Richard Lugar

Mr. LUGAR

Mr. LUGAR. Mr. President, I rise in support of the amendment of the distinguished Senator. I believe he has concisely pointed out the dilemma of subsidies in the dairy areas where a great deal of the problem has been created in the past. The committee has wrestled over the course of time with dairy policy and has found vast regional and sectional differences, most recently exacerbated by the New England Dairy Compact and the debate that has surrounded that particular situation. As a matter of fact, the Chair will recall when we last had an agriculture debate where there were a number of Members vitally interested in the dairy issue, although that was not ultimately a part of the supplement payments virtually made by that legislation last August. But a great number of Members pointed out inequities they believed were created by Federal policy and created by the New England Dairy Compact. Even though the last farm bill indicated it should come to an end after a couple of years, it did not come to an end because of negotiations that surrounded appropriations bills at the end of the session. Advocates for the New England Dairy Compact managed each year to do so by bumping it ahead another year beyond the termination of the farm bill that called for it. The last farm bill also called for very substantial changes in dairy subsidies. Those likewise have been bumped ahead by other negotiations that do not deal directly with farm legislation most frequently but were tradeoffs by Senators whose votes were required at the end of the session on appropriations bills. The compounding of these problems over the years leads us to this point and the need for some rationalization, some study of how there might be some degree of equity for dairy producers throughout the country, regardless of where they live and their income, both with regard to production and pricing as opposed to artificial constraints or boosts that the Federal Government gives. Certainly, it is a way of bringing things back to where we thought we were in passing the 1996 act given the same troubles the Senator from Idaho has pointed out today. They were exacerbated then. In addition to this, I presume, in an attempt not to hit the New England Dairy Compact issue head on, the Agriculture Committee, by passing a very generous dairy bill, indicated to many Senators that the additional subsidies and payments to dairymen would be fairly universal around the country. At least one of the first attempts to do this in the farm bill--and the distinguished Presiding Officer listened to the debate, as well as the distinguished Democratic manager present, the Senator from Georgia--was to up the ante very substantially; one thought being that those who utilized dairy products might put money into a trust fund for the benefit of producers but at the expense of consumers. It was estimated that this particular scheme might result in a payment of 26 cents per gallon more by all the consumers of milk regardless of income level, regardless of the WIC program, or the school lunch program. Understandably, as word of this particular redistribution of the wealth got out, cries of outrage occurred. As a matter of fact, the dairy sections were not very compatible. Having warred with each other for all of these years, the thought that somehow the New England compact would be universalized with equity, even if paid for by others--namely, the consumers, ultimately, and 26 cents a gallon--did not set well. So as a result, it was apparent that the farm bill was being rewritten by committee staff. Most Senators were never the wiser as to what changes the staff made in that particular area, but they were substantial, in part because the initial scoring by the Congressional Budget Office, and others, of the overall product of our Agriculture Committee sent it well beyond the limits that were still very generous in the budget situation. So it would have been subject to a point of order, and a lot of amending and rewriting went on. That, of course, was not the end of it. I have no idea how many times the dairy section has been subsequently rewritten. I am advised that even this morning before we started this debate, once again, the dairy section was being rewritten. The reason for the delay of our debate this morning was, in fact, legislative counsel was working with the distinguished Democratic staff members on still another dairy amendment to the farm bill to supplant whatever was there, which bore no relationship to what we finally debated in committee. I think the Senator's amendment is very constructive because neither he nor I have the slightest idea what is now in the farm bill that is before us, and particularly with regard to the dairy situation. We have scrambled, I admit to you, Mr. President, in terms of the amendment that I was about to offer and will offer subsequently to this dairy amendment, to find where, in relationship to the new bill that Senator Daschle has offered this morning, our amendment fits. That is going to be a problem for everybody thinking about amendments today. I think we have rearranged the papers, but there are substantial numbers of new pages. I would estimate, just quickly, there are over 100 pages of new language, some of it pertaining to dairy--a lot of it, as a matter of fact, because that has been the major area of contention and scoring. Fortunately, the Senator from Idaho, noting this situation, simply says, we just strike the dairy section, whatever its writing or reiteration. Whether it is the fourth or fifth or sixth try at this, we strike it, and we have a study of the situation, which is going to be much more healthy for every American consumer. Any consumer of milk, listening to this debate, will be relieved that the cost of milk is not going to go up 26 cents a gallon or 5 cents or 10 cents a gallon or what have you. As a matter of fact, there will be a pretty economical milk situation without extraordinary subsidies piled on and redistributed in this way. The Senator from Idaho has done a favor for every American consumer of milk, a humanitarian service for those who are poor, those who are being assisted in the Women, Infants and Children Program and the school lunch program. He certainly has assisted all of us as Senators to come out of the trenches of this sectional warfare over dairy, which has pitted Senators not only on the Agriculture Committee but on the floor in pitched battles for some time. I can remember vividly 2 years ago this December when it was very difficult to close down the session of the Congress because the distinguished Senator from Wisconsin, Mr. Kohl, felt that somehow, despite his very best efforts, behind the scenes, somebody, trying to wind up the appropriations process, was, once again, renewing the New England Dairy Compact, which was supposed to be over at that point. The Senator's suspicions were correct. Amazingly, as we left town, the dairy compact was still alive. And Senator Kohl vowed that he would stop this sort of thing. He has tried valiantly to do so on behalf of Wisconsin dairymen and people from the Midwest but without visible success. I would say to the distinguished Senator from Wisconsin, Mr. Kohl, if he had read the first dairy section coming out of the Agriculture Committee, he would have been even further outraged by the process. He may have read that and may have contributed, for all I know, to other iterations subsequently. But my hope is we will adopt the amendment offered by the distinguished Senator from Idaho. It is a clean-cut way of getting us back to some reality in the dairy area. Clearly, it will be useful for the Congress at this point--without the encumbrance of all of the layers of dairy programs that we have produced, plus some that we have not ever debated but have been produced somewhere else--to sort of clear the deck. The Senator's amendment does that magnificently and cleanly. So I am hopeful that as we approach the time for final consideration of this amendment and a rollcall vote on the amendment, Senators will be found to have voted in the affirmative for it. I certainly will be. I commend the Senator for crafting this amendment. Mr. President, I yield the floor.

