The Iowa congressional delegation and a group of its top state officials, including Gov. Terry Branstad, called on the Reagan administration Tuesday to make good on a campaign promise for $650 million in credit relief for financially hard-pressed Midwestern farmers.
Republican Sen. Charles Grassley said that Budget Director David Stockman is a major obstacle in getting the White House to take the farm-credit crisis seriously and that unless he does, ”we may have to call for his resignation.”
Grassley`s Senate colleague, freshman Democrat Tom Harkin, noting farm protests across the nation, warned that the ”specter of widespread violence thoughout the Midwest is there.” He said farmers may ”take to the streets” to protest government inaction. He predicted small runs on banks and bankruptcy for some small businesses whose health is tied to the farm economy.
THE IOWANS, speaking at a Capitol press briefing, not only want the administration to get moving on the $650 million program of loan guarantees, they want the amount increased to $3 billion. Republican Rep. Cooper Evans said that as of Jan. 1, only $25 million of the $650 million had been obligated.
Moreover, Iowa Banking Supt. Thomas Huston said that of the $33 million allocated to his state from the $650 million, ”practically none of it has been used.” He said the situation is the same in other Midwestern states.
The program seems to be stuck while the U.S. Department of Agriculture and the Office of Management and Budget thrash out their differences. Budget office spokesman Edwin Dale declined comment on Grassley`s statement about Stockman but said the office is still waiting for the agriculture agency to send it an acceptable plan to carry out the $650 million package.
KATHLEEN LAWRENCE, undersecretary of agriculture for small community and rural development, said such a plan has been sent. But she said it asks the budget office for authority to allow banks to write off part of the interest on a guaranteed loan, instead of part of the principal, as President Reagan outlined when he announced the program.
Dale said of the proposal, ”That`s got problems.”
Banks and the farm-credit system are holding back on applications for the program, Lawrence said, suggesting that they are waiting ”to see if the pot gets sweetened.”
Immediate action by the administration is necessary, Branstad said, because March 1 is the traditional date farmers must make lease and mortgage payments and begin to collect their operating cash for the 1985 crop year. Farming, which is heavily dependent on borrowed money, involves taking out big operating loans in the spring to be repaid from the receipts of the crop in the fall.
THE FEDERAL credit-relief program was announced at the height of the presidential campaign, on Sept. 18, just before Reagan went on a swing through farm states.
Rep. Neal Smith said the Small Business Administration ought to help farmers and could do so without legislation. The Iowa Democrat said, however, that there has been ”not one single (debt) restructuring loan under SBA” in the current farm-credit crisis.
And Neil Harl, an Iowa State University professor, said 10 to 15 percent of Iowa farmers might not get credit for 1985.
Huston was critical of Stockman and Agriculture Secretary John Block, an Illinois hog farmer, for not moving faster on the program. At a meeting with administration officials he attended last week, he said, ”Block did not speak up as strongly as he should have. It appears that David Stockman has the upper hand on how this program should be run even though (it) is in the U.S. Department of Agriculture.”
