nAssistance Act (P.L. 480). The volume exported under this program is\n- 3 --\nexpected to reach nearly 5.5 million tons of food in this fiscal year,\nincluding 4 million tons of wheat. This will be 70 percent higher than a\na year ago. Wheat shipments will be more than double last year's level.\nFurther liberalization of world agricultural trade is one of our prime\nobjectives at the multilateral trade negotiations which have just begun in\nGeneva.\nIn addition to these actions, producers deserve all possible help through\nexisting Government programs for the extension of credit and other forms\nof financial assistance. But, primarily, the answer to their difficulties\nlies in prompt, responsible actions by this Government in dealing with\nrecession and inflation.\nIn contrast to the development of current legislation--the Agriculture and\nConsumer Protection Act of 1973--which was the result of considerable\nthought and study, H.R. 4296 was hastily conceived with a minimum of\nhearings and without sufficient opportunity for consumers and taxpayers\nto have a voice in its preparation. As the name of the bill implies, it\nwas prepared in an attempt to redress an \"emergency\" situation in the\nfarm sector by means of excessive and inconsistent increases in the price\nsupport levels for wheat, feed grain, cotton and soybeans. Many farmers\noppose this bill. Its passage is not supported by two of the nation's largest\nfarm organizations--The American Farm Bureau Federation and The\nNational Farmers Union.\nFarmers have made their plans, bought their seed and many are well into\ntheir planting season. These plans have obviously been completed without\nany dependence on the \"quick fix\" envisioned by the authors of H.R. 4296.\nThe direct effect on consumer prices in the next year would be small.\nHowever, the long-range effect of this bill would tend to push both consumer\nprices and federal budget outlays higher, making our fight against inflation\nmore difficult.\nThis bill would ultimately lead to paying farmers not to grow crops,\n- 4 -\nresulting in loss of jobs in food-related industries because of cutbacks\nin farm production. It would induce farmers to grow more cotton, which\nis already in surplus, and less soybeans, which are needed for food. The\nbill would jeopardize the competitive position of U.S. cotton in world markets,\nand would create a price umbrella for farmers in other nations who compete\nwith U.S. farmers, leading to deterioration of our international trade position.\nOur farmers have responded magnificently during the past several years\nin the production of food and fiber. This has made agriculture our number\none earner of foreign exchange. Most farmers are again going for all-out\nproduction this year. They are responding well under very trying cir-\ncumstances. They deserve and will receive my support for a vigorous\nexport policy for their products. Last year we unfortunately had to ask one\nof our new customers to curtail its purchases of American grains. For\na short time we also operated a voluntary prior approval system for export\nsales of grains and soybeans. We do not intend to resort to either of\nthese measures again. Our farmers deserve and will receive unfettered\naccess to world export markets.\nCurrent farm legislation is working successfully. In spite of the financial\ndifficulties many farmers are experiencing, farm exports, farm operators'\nnet income - in total - and total farm cash receipts are at near-record\nlevels. The government is out of the farming business, and should stay\nout, leaving the farmer free to earn his income from the marketplace,\nnot from the Federal Treasury.\nThe Act that I am vetoing is anti-consumer, anti-farmer, anti-taxpayer\nand anti-humanitarian:\n--It is anti-consumer because it will result in unwanted crops, produced\nfor Government storage instead of for the demands of the marketplace.\n--It is anti-farmer because it will inevitably price U.S. farm commodities\nout of world markets and lead to production cutbacks, which, in turn,\n- 5 -\nwill make our farms less efficient by spreading fixed costs over fewer\nproducing acres.\n--It is anti-taxpayer because the potential price-tag would run into billions\nof dollars a year for deficiency payments to farmers, for paying farmers\nnot to grow crops, for export subsidies, for crop loans, and for the\nstorage of huge inventories of government-owned or government-controlled\nfarm commodities.\n--It is anti-humanitarian because once our export markets are lost and\nour farmers are denied the profits of full production, then world\nconsumers will face higher food costs brought about by reduced world\nsupplies.\nBy signing this Act into law, I would take economic independence away\nfrom farmers on the one hand, and, on the other, burden taxpayers with\nmassive, accelerating Federal expenditures.\nTHE WHITE HOUSE\nWASHINGTON\nApril 29, 1975\nMEMORANDUM FOR\nWARREN HENDRIKS\nFROM:\nJUDY JOHNSTON\nSUBJECT:\nAg Veto Message\nBob Hormats requested that two more changes be made to\nthe message.\n-- p.3 2nd paragraph, 2nd line. \"with the European\nCommunity to remove (rather than \"end\" ) the export\n-- p.4 2nd paragraph, 6th line, after sentence ending\nproducts. Add \"It is our policy to do everything\npossible to avoid the use of export restraints in the\nfuture.\"\nTHE WHITE HOUSE\nWASHINGTON\nApril 28, 1975\nMEMORANDUM FOR THE STAFF SECRETARY\nFROM:\nMAX L. FRIEDERSDORF m.b.\nSUBJECT:\nVeto Message - H.R.4296 the Emergency Agricultural\nAct of 1975.\nI recommend the substance of 2A be retained.\nAlthough I believe a veto can probably be sustained without\nraising the loan rates, failure to do so will erode our strength\nto a dangerous level.\nA whip check of hardcore support late today without raising the\nloan rates, shows us with 153 votes, only 8 above our 145 needed\nto sustain.\nSeventy votes against the bill were Democrats, and many will be\nsusceptible to switching against us if the vote is close.\nIt is my understanding that the loan rate increases recommended\nby Secretary Butz would be well below the market structure, and\nnot affect outlays.\nI believe the loan rate increase would insure a large Presidential\nvictory on the veto and should be included in the message.\nTI\n[4/29/75]\n#\nWe came up with a solution\nthe\nthat recognizes\nthe farmers problem but makes no commitment\nto the expenditure of other Federal Funds\nYour message might include the following\nlanguage:\nTHE WHITE HOUSE\nWASHINGTON\nApril 29, 1975\nMEETING ON FARM VETO MESSAGE\nTuesday, April 29, 1975\nThe Cabinet Room\n5:00 p.m.\nFrom: Jim Cannon\nI.\nPURPOSE\nTo review and obtain your concurrence on a\nresponse to a new development related to your\nFarm Veto Message.\nII.\nBACKGROUND, PARTICIPANTS AND PRESS PLAN\nA. Background\nYou recently reviewed Bill Seidman's option\npaper of April 24 on Farm Bill Alternatives (Tab A)\nand decided to veto the bill and not do anything\nabout the loan levels.