Mr. LUGAR. Let me respond to the distinguished leader. That will be fine as far as I am concerned. My understanding was we were going to commence the debate after the third rollcall vote. I point out the drafting of a new bill is not completed even as we speak. Legislative counsel is still working on it somewhere. Whenever it does emerge, that is what we ought to do so we can finally offer amendments and get on with it. I am merely going to speak to the bill, given the instructions that we were going to have general debate on the agriculture bill until 11. Once the Senator propounds the request, I certainly will be agreeable.

Mr. LUGAR. I thank the distinguished leader and I appreciate his courtesy in allowing me to complete these remarks. Madam President, I pointed out the concentration of these payments in six States. But within those States, the concentration is fairly substantial. For instance, in the State of the distinguished leader, 10 percent of the farmers who receive payments receive 55 percent of the money--just 10 percent. In my State of Indiana, the concentration is even greater. The top 10 percent receive 62 percent of the money. Not only is there concentration in a few States, but within States that are major beneficiaries, a concentration exists with a very few farms. This is not the first time that proposition has been brought to the attention of the Senate and, indeed, as we began debate in the Senate Agriculture Committee this year, the distinguished chairman, Senator Harkin, frequently talked about this problem of concentration. In fact, it bobbed up in all sorts of ways: Concentration of meat packers, concentration of supermarket chains, concentrations of authority all the way through the food chain, and, of course, very startlingly with regard to producers themselves. But as the debate proceeded, somehow or other along the way the whole idea of concentration, when it came to payments to a very few farmers in a very few States, was lost by the wayside. This is why it came as a pleasant surprise to me to read an article by Peter Harriman in the Sioux Falls Argus Leader. This is on December 7: U.S. Sens. Tim Johnson, D-S.D., and Byron Dorgan, D-N.D., will introduce a farm bill amendment next week-- That is the week we are now in-- that would drop commodity subsidies from a maximum $460,000 per individual per year now to about $275,000. The amendment also would require commodity- payment recipients to be actively involved in farming. A quote from Senator Johnson: You can't use these corporate entities to expand the amount of benefits you get. . . . One of the points that Senator Johnson goes on to make is: One of the deficiencies of the Senate farm bill is that it really didn't do much to target payments to typical farmers and ranchers. We thought the Senate bill could be strengthened by better redirection of resources to typical farmers. . . .'' Dorgan added, ``It has been increasingly frustrating over the years to see large corporate ag factories get very large checks, and there is not enough money left to provide a decent safety net for family farmers.'' Johnson said: ``If people want to farm the whole township they can. There is nothing in this amendment to keep people from farming. But we are not asking taxpayers to subsidize a small handful of operations that are getting over $500,000.'' I look forward to that amendment and the debate on that because it certainly has occupied a lot of time already of many of us in the committee who felt that, in fact, these payments really required some scrutiny. I ask some consideration in due course, Madam President, when I offer an amendment to the commodity title which, in fact, does provide a very substantial limit. My legislation provides 6 percent of the total farm bill, so it is not discriminatory but equal in all States--equal, really, to all types of farming. But it does finally limit these payments to $40,000. That seems to me to offer equity to every farmer in every State, every county, every crop. And it meets the needs of those who truly are small and struggling and have a very difficult time, given the concentration in agriculture that has been pointed out by so many. So we will have an opportunity in due course to think through concentration and limitations and equity, a chance to move this from half of the money going to six States to an even distribution wherever there is farming of any sort in every State. Madam President, I ask active consideration of Senators as they take a look at their own States, at their own farmers, at what farming occurs in their States, to support that general proposition as opposed to the one that lies before us in the bill that came out of the Agriculture Committee which, in fairness, essentially bumps along with the same type of distribution system that we have had for many years and which I and others have criticized in the course of this debate. Finally, let me point out that we still have the problem of money. I believe at least we have a problem of money. Others on the Senate floor may disagree and may believe that we already are running into Federal deficits that are fairly large and that these payments to farmers are merely part of that proposition. Some suggested yesterday that maybe even a stimulus package of sorts for rural America would stimulate the situation. If that is the proposition, it is very difficult to make it, given the figures I have just recited; namely, that all of the stimulus or half of it would be narrowed to six States. Even within those States, well over half of 10 percent of farmers is a relatively few thousand people. That is not very much of a general stimulus. In fact, it is a very pointed and very focused situation. I can well understand why those who are beneficiaries of the past bill, or of the bill that Senator Harkin has introduced, would be obsessed that we are taking a look either at the fact that we have a Federal deficit or that these are rather concentrated payments. There has been a general myth that has surrounded farm bills--that they are meant to save every family farmer; that somehow they make a difference in the lives of every family farmer. I am here to tell you that, in fact, each bill and the bill that Senator Harkin has proposed even concentrates this further with higher subsidies, higher target prices, and higher loans. The money goes to those who are the most efficient. One can ask: What is wrong with that? The most efficient are not always the largest but frequently they are because of the scale of size and unit costs involved. And the ability to produce, quite apart from the market, has led to their concentration. And it has continued each year. It will march ahead now. That is why I will oppose the bill that lies before us. We need to amend it constructively so that, in fact, we can proceed to good agricultural legislation. I thank the Chair for this opportunity. I thank the distinguished majority leader for allowing me to complete my remarks under the unanimous consent. I yield the floor.

Mr. LUGAR. Yes, I will be happy to yield to the distinguished Senator.

Mr. LUGAR. I will be happy to yield to the distinguished leader.

Mr. LUGAR. Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. LUGAR. I thank the majority leader. I appreciate his comments on the stimulus package. I want to go back, however, to the action taken just before that. As I understood, the leader offered an amendment that was identified by number. I just want to trace the parliamentary situation. Was this amendment offered to the bill S. 1731? Does it stand as an amendment to that bill? The reason I ask--and let me clarify further-- is that some thought was expressed, I believe, here on the floor, that this would be original text supplanting S. 1731. And, respectfully, my view would be--although the Parliamentarian might confirm this--that if the majority leader were to supplant all of this and make his amendment original text, you would need to ask unanimous consent to do that as opposed to the offering of simply an amendment in the straightforward way he did so.

Mr. LUGAR. Madam President, I want to make general comments about the farm bill. I appreciate the distinguished chairman of our committee, Senator Harkin, and others are even at this moment involved in drafting a new bill. At some point, my understanding is they will come forward with a substitute for the entire bill which is now before us. I am not supercritical of this procedure, although it does raise some questions on our side. We have not seen the new text and will not see the new text for some time, apparently. It is still in the hands of legislative counsel, I am advised, working its way through. I make this point because this has characterized the procedure, unfortunately, in the committee and on the floor. Members may or may not wish to know what is in the farm bill. I think it is important. Very clearly, there are many Members who want to debate and pass the farm bill and fairly rapidly. They are joined by those outside this Chamber. I cite, for example, the December 8, 2001, issue of Congressional Quarterly, in which the headline is ``Fear of Budget Constraints and 2002 Galvanizes Farm Bill Supporters.'' The article goes on to say: The specter of a tight Federal budget next year with less money for farm subsidies has agricultural lobbyists and their allies in Congress pushing for final action on a farm bill before lawmakers leave this month. Lobbyists fear that if Congress waits until 2002 when the current authorization bill expires, then the $73.5 billion in new spending for agricultural programs over the next 10 years that was set aside by this year's budget resolution might vanish. ``We have never before had this hammer over our heads, like the loss of this money,'' said Mary Kay Thatcher, lobbyist for the American Farm Bureau Federation. However, with little time left lawmakers say finishing a bill could be difficult. Indeed, it could, and the bill is not even available as of this moment. It was announced yesterday with a great deal of certainty that after three rollcall votes this morning, we would be on the farm bill, we would be offering amendments presumably to the text that came out of the Senate Agriculture Committee. As of this moment, we are not offering amendments because we are awaiting a new bill. While we await the new bill, other things also are occurring outside. I note that CBO announced that the Federal deficit for October and November of this fiscal year, for 2 months--the fiscal year we are now in--unfortunately, amounted to $63 billion. That is $28 billion more in deficit than last year. It is the first time the Government has run a deficit this size since 1997, which was the last time the Federal Government ran a deficit for the entire fiscal year. This simply underlines the fact that CBO is not alone in pointing out we are in a deficit year. We did not expect to be in such a predicament at the beginning of the year. Indeed, when the President of the United States gave his State of the Union Address to a joint session of the Congress, he talked about $3 trillion of surpluses over a 10-year period, and the allocation to solve Social Security and Medicare reform problems, and for a very generous education bill that he and many Members of this body were proposing. In fact, CBO earlier in the year prophesied a potential surplus of over $300 billion, scaled down to something less than $200 billion by summertime, $50 billion as we proceeded in the post-September 11 period, and now it is apparent we are headed for a deficit. That does not change the context of this debate one whit. Proponents of the bill, fastening on to a budget resolution adopted early this year, said we have pinned down $172 billion over 10 years, $73.5 billion over baseline, over the normal expenditures that have been occurring year by year in the agriculture bills. It is there. I and others have pointed out it really is not there. Members may delude themselves that somehow, because this is December 11, we are unable to foresee the future and understand that life has changed; that we are in a deficit because of recession, because of war expenditures, because of all sorts of emergencies that still lie ahead of us as we try to meet these emergencies with our President. Yet even in the face of this, as the Congressional Quarterly article points out, agricultural lobbyists, perhaps aided and abetted by even Senators on occasion, believe we need to have the debate and complete the debate to pin this money down, money which, in my judgment, is no longer there. There is an Alice-in-Wonderland quality about the debate. I say simply that at some point, even though $63 billion of deficit has occurred in 2 months, another 2 months will pass and CBO will have another prophecy that will be even more bleak, in my judgment. At that point, however, in the event the Senate has acted, the Senate and House have conferred, and the President has signed a bill, whether we have the money or not, it will add to the deficit. That must be the calculation of those who are looking at this presently. The administration has not really weighed in on the budget side thus far, and proponents of the bill will point that out, that essentially there have been plans offered, that the administration apparently supports, that seem equally as expensive as the chairman's bill. At some point, however, all of us have to make judgments as to what is fiscally sound, where priorities ought to lie in this situation. Eventually, as we get into the bill, I want to ask Senators, as they are thinking about their preparation and how they size this up--I appreciate that many Senators will approach this bill on principle alone. Some would say--not many--some would say very frequently agriculture bills are very parochial bills. We each look after our own States, and that is what we ought to do. If this is the case, I think it is important, as Gannett News Service pointed out in an article by Carl Weiser on December 6, 2001, that under the current legislation--which the new farm bill, of course, would revise-- Six States--Iowa, Illinois, Texas, Kansas, Nebraska and Minnesota--collected almost half the payments in 1999. It was not dissimilar in 2000, for that matter, according to GAO. Farm bills, as they are now written, are subsidies, essentially, for the row crops--corn, wheat, cotton, rice, now with very generous loan rates for soybeans--and are concentrated on States that have that type of agriculture. By and large, the payments do not become very generous for those who are involved in livestock or in vegetables, in timber, and other