\nUnfortunately yesterday we learned that there\nis a misconception on the Hill that you are\ngoing to couple your veto with some kind of\naction on loan levels.\nMax Friedersdorf and Secretary Butz report that\nthere would be a serious risk that a veto would\nbe overriding if a veto message makes no mention\nof loan levels. Max's latest vote count to\nsustain a veto shows:\n52 Democrats\n103\nRepublicans\n155 Total\nWe might pick up as many as 18 votes that are\nnow uncommitted; but we could lose a substantial\nnumber of the Democrats if the caucus makes a\nstrong effort to override.\n-2-\nIn view of this new development, Max Friedersdorf,\nEarl Butz, Bill Seidman, Jack Marsh, Jim Lynn and\nI met this morning to discuss this problem. We\ncame up with a solution that recognizes the farmers\nproblem but makes no commitment to the expenditure\nof other Federal Funds\nYour message might include the following\nlanguage:\nTo guard against any possible adverse\neconomic effects from further price\ndeterioration, I am directing the Secretary\nof Agriculture to be prepared to make de-\nsirable adjustments in price support loan\nrates for wheat, corn, and other feed\ngrains.\nMax and Earl Butz are reasonably certain that a\nveto can be sustained if this language is\nincluded.\nIII\nPARTICIPANTS\nThe Vice President\nPaul O'Neill\nSecretary Butz\nJim Cannon\nCounsellor Hartmann\nBill Seidman\nCounsellor Marsh\nDon Rumsfeld\nMax Friedersdorf\nAlan Greenspan\nJim Lynn\nIV\nPRESS PLAN\nTo be announced\nApril 29, 1975\nTo the House of Representatives:\nI am returning without my approval H.R. 4296, referred\nto as the Emergency Agricultural Act of 1975. Although the\nCOSTLY 4 TO\naim of this bill is laudable, its results would be counter\nthe\nCONSUMERS\nAND\nDAMAGING\nTD\nproductive for farwers, other taxpayers, and for America's\neconomic recovery and world market position.\nThe bill would remove a considerable amount of economic\nindependence from farmers while burdening consumers with\nhigher prices and boosting the already overly-inflated\nFederal deficit\nApproval of this bill would, therefore, not be in the\npublic interest.\nIn the conduct of the Government's fiscal affairs, a line\nmust be drawn against excesses. I drew that line in my address\nto the Nation on March 29. I promised all Americans that,\nexcept where long-range national security interests, energy\nmatters, or urgent humanitarian needs were involved, I would\ntake action to hold our fiscal year 1976 deficit to no more\nthan $60 billion.\nNew spending programs which the Congress is considering\ncould easily raise the Federal deficit to an intolerable level\nof $100 billion. This must not happen.\n- 2 -\nIncreased\nH.R. 4296 is an example of spending\nWHIN\nis\nNOT\nissential\nprogram. In fiscal year 1976, it could add an estimated $1.8\nbillion to the Federal deficit. If used as a point of departure\nfor longer-term legislation -- as was strongly indicated during\nits consideration --- it could lead to an escalation of farm\nprogram subsidies in succeeding years.\nApproval of this bill would undermine the successful\nmarket-oriented farm policy adopted by this Administration\nand the Congress. It is a step backward toward totally\ndiscredited policies.\nProspects for farmers, it is true, are not as bright\nthis year as in the recent past. Farm production costs have\nbeen pushed upward by the same inflationary pressures that\nhave affected other industries. At the same time, demand for\ncertain farm products has slackened because of the recession.\nThis Administration recognizes farmers have financial\ndifficulties due to this cost-price squeeze and has taken a\nnumber of positive steps to assist farmers. The 1976 wheat\nacreage allotment was recently increased by 8 million acres\nto 61.6 million acres. This action provides wheat producers\nwith additional target price and disaster protection. We\nhave also increased the 1975 crop cotton price support loan\nrate by 9 cents a pound. And we recently announced an\nincrease in the price support level for milk, which, combined\nwith easing feed prices, should assist dairy producers.\n- 3 -\nWithin the past several days, we have completed negotiations\nwith the European Community to remove the export subsidies on\nindustrial cheese coming here -- a step that ensures that surplus\ndairy products will not be sold in the U.S. market at cut-rate\nprices. At the same time, we have worked out arrangements\nwhich enable the Europeans to continue selling us high-quality\ntable cheese. This solution has enabled us to keep on mutually\nagreeable trading terms with out best customers for American\nfarm exports.\nWe have also taken action to protect our cattle producers\nagainst a potential flood of beef imports from abroad. The\nDepartment of State is completing negotiations with 12 countries\nlimiting their 1975 exports of beef to this country. These\nvoluntary export restraint agreements are intended to keep\nimports subject to the Meat Import Law to less than 1, 182\nmillion pounds.\nIf any unforeseen price deterioration calls for such\naction, I am directing the Secretary of Agriculture\nbe\nprovided to make desirable adjustments in price support loan\nrates for wheat, corn, feed grains. It is our\nsuy bed other\nexpectation, however, that market prices for grains will\nremain well above loan rates and target prices in the coming\nyear.\n- 4 -\nIn contrast to the development of the Agriculture and\nConsumer Protection Act of 1973 -- which was the result of\nconsiderable thought and study -- H.R. 4296 was hastily con-\nceived with inadequate hearings and without sufficient oppor-\ntunity for consumers and baxpayers to have a voice in its\npreparation.\nMost farmers have already made their plans and bought\ntheir seed. Many are well into their planting season. These\nplans have obviously been completed without any dependence\non the provisions of H.R. 4296.\nIn the long haul, this bill ultimately would lead to\nconstraints on production, resulting in loss of jobs in\nfood-related industries. It would induce farmers to grow\nmore cotton --- already in surplus -- and less soybeans ---\nneeded for food. The bill would jeopardize the competitive\nposition of our cotton in world markets.\nAmerican farms have responded magnificently during the\npast several years to produce food and fiber for this Nation\nand the world. This has made agriculture our leading source\nof foreign exchange. This year, despite very trying circum-\nstances, most farmers are again going for all-out production.\nThey have my support for a vigorous export policy for their\nproducts. recognize that agricultural exports have been\nWe have are deinvoid all\n- 5 - restruction an exports and И\nrestrained twice in the past two years. nw are determined\nnot to have chem again.\nto de everything possible to avoid resorting to such restraints\nin the future. Our farm products must have unfettered access\nto world markets.\nThe act, in short, is anti-consumer, anti-farmer, anti-\ntaxpayer, and even anti-humanitarian:\n-It is anti-consumer because it would cause higher\nprices and result in crops produced for Government storage\ninstead of for the demands of the marketplace.