situations. I point out Senators may want to take a look at their chart which can be found on the Environmental Working Group Web site. For example, the State of California, with 74,126 farms, is second only to Missouri and Iowa on this chart, but in California, only 9 percent of all the 74,000 farm families receive Government subsidies. As a matter of fact, only 7 percent of farmers in Massachusetts, 9 percent in Nevada, 7 percent in New Jersey, and in the State of Washington only 20 percent of the 29,000 farmers in that State receive anything in these programs. For example, if one were to take a look at the State of Iowa, 75 percent of farmers receive subsidies; in the State of Kansas, 65 percent; in my home State of Indiana, 52 percent. We are sort of fair to middling; half of us farmers receive subsidies, the other half do not. As I pointed out earlier in the debate, roughly 40 percent of farmers benefit from these programs, while 60 percent do not. If you happen to represent a State in which, as in California's case, 91 percent do not participate, it is hard for me to understand how you would be enthusiastic about these formulas because essentially this is an income transfer from some persons in the United States--taxpayers--to a very few taxpayers who are the beneficiaries. In this case it is quite a large transfer. We are talking about $172 billion over 10 years of time. Not only are most of the payments concentrated, almost half of them in six States, but in those States the concentration is rather profound.

Mr. LUGAR. It was offered as a substitute but does not supplant the original text of the original bill?

Mr. LUGAR. I thank the Chair and the leader for that clarification.

Mr. LUGAR

Mr. LUGAR. Therefore, I do not want to dwell on the committee product in its entirety because I support, as I recall, eight of the titles, if I remember how many we dealt with. But all of us around the table knew we would have some differences on policy and results with the commodity title, and we did. So this is a part of that extended argument. At the time of the adoption of the nutrition title, I offered an amendment in the committee which was narrowly defeated that, in fact, traces the additions I wish to offer today. In essence, for those who are attempting to keep some scoring as to how this is paid for without breaking out of the budget balance, the savings I obtain in my commodity title are more than are required to do the additional things I have chosen to do in the nutrition title. In the proposal that I make, beginning in the year 2003--and I stress that; not this year or the next year, 2002, but in 2003--a farmer or rancher with at least $20,000 in annual gross farm income, and who provides 5 consecutive years of Federal tax return information related to his or her farm business, regardless of commodities produced--that is a very large ``regardless''--for Senators or staff who may be listening to this debate, the question would be, for example, Does that mean strawberries? Yes, it does. Sheep and wool? Both. In essence, it means just what it says, all returns from farm business. That total amount of revenue would qualify for a voucher to come from the Federal Government, redeemable to, first of all, help purchase a revenue insurance policy. This would not be crop insurance. This would be whole farm revenue insurance at an 80-percent level of coverage. Or it could be used to fund matching deposits for a farmer who chooses to participate in an income stabilization savings account. In essence, the farmer matches the voucher, and all of this goes into an interest- earning savings account for that farm family. Or it could be used to help purchase, in addition to the whole farm insurance idea, any other approved risk management tool, once again, to help insure 80 percent of normal market revenue. An eligible farmer's annual voucher would be equal to 6 percent of the first $250,000 in average gross income from the farm from all sources. This would drop to 4 percent on the next $250,000 gross farm income up to $500,000, and 1 percent of the next $500,000 gross farm income up to $1 million, based on the tax return information as filed. Therefore, under this schedule, the maximum voucher would be $30,000. I appreciate, for those listening to that figure, that is some distance from the estimates of the committee-passed bill that a farmer might, in fact, under some circumstances, gain as much as $500,000 from program subsidies. Cynics, I point out to the Presiding Officer--and the Presiding Officer would not be one of these--but around the agriculture table in the past we have heard descriptions of what might be called ``the Christmas tree theory'' of the subsidies. In short, people who are very sophisticated point out that some farm families, who seem to have a lot of members, had so distributed their property into a number of farms, all of which seemed to qualify for the maximum amount. Ingenious Senators and Members of the House have tried to curtail this practice on occasion, but I do not see great success in doing that. Those who were able to contrive this had very good legal counsel and accounting counsel, as would befit the stature of the sums of money that were involved. In any event, one of the arguments around the table for a long time has been a recognition that perhaps the payments were too concentrated, first of all, by crop, by certain States, to certain people. So as a result, in one fell swoop, my reform cures this. First of all, every farmer in every State is on a level playing field. There are no historical program crops. A bushel of corn and revenue from that counts the same as a bushel of strawberries and the revenue that comes from that. I make that point because on the face of it the self-interests of Senators from most States would be to favor my bill. Senators may not have studied my bill. That is why I am tedious in trying to make the case that they should. Because they will find that in many cases only a single digit of farmers receive any benefits in their State. California, for example--a very large agricultural State-- only 9 percent of farmers in California receive anything from all of this. So farmers in California, listening to this debate today, will know that the Lugar proposal means that they participate. Some farmers in California may say: We really don't want any of this in our lives. We have some testimony to that effect, that farm programs inevitably lead to more and more entrants into a market, overproduction, disastrous prices, and dependence on the Federal Government. So they would say: Thank goodness we were spared all of this. So there may be Senators who have a majority of farmers who are asking to be spared the farm bill. But my recognition, at least during debates we have already had, is that many Senators have a different point of view. As a matter of fact, they want to know what is in any of this that may be helpful to their farm families. So I am saying, first of all, all of your farm families, for the first time in American history, qualify for a farm program. And they all qualify on the same basis. Furthermore, we try to recognize it is important they qualify only to a certain extent; that is, that the purpose of these transfer payments, from all taxpayers to some taxpayers, is to bring about some income stability for family farmers. You may say a 20-percent reduction in 1 year is not a great deal, but most of the arguments made to us come from people who have suffered weather disasters or trade disasters or extraordinary events in which really a much larger percentage of their income has been wiped out, and they hope to get some wholeness through emergency appropriations. There are very few businesses in America that would be able to purchase whole business insurance and guarantee that their revenues would be at least 80 percent of their 5-year average, and to do so, in essence, with a premium paid for by the Federal Government. That is the proposition. And it brings stability to every farmer regardless of size. It recognizes that the bulk of the money must go to those farmers who have revenues of $1 million or less--even more pointedly, $500,000 or less. But that covers a prohibitive percentage of farmers in America, even though current farm programs are really geared to the very small percentage that it does not cover. This comprehensive revenue-based program would replace most traditional farm program supports, the latter of which my bill would phase out over the 3-year, 2002-2005 crop-year period. Essentially, the program that remains through this period is the loan deficiency payment program which has been the safety net of the 1996 bill. That is important so that while this transition is occurring, people are establishing the 5-year average. During the transition, they have some certainty that a national loan program for corn and other program commodities will continue at whatever the support may be at the local elevator in each of our States and counties. The risk management program supposes that a producer operates a farm that has $100,000 in average gross farm income at the start of his plan. Let's say $94,000 of that came from crop and livestock market receipts and $6,000 in government payments. The latter is likely to occur because of the hangover of the last AMTA payment of this bill, 2002, or loan deficiency payments that may come in the program crops that have those payments. But in any event, this farmer would be eligible for a $6,000 voucher beginning in the year 2003. The farmer could use the voucher to purchase the 80-percent whole farm revenue insurance. Let me say that the premium is based upon the fact that the current farm bill and the committee-passed bill continue the basic crop insurance program with changes that we made last year. It is already a very generous crop insurance program. I will not go into anecdotal material with the Chair, but as one who has argued in favor of the program and in full disclosure, I have indicated that I have utilized the farm insurance program. It is possible the family of the distinguished Senator from Iowa, Mr. Grassley, has used the program; that is, we have paid premiums to a commercial insurer. I have no idea of Senator Grassley's level of coverage, but in the current crop-year, I selected the 85-percent policy, which is a very substantial policy. There is no other business in America in which I could have purchased that kind of insurance before my crop was even in, which gave me then the ability to go into the futures markets and to sell thousands of bushels that had not yet been planned, a reckless gesture without, in fact, the safety net that this insurance gives and thus some possibility of selling to the markets as opposed to the loan deficiency payment at the end of the trail. Other farmers in America have done that; as a matter of fact, many people who are much more involved than I am. But it is there. It remains there. Given the fact that already that premium has a very high Federal subsidy, some would estimate maybe 48 percent already paid for by the Federal Government, the voucher that comes, the $6,000 to our hypothetical $100,000 revenue farmer, solidly pays for the 80 percent. As this all works out in the fullness of time, it may buy more than that. But we shall see. I believe it is a conservative estimate. If it doesn't or he doesn't need the $6,000 entirely to buy the whole farm insurance, then there is money left over for the savings account. It is not lost. The whole purpose of all of this from the beginning was to bring some assurance, some stability, and some financial security to the family farmer. The aspects of this are reasonably clear. Yet I know, as I explain a complex program to many for the first time, that some would say we would need to walk around. The problem, as we all recognize, is that we are now debating a farm bill. Whether we should be walking around it longer is not for me to say. I am attempting to manage, with the distinguished chairman, and to expedite the passage of a good bill in a constructive way. But it is important that we recognize the need for the change in course that I have tried to identify because the failure to adopt what amounts to a substantially new course is to exacerbate the problems of the past, which I still believe are overproduction, low prices, greater instability, a built-in bubble in land values for which we shall pay at some point. It has been my good fortune as a farmer to have land that went way up in value in the 1970s. As I didn't either buy it or sell it in that period, I could watch happily, but then would watch with dismay a crash and burn scenario in the early 1980s, as that same land lost perhaps 60 percent of value, years entirely stripped off, a breathtaking, heart-stopping experience that was extended, however, not over 6 months but over 6 or 7 years, followed by a tedious movement back up the scale. If, in fact, you have a family farm that has longevity and you have the good fortune to last through all of this, it is interesting to talk about anecdotally, but it does not really affect your material prospects except on paper. Most farmers do not have that opportunity. As a matter of fact, we really have to gear programs for persons likewise who want to enter agriculture as well as to exit the scene as gracefully as possible. In short, my amendment strengthens very substantially the Federal safety net for low-income Americans, as I illustrated in the earlier part of this presentation. It has been crafted with the very generous help of those involved in the hunger movements all over our country and those who have had great experience and with whom it has been my privilege to work for the past 25 years on this committee. They come in year after year to advocate for the poor; to talk about the problems that a low-income person has with the administrative hassles of pages of estimates that would be very difficult for a sophisticated businessperson to give; the growing problems of persons who are hungry because they really could not figure out how to contact the system despite advocates for the poor who tried to guide them in; the inequities of the vehicle laws or the problems of savings or things that may seem incidental to people who have middle-income situations but are very tragic for others; on top of this, the welfare reform law, which had very good effects for many Americans but at the same time, as we now know and we heard testimony from Second Harvest about food banks and food pantries throughout the country. We have a counterintuitive situation of a nation in prosperity and yet a nation whose food banks frequently are running dry. These are problems that the Agriculture, Forestry, and Nutrition Committee has to think about. The political excitement of this debate comes in thinking about producers, although in fairness, most of us are also interested in nutrition ideas. It is important the degree to which we are interested. I pointed out earlier in my talk that we had tough times in 1995 and 1996 as a committee. Under the so-called reconciliation procedure at that time, we were ordered to cut spending by $23 billion. We solved it by cutting producer programs by $2 