\n--It is anti-farmer because it would price our farm\ncommodities out of world markets, and lead to cutbacks in\nproduction.\n--It is anti-taxpayer because of the potential cost of\nsubsidies for export purposes, for crop loans, for storage\nof inventories of Government-controlled farm commodities,\nand for not growing crops.\n--It is anti-humanitarian because once our export\nmarkets are cut and our farmers are denied the profits of\nfull production, then consumers in a world stalked by hunger\nwould face higher food costs caused by reduced world supplies.\nI cannot in good conscience, approve this act.\nI return it herewith.\nthis Administration will act to insure\nthe of armer his of in shar IT will\nnot act to aislort his married we\nmust hold the hudget line of we a\nare properous, stable, non flationary\nall to enjoy the benefit of\nApril 29, 1975\nTo the House of Representatives:\nI am returning without my approval H.R. 4296, referred\nto as the Emergency Agricultural Act of 1975. Although the\nCOSTL 10\naim of this bill is laudable, its results would be counter\n#\nCONSUMERS\nAND\nDAMAGING TO\nproductive for farmers, other taxpayers, and for America's\neconomic recovery and world market position.\nThe bill would remove a considerable amount of economic\nindependence from farmers while burdening consumers with\nhigher prices and boosting the already overly-inflated\nFederal deficit.\nApproval of this bill would, therefore, not be in the\npublic interest.\nIn the conduct of the Government's fiscal affairs, a line\nmust be drawn against excesses. I drew that line in my address\nto the Nation on March 29. I promised all Americans that,\nexcept where long-range national security interests, energy\nmatters, or urgent humanitarian needs were involved, I would\ntake action to hold our fiscal year 1976 deficit to no more\nthan $60 billion.\nNew spending programs which the Congress is considering\ncould easily raise the Federal deficit to an intolerable level\nof $100 billion. This must not happen.\n- 2 -\nIncreased\nH.R. 4296 is an example of\nspending\nWHICH\nis\nessential\nprogram. In fiscal year 1976, it could add an estimated $1.8\nbillion to the Federal deficit. If used as a point of departure\nfor longer-term legislation -- as was strongly indicated during\nits consideration -- it could lead to an escalation of farm\nprogram subsidies in succeeding years.\nApproval of this bill would undermine the successful\nmarket-oriented farm policy adopted by this Administration\nand the Congress. It is a step backward toward totally\ndiscredited policies.\nProspects for farmers, it is true, are not as bright\nthis year as in the recent past. Farm production costs have\nbeen pushed upward by the same inflationary pressures that\nhave affected other industries. At the same time, demand for\ncertain farm products has slackened because of the recession.\nThis Administration recognizes farmers have financial\ndifficulties due to this cost-price squeeze and has taken a\nnumber of positive steps to assist farmers. The 1976 wheat\nacreage allotment was recently increased by 8 million acres\nto 61.6 million acres. This action provides wheat producers\nwith additional target price and disaster protection. We\nhave also increased the 1975 crop cotton price support loan\nrate by 9 cents a pound. And we recently announced an\nincrease in the price support level for milk, which, combined\nwith easing feed prices, should assist dairy producers.\n- 3 -\nWithin the past several days, we have completed negotiations\nwith the European Community to remove the export subsidies on\nindustrial cheese coming here --- a step that ensures that surplus\ndairy products will not be sold in the U.S. market at cut-rate\nprices. At the same time, we have worked out arrangements\nwhich enable the Europeans to continue selling us high-quality\ntable cheese. This solution has enabled us to keep on mutually\nagreeable trading terms with out best customers for American\nfarm exports.\nWe have also taken action to protect our cattle producers\nagainst a potential flood of beef imports from abroad. The\nDepartment of State is completing negotiations with 12 countries\nlimiting their 1975 exports of beef to this country. These\nvoluntary export restraint agreements are intended to keep\nimports subject to the Meat Import Law to less than 1,182\nmillion pounds.\nIf any unforeseen price deterioration calls for such\naction, I am directing the Secretary of Agriculture to be\nprepared to make desirable adjustments in price support loan\nrates for wheat, corn, and other feed grains. It is our\nexpectation, however, that market prices for grains will\nremain well above loan rates and target prices in the coming\nyear.\n- 4 -\nIn contrast to the development of the Agriculture and\nConsumer Protection Act of 1973 -- which was the result of\nconsiderable thought and study -- H.R. 4256 was hastily con-\nceived with inadequate hearings and without sufficient oppor-\n\"tunity for consumers and taxpayers to have a voice in its\npreparation.\nMost farmers have already made their plans and bought\ntheir seed. Many are well into their planting season. These\nplans have obviously been completed without any dependence\non the provisions of H.R. 4296.\nIn the long haul, this bill ultimately would lead to\nconstraints on production, resulting in loss of jobs in\nfood-related industries. It would induce farmers to grow\nmore cotton -- already in surplus -- and less soybeans --\nneeded for food. The bill would jeopardize the competitive\nposition of our cotton in world markets.\nAmerican farms have responded magnificently during the\npast several years to produce food and fiber for this Nation\nand the world. This has made agriculture our leading source\nof foreign exchange. This year, despite very trying circum-\nstances, most farmers are again going for all-out production.\nThey have my support for a vigorous export policy for their\nproducts. I recognize that agricultural exports have been\n- 5 -\nrestrained twice in the past two years. We are determined\nto do everything possible to avoid resorting to such restraints\nin the future. Our farm products must have unfettered access\nto world markets.\nThe act, in short, is anti-consumer, anti-farmer, anti-\ntaxpayer, and even anti-humanitarian:\n-It is anti-consumer because it would cause higher\nprices and result in crops produced for Government storage\ninstead of for the demands of the marketplace.\n--It is anti-farmer because it would price our farm\ncommodities out of world markets, and lead to cutbacks in\nproduction.\n--It is anti-taxpayer because of the potential cost of\nsubsidies for export purposes, for crop loans, for storage\nof inventories of Government-controlled farm commodities,\nand for not growing crops.\n--It is anti-humanitarian because once our export\nmarkets are cut and our farmers are denied the profits of\nfull production, then consumers in a world stalked by hunger\nwould face higher food costs caused by reduced world supplies.