billion and food stamps by 21. Now, we have the good fortune of history that prosperity occurred in the country, so as a result many people left the Food Stamp Program and the savings eventually were $50 billion. Correspondingly, however, the $2 billion in cuts in the producer programs did not last for long, and we spent not plus-30, but negative 50. So the disparities in our responsibilities have been substantial. Finally, let me once again offer what almost comes as a common scold, and that is that none of us could have predicted precisely that our country would enter a mild economic recession, and we pray that it is mild and short. Certainly, at the time we were discussing the budget at the beginning of this year, we heard the President of the United States in the State of the Union Address describe $3 trillion of surpluses over 10 years of time--the solution, perhaps, of Social Security disability, Medicare reform, of important educational advances, and much more; and we saw our own Congressional Budget Office, I recall, prophesying in the fiscal year we are now in that started October 1 a surplus of over $300 billion. By summer, that had been tempered down to 176 before we left for the August recess. After September 11, it tempered down to 50, double digits. Subsequently, a sober analysis has said, sadly enough, we will have a deficit this year. This is reinforced by reports from the Treasury yesterday that in the first 2 months of the fiscal year, September and October, the deficit was $63 billion. In part, that is because of when receipts come and when expenditures come and not a chunk of income is coming in. But last year it was $35 billion in the same period. So that is $28 billion more. There has not been this much of a rise in the first 2 months of the fiscal year in a long time. Last year, unfortunately, we suffered a budget deficit, year long. Perhaps we will recover, but most who are projecting say probably not for a few months. This may not make any difference to Senators one way or another. The mood has changed because we have been talking about war expenditures, about expenditures for New York City and elsewhere, on rebuilding. We are talking on and off about a stimulus package that may contain everything from tax cuts to substantial safety net enhancements. Perhaps we are all now of a mood that, in fact, we are in deficit finance. Therefore, the problem of dealing with it is different. And farmers, after all, should not be discriminated if we are going to have deficit finance for other people. On the farm we ought to be thinking about that. That would make more sense if this were a 1-year bill, but it is not. It is 5 years in the Senate version. The bill that passed the House is 10 years. I have no idea where the conference will come out on these things. We are not writing the final bill. The House bill assumes really a perpetual agricultural crisis for the entire decade. It was written with the thought that a portion of that $3 trillion surplus ought to be spoken for, and quickly, by agriculture. Many members on the House committee would still contend that if we do not speak quickly, it will be gone. We have had some testimony to that effect from Senators, and some tempering by the majority leader who said the other day, not right away. We would have to act in a timely way, but on the other hand it would not disappear at midnight at the end of this year. Well, maybe not theoretically, but actually it is gone. We are in a deficit situation, and these will be expenditures on top of that. Why do I bring all of this up? Because essentially the scoring by the budget authorities in the commodity section of the Harkin substitute is $27.6 billion for a 5-year bill--from 2002 to 2006. The Harkin substitute has about $1.8 billion on the nutrition side in that 5-year period. Now, my bill has markedly different results, and I will try to explain some of them because this is not magic. My bill costs only $5.6 billion in the commodity title in the first 5 years--not 27.6, but 5.6. My nutrition section is $3.7 billion, roughly double the $1.8 billion in the Harkin substitute. The figure of 5.6 would seem dramatically low for any sort of safety net operation, but it comes through the scoring process because we are phasing out a number of agricultural subsidy programs. So with the cost of these 6-percent vouchers for every dollar of agricultural income, which mounts up to a lot of money, lots more people are being included, lots more States and farms. But as you subtract the cost of the current agricultural subsidy programs, the net of this comes down to 5.6 for the 5-year period of time. I think that is an important contribution, in large part because I believe that theoretically my bill satisfies the safety net situation for more farmers and more States and more situations than does the Harkin substitute, however well motivated that might have been and generous in its payments. Clearly, demonstrably, tens of million of people are affected by this, and all the various States are going to be better off in the ripple effect of agricultural spending, farm families and farm communities. Furthermore, I believe that at a fairly small cost in the aggregate of all of this, the humaneness of nutrition changes is very important. I believe they will lead to greater social justice as we continue with welfare reform and the thought that there ought to be a meal for every American, even as we try to work with Americans to find work and responsibility. I appreciate the attention of the Chair to what has been an extended presentation. But this is a serious attempt to markedly change agricultural policy in this country. I appreciate that such changes are not easy to make, not easy to explain, and are worthy of a great deal of study. Nevertheless, I have attempted to do my best as one who has witnessed farm bills for 25 years and heard the debates and seen the results, and as one of perhaps a few Senators who actually experienced the results of these farm bills on my own farm property. It is not a large farm--604 acres, located now inside the city limits of Indianapolis, given the extension of our city on various occasions. But it is a corn farm, soybean farm, and a tree farm. It has made money for the last 45 years every year. We were fortunate. But, at the same time, I mention that because I will admit that the amount we have made is very small as a return on invested capital or what the farm was worth. That is the problem for all farms in America. I recognize that acutely, as one whose small wealth is tied up in this sort of thing. A 4-percent return on invested capital is roughly what I see as sort of a gold standard that you work by. That is true whether it is the Lugar farm or all farm income in America. This past year was a bit over a trillion dollars, and with net-net farm income of something over $40 billion, the 4 percent bobs up even as you look at USDA's figures. That makes farming a difficult proposition, and it always will be. These debates will continue because we are not talking about persons who are likely to be wealthy across the broad spectrum--a few cases, maybe deservedly so, from ingenuity, work, and perseverance--but the broad spectrum is mostly in difficulty. Under those circumstances, I talk about a realistic safety net that I think can be perpetuated at fairly low cost and is unlikely to have the political reaction or re-reaction from other taxpayers at various points when they visit these programs. Mr. President, I yield the floor, as others may have comments about this amendment. I suggest the absence of a quorum.