\nI cannot in good conscience, approve this act.\nI return it herewith.\nthis Administration will act to insure\nnot act to astort his marries we\nthe of armer his fair shaw 11 will\nmust hold the handget line of we a\nare all to the be fit of\nproperous, stabled nm flationary\neconomy.\nApril 29, 1975\n6:00 p.m. DRAFT\nTo the House of Representatives:\nI am returning without my approval H.R. 4296, referred\nto as the Emergency Agricultural Act of 1975. Although the\naim of this bill is laudable, its results would be costly\nto consumers and taxpayers, and damaging to America's economic\nrecovery and world market position.\nApproval of this bill would, therefore, not be in the\npublic interest.\nIn the conduct of the Government's fiscal affairs, a\nline must be drawn against excesses. I drew that line in\nmy address to the Nation on March 29. I promised all Americans\nthat, except where long-range national security interests,\nenergy matters, or urgent humanitarian needs were involved,\nI would take action to hold our fiscal year 1976 deficit to\nno more than $60 billion.\nNew spending programs which the Congress is considering\ncould easily raise the Federal deficit to an intolerable level\nof $100 billion. This must not happen.\nH.R. 4296 is an example of increased spending which is\nnot essential. In fiscal year 1976, it could add an estimated\n$1.8 billion to the Federal deficit. If used as a point of\ndeparture for longer-term legislation -- as was strongly\n- 2 -\nindicated during its consideration -- it could lead to an es-\ncalation of farm program subisdies in succeeding years.\nApproval of this bill would undermine the successful\nmarket-oriented farm policy adopted by this Administration\nand the Congress. It is a step backward toward totally\ndiscredited policies.\nProspects for farmers, it is true, are not as bright\nthis year as in the recent past. Farm production costs have\nbeen pushed upward by the same inflationary pressures that\nhave affected other industries. At the same time, demand for\ncertain farm products has slackened because of the recession.\nThis Administration recognizes farmers have financial\ndifficulties due to this cost-price squeeze and has taken a\nnumber of positive steps to assist farmers. The 1976 wheat\nacreage allotment was recently increased by 8 million acres\nto 61.6 million acres. This action provides wheat producers\nwith additional target price and disaster protection. We\nhave also increased the 1975 crop cotton price support loan\nrate by 9 cents a pound. And we recently announced an\nincrease in the price support level for milk, which, combined\nwith easing feed prices, should assist dairy producers.\n- 3 -\nWithin the past several days, we have completed\nnegotiations with the European Community to remove the export\nsubsidies on industrial cheese coming here -- a step that\nensures that surplus dairy products will not be sold in the\nU.S. market at cut-rate prices. At the same time, we have\nworked out arrangements which enable the Europeans to continue\nselling us high-quality table cheese. This solution has\nenabled us to keep on mutually agreeable trading terms with\nour best customers for American farm exports.\nWe have also taken action to protect our cattle producers\nagainst a potential flood of beef imports from abroad. The\nDepartment of State is completing negotiations with 12 countries\nlimiting their 1975 exports of beef to this country. These\nvoluntary export restraint agreements are intended to keep\nimports subject to the Meat Import Law to less than 1,182\nmillion pounds.\nIf any unforeseen price deterioration calls for such\naction, I am directing the Secretary of Agriculture to\nto make desirable adjustments in price support loan\nrates for wheat, corn, and other feed grains. It is our\nexpectation, however, that market prices for grains will\nremain well above loan rates and target prices in the coming\nyear.\n- 4 -\nMost farmers have already made their plans and bought\ntheir seed. Many are well into their planting season. These\nplans have obviously been completed without any dependence\non the provisions of H.R. 4296.\nIn the long haul, this bill ultimately would lead to\nconstraints on production, resulting in loss of jobs in\nfood-related industries. It would induce farmers to grow\nmore cotton -- already in surplus -- and less soybeans --\nneeded for food. The bill would jeopardize the competitive\nposition of our cotton in world markets.\nAmerican farms have responded magnificently during the\npast several years to produce food and fiber for this Nation\nand the world. This has made agriculture our leading source\nof foreign exchange. This year, despite very trying circum-\nstances, most farmers are again going for all-out production.\nThey have my support for a vigorous export policy for their\nproducts. I recognize that agricultural exports have been\nrestrained twice in the past two years. We are determined\nto do everything possible to avoid resorting to such restraints\nin the future. Our farm products must have unfettered access\nto world markets.\nThis Administration will act to ensure the farmer his\nfair share. It will not act to distort his market. We must\nhold the budget line if we are all to enjoy the benefit of a\nprosperous, stable, non-inflationary economy.\nI cannot approve this act. I return it herewith.\nTHE WHITE HOUSE\nWASHINGTON\nApril 29, 1975\nMEETING ON FARM VETO MESSAGE\nTuesday, April 29, 1975\nThe Cabinet Room\n5:00 p.m.\nFrom:\nJim Cannon\nI.\nPURPOSE\nTo review and obtain your concurrence on a\nresponse to a new development related to your\nFarm Veto Message.\nII.\nBACKGROUND, PARTICIPANTS AND PRESS PLAN\nA. Background\nYou recently reviewed Bill Seidman's option\npaper of April 24 on Farm Bill Alternatives (Tab A)\nand decided to veto the bill and not do anything\nabout the loan levels.\nUnfortunately yesterday we learned that there\nis a misconception on the Hill that you are\ngoing to couple your veto with some kind of\naction on loan levels.\nMax Friedersdorf and Secretary Butz report that\nthere would be a serious risk that a veto would\nbe overridden if a veto message makes no mention\nof loan levels. Max's latest vote count to\nsustain a veto shows:\n52 Democrats\n103\nRepublicans\n155 Total\nWe might pick up as many as 18 votes that are\nnow uncommitted; but we could lose a substantial\nnumber of the Democrats if the caucus makes a\nstrong effort to override.\n-2-\nIn view of this new development, Max Friedersdorf,\nEarl Butz, Bill Seidman, Jack Marsh, Jim Lynn and\nI met this morning to discuss this problem. We\ncame up with an approach that can help but makes\nno commitment to the expenditure of further Federal\nFunds.\nYour message might include the following language:\nIf any unforeseen price deterioration\ncalls for such action, I am directing\nthe Secretary of Agriculture to be pre-\nDE\nto make desirable adjustments in\nprice support loan rates for wheat,\ncorn, and other feed grains 1 and Soybeaus.