Mr. LUGAR. Mr. President, I rise to offer an amendment to the Agriculture Committee-passed farm bill and to the substitute that has been submitted. By adopting my amendment, the Federal safety net for low-income Americans will be strengthened through improvements in the Federal nutrition programs and will create a more effective market- oriented and broad-based safety net program for U.S. farmers and ranchers. Therefore, my proposal amends the commodity title and the nutrition title of the bill. Since joining the Senate Agriculture Committee, I have fought for Federal nutrition programs and worked closely with my colleagues on both sides of the aisle to make improvements to those programs and to safeguard their existing resources to improve the safety net for low- income Americans and to support the goals of welfare reform. The last time we looked at significant changes in the Federal nutrition programs was during welfare reform. Since that time, significant changes have occurred which require adaptations and improvements in the program's policies and operations. Over the course of the re-authorization process, we have been able to achieve remarkable consensus among the client advocates, the States, and the administration as to changes that should be made to Federal nutrition programs. This consensus was reflected in the nutrition title of S. 1571, the farm bill proposal which I introduced. I am pleased that Chairman Harkin of the Agriculture Committee adopted a number of these proposals in the chairman's mark, and many are included as part of the committee-passed legislation. However, I believe strongly we can and should do more in the nutrition area, and this amendment will accomplish just that. The second part of my amendment reforms the safety net for U.S. farmers and ranchers. The Senate Agriculture Committee and the House of Representatives have each passed legislation expanding dramatically U.S. farm program subsidies. The bills are not only costly, but each represents a wholesale retreat from the important reforms begun under the last farm bill. My amendment will expand the base of the agriculture safety net and will institute much needed market-oriented reforms so the U.S. farm policy will comport with economic reality. Americans can take pride in the assistance programs created to provide a strong nutrition safety net. The Food Stamp Program is the foundation of this safety net, and its re-authorization warrants our thoughtful and serious attention. In our post-welfare-reform environment, the Food Stamp Program is particularly important. As families leave behind cash assistance for employment, they typically encounter minimum wages and modest, if any, fringe benefits and often unstable jobs. In the year 2001, a family of four with earnings equivalent to a full-time minimum wage job and the earned income tax credit needs food stamps just to reach the poverty line. Dr. Ron Haskins, a key architect of welfare reform legislation, has stated: There are millions of people who cannot earn enough to support their families. Even more than in the past, the Food Stamp Program has become a vital support to poor and low- income mothers who work. Thus, one of the important questions we must address is whether or not the current Food Stamp Program effectively supports welfare reform goals. There appears to be a number of indicators that point to the need for additional program changes. Some of these signals, such as the increased proportion of recipients who hold jobs, are clearly desirable but may suggest further steps to make the program more compatible with this evolving caseload profile. Other findings, such as the decline in the percentage of financially eligible persons who participate, raise questions. Collectively, these shifts illustrate the need both to continue adapting and improving the Food Stamp Program. As part of my farm bill proposal, I introduced a nutrition title embodying changes which would simplify food stamp rules for all stakeholders, increase State flexibility in administering the program, make the quality control system less punitive, support personal responsibility and work, and reduce the dependency of low-income persons on emergency food assistance. This idea received public support from Michigan's Governor Engler when introduced, and the amendment which I offer today is intended to provide a more complete meal to low-income families in need of nutrition assistance and to States seeking administrative flexibility and simplicity. I served as chairman of the Agriculture Committee in 1995 and 1996 when the committee wrote both the farm bill and the food stamp provisions of welfare reform. The committee faced a difficult budget reconciliation instruction for those years. The result was that spending on food stamps was significantly reduced. For the years 1996 through 2001, the Congressional Budget Office (CBO) estimated that welfare reform would reduce food stamp spending by over $21 billion. Over that same time-frame, CBO estimated that farm program spending would be reduced by $2 billion due to the enactment of the 1996 farm bill. Thus, over 90 percent of the budget cuts enacted in 1995 and 1996 pursuant to the Agriculture Committee's reconciliation instruction occurred in the Food Stamp Program. I make that point again because it is such a dramatic one. Reconciliation instructions came to our committee. We were compelled to act. The $23 billion of savings that was required came, $2 billion from farm commodity programs and $21 billion from food stamps. As it turned out, CBO underestimated the effects of welfare reform on the Food Stamp Program. For the years 1996 through 2001, food stamp spending declined by about $50 billion, not the $21 billion CBO originally estimated or the $21 billion we anticipated as we responded to the reconciliation instruction. Around half of that reduction was due to the changes in law made by welfare reform and an economy that was stronger than CBO anticipated. The other half of the decline in food stamp participation occurred among eligible families and was due largely to the outdated restrictive nature of the current Food Stamp Program administration. Thus, food stamps provided the vast bulk of the savings needed in 1995 and 1996. History has shown that the actual reductions were far bigger, in fact, dramatically larger than expected. Some of those reductions were reinstated in later bills. Specifically, about $2 billion has been restored to the Food Stamp Program, but