\nMax and Earl Butz are reasonably certain that a\nveto can be sustained if this language is\nincluded.\nB. Participants\nThe Vice President\nAlan Greenspan\nSecretary Butz\nJim Lynn\nCounsellor Hartmann\nPaul O'Neill\nCounsellor Marsh\nJim Cannon\nMax Friedersdorf\nBill Seidman\nDon Rumsfeld\nC. Press Plan\nTo be announced.\nTHE WHITE HOUSE\nWASHINGTON\nApril 24, 1975\nMEMORANDUM FOR THE PRESIDENT\nFROM:\nL. WILLIAM SEIDMAN\nSUBJECT:\nFARM BILL ALTERNATIVES\nBackground\nEarly in. 1973 the Nixon Administration proposed to the Congress\nthat Federal programs relating to wheat, feed grains, and\ncotton be limited to providing loans at rates ($ per unit of\nproduction) well below current and anticipated market prices.\nThis would have allowed the market to operate with minimum\nGovernment interference and yet preclude exceptionally low\nprices. The proposed programs were to replace older programs\nunder which producers were paid to restrict production.\nDuring the period of consideration, market prices moved up\nquickly and the outlook was one of continued high demand\nfor food. The Congress rejected that approach and substituted\na program-embodying loans and target prices. The loan levels\nwere to perform essentially the same function as proposed by\nthe Executive Branch. All of the producer's production would\nbe eligible for loans. The target prices were designed to\nprovide incentives to producers to meet the projected increased\ndemand for food. Only those producers with an acreage allot-\nment (based upon planting history) would receive such payments\nand only to the extent of the normal production on their allot-\nment.\nThe Executive Branch originally resisted this approach since\nit meant continued Federal involvement. Objections centered\non the high target prices over the life of the bill and the\n\"escalator\" provision which would have increased target\nprices each year in line with increases in the index of prices\npaid by farmers for production items including interest,\ntaxes, and wages.\nThe target price concept eventually was accepted by the\nExecutive Branch and a bill agreed upon in the summer of 1973.\nThe \"escalator\" was modified to provide adjustments for\nincreased yields to apply only to 1976 and subsequent crops\n2\n(not the 1975 crop) and the target prices were lowered.\nMeanwhile, domestic prices rose well above projected\ntarget prices largely because of a worldwide economic boom,\na fall off in world agricultural production, and increased\nU.S. exports (partly due to devaluation of the dollar)\nThe impact of these events on producers was initially favorable.\nGovernment surpluses overhanging the market were eliminated.\nExport demand surged. Farm product prices rose dramatically.\nSpiraling agricultural prices focused attention on the value\nof grain reserves as a cushion against supply shortages.\nThis was a major issue at the World Food Conference in Rome.\nThe U.S. Government is in the process of developing a policy\nwith respect to the appropriate level of food security and\nhow the burden should be shared. Currently, importers, facing\nfavorable supply prospects, have shown little interest in\naccumulating grain stocks. An increase in Federal support\nthrough price guarantees would increase the risk of the\nFederal Government acquiring stocks and thus reduce the\ninterest of other nations in sharing the burden of carrying\nrèserves.\nThe supply/demand situation today is vastly changed from a\nyear ago. Farm prices are retreating from their former high\nlevels, with some prices (wheat, soybeans, cattle) having\nfallen precipitiously.\nMeanwhile, production costs are at record levels since current\ntarget prices and loan rates were established in 1973. Pro-\nduction costs, as measured by the index of prices, an \"average\"\nof farm costs paid for production items, has increased 16\npercent since 1973. This index, the escalator defined in\nthe 1973 Act, will be applied to the 1976 and 1977 crops.\nHowever, costs of producing grain have risen much more\nsteeply than \"average\" farm costs since large quantities of\nfuel and fertilizer are required relative to other inputs.\nDetails for a couple of grain producing areas are shown\nin the table below:\nIncrease\nWheat, Kansas, E. Central\nUnit\n1973\n1975\n$\n=\nVariable costs\n$/bu.\n0.57\n1.05\n0.48\n84\nTotal costs:\nexcluding land\n$/bu.\n0.95\n1.54\n0.59\n62\nincluding land\n$/bu.\n1.59\n2.50\n0.91\n57\n3\nIncrease\nCorn, N. Indiana\nUnit\n1973\n1975\n$\ndo\nVariable costs\n$/bu.\n0.48\n0.81\n0.33\n69\nTotal costs:\nexcluding land\n$/bu.\n0.72\n1.12\n0.40\n56\nincluding land\n$/bu.\n1.15\n1.79\n0.64\n56\nProducers, particularly livestock, in 1975 are facing a cut in\nincome for the second year in a row.\nProduction\nRealized\nYear\nGross Farm Income\nExpenses\nNet Income\n(Billions of $)\n1970\n58.6\n44.6\n14.0\n1971\n60.6\n47.6\n13.0\n1972\n69.9\n52.4\n17.5\n1973\n97.0\n64.7\n32.2\n1974\n102.0\n74.8\n27.2\na 1975 est. 94-98\n75-77\n19-21\nThe enrolled Farm Bill, H.R. 4296, is the congressional\nanswer to the current situation. It would increase prices\nas follows:\nTarget Price\nLoan Rate\nUnit\nCurrent Law\nH.R. 4296\nCurrent Law\nH.R. 4296\nWheat\n$/bu.\n2.05\n3.10\n1.37\n2.50\nCorn\n$/bu.\n1.38\n2.25\n1.10\n1.87\nCotton\n$/bu.\n.38\n.45\n.34\n.38\nSoybeans\n$/bu.\n--\n--\n--\n3.94\nThe following is the vote tabulation on the bill:\nHouse\nSenate\nFor\nAgainst\nFor\nAgainst\nOriginal bill\n229\n162\n57\n25\nConference bill\n248\n166\nVoice approval\nThe House vote on the Conference bill was 28 votes short of\nthe number needed to override a veto.\n4\nIssue: What, if anything, should the Administration do, if\nH.R. 4296 is vetoed.\nSince it is unlikely that any action would have a\nsignificant impact on this year's production, alterna-\ntive actions should be viewed largely in terms of\ntheir impact on (1) the votes to override a veto;\n(2) 1976 outlays; (3) future years' production,\nprices and budget outlays; (4) the likelihood that\nCongress, in an election year, will attempt to\nraise supports even higher.\nOption 1: Do nothing beyond vetoing the bill.\nThis would leave the loan levels at the minimum specified\nby the 1973 Act. Target prices would be unchanged with the\nescalator applied to the 1976 and 1977 crops.\nPros\n\"1\". Additional incentives to increase production are not\nneeded (at least in 1975). The acreage farmers intend\nto plant will, given normal weather, exceed market\ndemands and add to stocks. A very large winter wheat\ncrop already seems assured.\n2. Any increase in loan levels will add to 1976 budget out-\nlays.\n3. An increase in Federal support through price guarantees\nwould increase the risk of the Federal Government\nacquiring stocks and thus lessen the interest of other\nnations in sharing the burden of carrying reserves.\n4. Farmers could protect themselves by using the futures\nmarket.\nCons\n1. The Administration could appear insensitive to the cost/\nprice squeeze faced by farmers, especially since the\nGovernment has asked for all-out production.\n2. Could lead to further legislative efforts, to pass a\nfarm bill for 1975, or, although unlikely, to a veto\noverride.\n5\n3. Loan rates could be raised moderately without significant\neconomic consequences, since prices are expected to average\nhigher than any loan levels that would be selected, and\nsince, under such circumstances, the loans would be\nrepaid.\nOption 2: Increase loan levels to a point unlikely to result\nin the CCC accumulating quantities of wheat and\nfeed grains.\nThe wheat loan rate would be raised from $1.37 to\n$1.75 ($2.50 in the bill), and corn from $1.10 to\n$1.50 ($1.87 in the bill).\nPros\n1. Would cover most producer's total costs of production,\nexcluding land, by a wide margin.\n2. Could offset pressures to override a Presidential veto.\n3. Narrows spread between wheat and corn prices and makes\nwheat more competitive in feed markets during times of\nlarge surplus.\nCons\n1. Would. increase 1976 budget outlays by about $75 million.\n2. Continues a pattern of the Administration acting when\nCongress passes unacceptable bills.\n3. Adds to degree of indexation in the economy making\ncontrol of inflation more difficult.\nOption 3: Raise the loan rates to levels the Secretary of\nAgriculture believes are the minimum acceptable\nto congressional representatives of wheat and\nfeed grain producers.\nThis would raise the wheat loan from $1.37 to\n$2.00 (compared to $2.50 in the bill and $1.75\nin Option 2) and corn from $1.10 to $1.50 (com-\npared to $1.87 in the bill but same as Option 2).\n6\nPros\n1. Would give wheat producers substantial protection since\nthe levels would significantly exceed production costs,\nexcluding land.\n2. Could offset pressures to override a Presidential veto.\nCons\n1. Would increase 1976 budget outlays by about $90 million.\n2. Increases risk of expanded use of loan program and higher\nbudget outlays, especially if export demand weakens.\n3. Widens spread between wheat and corn prices, and makes\nwheat uncompetitive in feed market during time of large\nsurplus.\nOption 4: Propose legislation applying the escalator to the\n1975 crop target prices for wheat and feed grains.\nWheat would be increased from $2.05 to $2.51\n($3.10 in bill). Corn would be increased from\n$1.38 to $1.68 ($2.25 in bill). Cotton would\nnot be increased since targets are already above\nmarket prices.\nPros\n1. Would be in harmony with the spirit of the 1973 Act\nsince it would capture most of the bulge in production\ncosts as measured by the production cost index.\n2. The target prices for grains would be well below the\nmarket price anticipate if exports continue at a high\nlevel.\nCons\n1. Would appear to discriminate against cotton producers.\n2. Conflicts with past Administration policy not to negotiate\nhigher target prices.\n7\n3. Increases the risk of target prices exceeding future\nmarket prices.\n4. Will reopen the issue to legislative logrolling.\n5. Would add $40 million to outlays for disaster payments\n(tied to the target price).\nOption 5: Propose legislation increasing target prices to\nthe level of market prices anticipated for 1975\ncrops, assuming low exports.\nWheat would be increased from $2.05 to $2.50\n($3.10 in bill). Corn would be increased from\n$1.33 to $2.00 ($2.25 in bill). Cotton would\nnot change.\nPros\n1 With target prices tied to minimum market expectations,\nthe likelihood of deficiency payments for wheat would\nbe reduced.\n2. Producers would be protected to the low end of Government\nprice expectations.\nCons\n1. Would increase 1976 budget outlays by about $60 million.\n2. Budget exposure would be further increased for 1977 and\n1978 when market prices are expected to fall.\n3. Would appear to discriminate against cotton producers.\nDecision\nOption 1\nDO nothing beyond vetoing the bill.\nSupported by Treasury, CEA, OMB, CIEP, Marsh\nOption 2\nIncrease loan levels 1:0 a point unlikely\nto result in the CCC accumulating quanti-\nties of wheat and feed grains.\n8\nOption 3\nRaise the loan rates to levels the\nSecretary of Agriculture believes are\nthe minimum acceptable to congressional\nrepresentatives of wheat and feed grain\nproducers.\nSupported by USDA, Domestic Council\nOption 1\nPropose legislation applying the escalator\nto the 1975 crop target prices for wheat\nand feed grains.\nOption 5\nPropose legislation increasing target\nprices to the level of makret prices\nanticipated for 1975 crops, assuming\nlow exports.\nCIEP recommends a veto on the farm bill and leaving the\nloan rates unchanged on economic grounds but making clear\nin a veto message our commitment to a strong export\noriented, open market policy.\nOMB wishes to qualify their vote for Option 1 with the follow-\ning statement. On the single economic merits, OMB recommends\nthe bill be vetoed and that no changes be proposed in target\nprices or loan rates. However, in coming to a decision as to\nwhat course to follow, assuming a veto, OMB believes careful\nthought should be given to the following considerations:\nAssuming that the Farm Bill is vetoed, and that the veto\nis sustained, the followup question must be: What action\nis the Congress then likely to take? If, as we suspect,\nthe Congress chooses to try again, then we need to assess\nthe likelihood of the Congress being able to pass a new\nbill that is \"vetc-proof\" because its sponsors lower the\ntarget price increases sufficiently to shift the necessary\nvotes to their side.\nIf the Administration shows no movement in connection with\nsuccessfully sustaining a veto on the first bill we could\nbe putting ourselves in a position of opposition to any\nincreases; a position which we probably cannot sustain.\nThis line of reasoning suggests that we may want to at\nleast consider the possibility of advocating an increase\nin target prices and loan rates; say to levels consistent\nwith the change in production costs since the current\nlaw was enacted in 1973. If this kind of approach could be\ncoupled with an agreement from the Committees to enact\nthese changes as part of a three year bill, we would\nbe protected against even greater increases in 1976.\nTHE WHITE HOUSE\nWASHINGTON\nApril 29, 1975\nMEETING ON FARM VETO MESSAGE\nTuesday, April 29, 1975\nThe Cabinet Room\n5:00 p.m.\nFrom:\nJim Cannon\nI.\nPURPOSE\nTo review and obtain your concurrence on a\nresponse to a new development related to your\nFarm Veto Message.\nII.\nBACKGROUND, PARTICIPANTS AND PRESS PLAN\nA. Background\nYou recently reviewed Bill Seidman's option\npaper of April 24 on Farm Bill Alternatives (Tab A)\nand decided to veto the bill and not do anything\nabout the loan levels.\nesterday we learned that there\nis a misconception on the Hill that you are\ngoing to couple your veto with some kind of\naction on loan levels.\nMax Friedersdorf and Secretary Butz report that\nthere would be a serious risk that a veto would\nbe overridden if a veto message makes no mention\nof loan levels. Max's latest vote count to\nsustain a veto shows:\n52 Democrats\n103\nRepublicans\n155 Total\nWe might pick up as many as 18 votes that are\nnow uncommitted; but we could lose a substantial\nnumber of the Democrats if the caucus makes a\nstrong effort to override.\n-2-\nIn view of this new development, Max Friedersdorf,\nEarl Butz, Bill Seidman, Jack Marsh, Jim Lynn and\nI met this morning to discuss this problem. We\ncame up with an approach that can help but makes\nno commitment to the expenditure of further Federal\nFunds.\nYour message might include the following language:\nIf any unforeseen price deterioration\ncalls for such action, I am directing\nthe Secretary of Agriculture to be pre-\npared to make desirable adjustments in\nprice support loan rates for wheat,\ncorn, and other feed grains.\nMax and Earl Butz are reasonably certain that a\nveto can be sustained if this language is\nincluded.\nB. Participants\nThe Vice President\nAlan Greenspan\nSecretary Butz\nJim Lynn\nCounsellor Hartmann\nPaul- O'Neill\nCounsellor Marsh\nJim Cannon\nMax Friedersdorf\nBill Seidman\nDon Rumsfeld\nC. Press Plan\nTo be announced.\nTHE WHITE HOUSE\nWASHINGTON\nApril 24, 1975\nMEMORANDUM FOR THE PRESIDENT\nFROM:\nL. WILLIAM SEIDMAN\nSUBJECT:\nFARM BILL ALTERNATIVES\nBackground\nEarly in 1973 the Nixon Administration proposed to the Congress\nthat Federal programs relating to wheat, feed grains, and\ncotton be limited to providing loans at rates ($ per unit of\nproduction) well below current and anticipated market prices.\nThis would have allowed the market to operate with minimum\nGovernment interference and yet preclude exceptionally low\nprices. The proposed programs were to replace older programs\nunder which producers were paid to restrict production.\nDuring the period of consideration, market prices moved up\nquickly and the outlook was one of continued high demand\nfor food. The Congress rejected that approach and substituted\na program.embodying loans and target prices. The loan levels\nwere to perform essentially the same function as proposed by\nthe Executive Branch. All of the producer's production would\nbe eligible for loans. The target prices were designed to\nprovide incentives to producers to meet the projected increased\ndemand for food. Only those producers with an acreage allot-\nment (based upon planting history) would receive such payments\nand only to the extent of the normal production on their allot-\nment.\nThe Executive Branch originally resisted this approach since\nit meant continued Federal involvement. Objections centered\non the high target prices over the life of the bill and the\n\"escalator\" provision which would have increased target\nprices each year in line with increases in the index of prices\npaid by farmers for production items including interest,\ntaxes, and wages.\nThe target price concept eventually was accepted by the\nExecutive Branch and a bill agreed upon in the summer of 1973.\nThe \"escalator\" was modified to provide adjustments for\nincreased yields to apply only to 1976 and subsequent crops\n2\n(not the 1975 crop) and the target prices were lowered.\nMeanwhile, domestic prices rose well above projected\ntarget prices largely because of a worldwide economic boom,\na fall off in world agricultural production, and increased\nU.S. exports (partly due to devaluation of the dollar)\nThe impact of these events on producers was initially favorable.\nGovernment surpluses overhanging the market were eliminated.\nExport demand surged. Farm product prices rose dramatically.\nSpiraling agricultural prices focused attention on the value\nof grain reserves as a cushion against supply shortages.\nThis was a major issue at the World Food Conference in Rome.\nThe U.S. Government is in the process of developing a policy\nwith respect to the appropriate level of food security and\nhow the burden should be shared. Currently, importers, facing\nfavorable supply prospects, have shown little interest in\naccumulating grain stocks. An increase in Federal support\nthrough price guarantees would increase the risk of the\nFederal Government acquiring stocks and thus reduce the\ninterest of other nations in sharing the burden of carrying\nreserves.\nThe supply/demand situation today is vastly changed from a\nyear ago. Farm prices are retreating from their former high\nlevels, with some prices (wheat, soybeans, cattle) having\nfallen precipitiously.\nMeanwhile, production costs are at record levels since current\ntarget prices and loan rates were established in 1973. Pro-\nduction costs, as measured by the index of prices, an \"average\"\nof farm costs paid for production items, has increased 16\npercent since 1973. This index, the escalator defined in\nthe 1973 Act, will be applied to the 1976 and 1977 crops.\nHowever, costs of producing grain have risen much more\nsteeply than \"average\" farm costs since large quantities of\nfuel and fertilizer are required relative to other inputs.\nDetails for a couple of grain producing areas are shown\nin the table below:\nIncrease\nWheat, Kansas, E. Central\nUnit\n1973\n1975\n$\nas\nVariable costs\n$/bu.\n0.57\n1.05\n0.48\n84\nTotal costs:\nexcluding land\n$/bu.\n0.95\n1.54\n0.59\n62\nincluding Land\n$/bu.\n1.59\n2.50\n0.91\n57\n3\nIncrease\nCorn, N. Indiana\nUnit\n1973\n1975\n$\nes\nVariable costs\n$/bu.\n0.48\n0.81\n0.33\n69\nTotal costs:\nexcluding land\n$/bu.\n0.72\n1.12\n0.40\n56\nincluding land\n$/bu.\n1.15\n1.79\n0.64\n56\nProducers, particularly livestock, in 1975 are facing a cut in\nincome for the second year in a row.\nProduction\nRealized\nYear\nGross Farm Income\nExpenses\nNet Income\n(Billions of $)\n1970\n58.6\n44.6\n14.0\n1971\n60.6\n47.6\n13.0\n1972\n69.9\n52.4\n17.5\n1973\n97.0\n64.7\n32.2\n1974\n102.0\n74.8\n27.2\nor 1975 est.\n94-98\n75-77\n19-21\nThe enrolled Farm Bill, H.R. 4296, is the congressional\nanswer to the current situation. It would increase prices\nas follows:\nTarget Price\nLoan Rate\nUnit\nCurrent Law\nH.R. 4296\nCurrent Law\nH.R. 4296\nWheat\n$/bu.\n2.05\n3.10\n1.37\n2.50\nCorn\n$/bu.\n1.38\n2.25\n1.10\n1.87\nCotton\n$/bu.\n.38\n.45\n.34\n.38\nSoybeans\n$/bu.\n--\n--\n--\n3.94\nThe following is the vote tabulation on the bill:\nHouse\nSenate\nFor\nAgainst\nFor\nAgainst\nOriginal bill\n229\n162\n57\n25\nConference bill\n248\n166\nVoice approval\nThe House vote on the Conference bill was 28 votes short of\nthe number needed to override a veto.\n1\nIssue: What, if anything, should the Administration do, if\nH.R. 4296 is vetoed.\nSince it is unlikely that any action would have a\nsignificant impact on this year's production, alterna-\ntive actions should bc viewed largely in terms of\ntheir impact on (1) the votes to override a veto;\n(2) 1976 outlays; (3) future years' production,\nprices and budget outlays; (4) the likelihood that\nCongress, in an election year, will attempt to\nraise supports even higher.\nOption 1: Do nothing beyond vetoing the bill.\nThis would leave the loan levels at the minimum specified\nby the 1973 Act. Target prices would be unchanged with the\nescalator applied to the 1976 and 1977 crops.\nPros\n1: Additional incentives to increase production are not\nneeded (at least in 1975). The acreage farmers intend\nto plant will, given normal weather, exceed market\ndemands and add to stocks. A very large winter wheat\ncrop already seems assured.\n2. Any increase in loan levels will add to 1976 budget out-\nlays.\n3. An increase in Federal support through price guarantees\nwould increase the risk of the Federal Government\nacquiring stocks and thus lessen the interest of other\nnations in sharing the burden of carrying reserves.\n4. Farmers could protect themselves by using the futures\nmarket.\nCons\n1. The Administration could appear insensitive to the cost/\nprice squeeze faced by farmers, especially since the\nGovernment has asked for all-out production.\n2. Could lead to further legislative efforts, to pass a\nfarm bill for 1975, or, although unlikely, to a veto\noverride.\n5\n3. Loan rates could be raised moderately without significant\neconomic consequences, since prices are expected to average\nhigher than any loan levels that would be selected, and\nsince, under such circumstances, the loans would be\nrepaid.\nOption 2: Increase loan levels to a point unlikely to result\nin the CCC accumulating quantities of wheat and\nfeed grains.\nThe wheat loan rate would be raised from $1.37 to\n$1.75 ($2.50 in the bill), and corn from $1.10 to\n$1.50 ($1.87 in the bill).\nPros\n1. Would cover most producer's total costs of production,\nexcluding land, by a wide margin.\n2. Could offset pressures to override a Presidential veto.\n3. Narrows spread between wheat and corn prices and makes\nwheat more competitive in feed markets during times of\nlarge surplus.\nCons\n1. Would. increase 1976 budget outlays by about $75 million.\n2. Continues a pattern of the Administration acting when\nCongress passes unacceptable bills.\n3. Adds to degree of indexation in the economy making\ncontrol of inflation more difficult.\nOption 3: Raise the loan rates to levels the Secretary of\nAgriculture believes are the minimum acceptable\nto congressional representatives of wheat and\nfeed grain producers.\nThis would raise the wheat loan from $1.37 to\n$2.00 (compared to $2.50 in the bill and $1.75\nin Option 2) and corn from $1.10 to $1.50 (com-\npared to $1.87 in the bill but same as Option 2).\n6\nPros\n1. Would give wheat producers substantial protection since\nthe levels would significantly exceed production costs,\nexcluding land.\n2. Could offset pressures to override a Presidential veto.\nCons\n1. Would increase 1976 budget outlays by about $90 million.\n2. Increases risk of expanded use of loan program and higher\nbudget outlays, especially if export demand weakens.\n3. Widens spread between wheat and corn prices, and makes\nwheat uncompetitive in feed market during time of large\nsurplus.\nOption 4: Propose legislation applying the escalator to the\n1975 crop target prices for wheat and feed grains.\nWheat would be increased from $2.05 to $2.51\n($3.10 in bill). Corn would be increased from\n$1.38 to $1.68 ($2.25 in bill). Cotton would\nnot be increased since targets are already above\nmarket prices.\nPros\n1. Would be in harmony with the spirit of the 1973 Act\nsince it would capture most of the bulge in production\ncosts as measured by the production cost index.\n2. The target prices for grains would be well below the\nmarket price anticipate if exports continue at a high\nlevel.\nCons\n1. Would appear to discriminate against cotton producers.\n2. Conflicts with past Administration policy not to negotiate\nhigher target prices.\n7\n3. Increases the risk of target prices exceeding future\nmarket prices.\n4. Will reopen the issue to legislative logrolling.\n5. Would add $40 million to outlays for disaster payments\n(tied to the target price).\nOption 5: Propose legislation increasing target prices to\nthe level of market prices anticipated for 1975\ncrops, assuming low exports.\nWheat would be increased from $2.05 to $2.50\n($3.10 in bill). Corn would be increased from\n$1.33 to $2.00 ($2.25 in bill). Cotton would\nnot change.\nPros\n1s. With target prices tied to minimum market expectations,\nthe likelihood of deficiency payments for wheat would\nbe reduced.\n2. Producers would be protected to the low end of Government\nprice expectations.\nCons\n1. Would increase 1976 budget outlays by about $60 million.\n2. Budget exposure would be further increased for 1977 and\n1978 when market prices are expected to fall.\n3. Would appear to discriminate against cotton producers.\nDecision\nOption 1\nDO nothing beyond vetoing the bill.\nSupported by Treasury, CEA, OMB, CIEP, Marsh\nOption 2\nIncrease loan levels to a point unlikely\nto result in the CCC accumulating quanti-\nties of wheat and feed grains.\n8\nOption 3\nRaise the loan rates to levels the\nSecretary of Agriculture believes are\nthe minimum acceptable to congressional\nrepresentatives of wheat and feed grain\nproducers.\nSupported by USDA, Domestic Council\nOption 1\nPropose legislation applying the escalator\nto the 1975 crop target prices for wheat\nand feed grains.\nOption 5\nPropose legislation increasing target\nprices to the level of makret prices\nanticipated for 1975 crops, assuming\nlow exports.\nCIEP recommends a veto on the farm bill and leaving the\nloan rates unchanged on economic grounds but making clear\nin a veto message our commitment to a strong export\noriented, open market policy.\nOMB wishes to qualify their vote for Option 1 with the follow-\ning statement. On the single economic merits, OMB recommends\nthe bill be vetood and that no changes be proposed in target\nprices or loan rates. However, in coming to a decision as to\nwhat course to follow, assuming a veto, OMB believes careful\nthought should be given to the following considerations:\nAssuming that the Farm Bill is vetoed, and that the veto\nis sustained, the followup question must be: What action\nis the Congress then likely to take? If, as we suspect,\nthe Congress chooses to try again, then we need to assess\nthe likelihood of the Congress being able to pass a new\nbill that is \"vetc-proof\" because its sponsors lower the\ntarget price increases sufficiently to shift the necessary\nvotes to their side.\nIf the Administration showsno movement in connection with\nsuccessfully sustaining a veto on the first bill we could\nbe putting ourselves in a position of opposition to any\nincreases; a position which we probably cannot sustain.\nThis line of reasoning suggests that we may want to at\nleast consider the possibility of advocating an increase\nin target prices and loan rates; say to levels consistent\nwith the change in production costs since the current\nlaw was enacted in 1973. If this kind of approach could be\ncoupled with an agreement from the Committees to enact\nthese changes as part of a three year bill, we would\nbe protected against even greater increases in 1976.\nMEETING ON FARM VETO\nMESSAGE\nTuesday, April 29, 1975\nThe Cabinet Room\n5:00 p.m."
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