an additional $30 billion has been added in commodity support over the same period. Given that such a large proportion of budget savings came from the Food Stamp Program, it seems equitable that with substantial new agricultural resources all of the legislation we are now considering, all the alternative bills produced, a significant share of the new money should go to restoration of a sound Food Stamp Program. I am not proposing that 90 percent, or even a majority of the new funding apparently available to the Agriculture Committee, go to the Food Stamp Program. The committee- reported bill, however, devotes only 7.6 percent of its spending to nutrition. I am proposing to spend 19.2 percent of these new resources for nutrition. It seems to me it is only fair and right to vote a little less than one-fifth of the bill's new resources to support Americans in poverty and to further the goals of welfare reform. The nutrition title in my amendment spends $6.3 billion more in budget authority over the next 10 years than the nutrition title in the farm bill now before the Senate. Senator Harkin's title spends $5.6 billion in budget authority over baseline; my amendment spends $11.9 billion, an increase of $6.3 billion over the committee-passed bill. I make it clear that the spending I am talking about goes to support the goals of welfare reform in addition to the Food Stamp Program. Collectively, my proposed nutrition policy serves to replace complex food stamp rules with simpler ones, better integrate the food stamp, Medicaid, and cash assistance programs, offer many opportunities for State flexibility, and attempt to make the program more compatible with the needs of working families. The nutrition package is constructed to make sure the Food Stamp Program promotes welfare reform objectives conveyed in the title of that legislation. First, responsibility and work opportunities: My proposal includes almost twice as many provisions to simplify the Food Stamp Program. They cover eligibility rules and procedures, income adjustments, and reporting requirements. Most of the differences between the two titles--that is, the committee-passed bill and my proposal--occur in the first two categories. My proposal excludes vehicles and dedicated retirement savings from the asset limit thus reflecting what a household needs to assume personal responsibility today and in the future. Making these changes also simplifies application and eligibility determination procedures by reducing the documentation households must provide and some of the fine distinctions case workers have to apply now as to which assets are and are not excluded. The result is a set of realistic and uniform asset policies across all States. Both titles--that is, the farm bill proposal of Senator Harkin and my proposal--create new opportunities for State flexibility and innovation. My proposal offers substantially more. States have provided an additional discretion for using food stamp employment and training funds, as well as additional dollars. The Lugar title also opens the door for States to test their own ideas on program simplification through changes to demonstration waiver rules on cost neutrality and by funding a set of systematically evaluated projects. The outcomes of the stated initiative should provide the basis for continuing welfare reforms. Finally, my nutrition title allows States to move beyond their successful demonstration experience of integrating a food stamp eligibility decision with an application for SSI benefits to more routine implementation for the one-stop approach. The two nutrition titles are similar to one another and to the House proposal for modifying the food stamp quality control system. The proposed changes result in targeting penalties to those States with repeated and exceptionally high levels of benefit payment error. Our proposals differ, however, with respect to rewarding States for exceptionally good performance. The Lugar proposal introduces a large number and variety of performance standards that allow many states the opportunity to be meaningfully rewarded for outstanding operations and service. Other improvements to the Food Stamp Program are intended to reduce dependency on emergency food assistance. Both the Lugar and committee proposals selectively remove some of the restrictions on the participation of legal aliens and able-bodied adults in the Food Stamp Program, as well as provide a modest benefit increase through a more generous standard reduction to family income. The Lugar bill proposes reasonable periods of U.S. residence, 5 years, or a history of 4 years at work. The proposal was carefully designed to balance our obligation to those who legally emigrate to this country and subsequently face economic hardship against the concern that assistance program policy should not be so generous as to provide benefits immediately upon arrival, nor to create that expectation. Finally, both titles link the standard income deduction to the poverty line which results in indexing by family size and adjusting for inflation. Under either proposal, the absolute benefit gain per household is modest. For example, after full phase in over 10 years, my proposal entitles a family of four to an additional $16 in benefits each month. This increase is more generous than the committee proposal in terms of the amount of the change and the rate at which the increase occurs. Many different organizations have sent letters of endorsement to both Senator Harkin and to myself. Public support includes the Food Research and Action Center, Second Harvest, the Center on Budget and Policy Priorities, the Evangelical Lutheran Church, the Bishop's Council, Farmers Market Advocates, United Jewish Communities, the Quakers, the National Council of La Raza, the National Governors Association, the National Conference of State Legislatures, and the American Public Human Services Association. These organizations acknowledge the important steps Chairman Harkin and the Agriculture Committee have taken to build on the provisions of the House title. But these same organizations note that nutrition funds provided by the committee's package provide the minimum budget necessary to make a difference. Many also indicate their preference for both the proposed policies in, and the funding for, my nutrition title ideas. Individual groups identify specific but different provisions that they view as critical to fully implementing welfare reform. With our country's wealth and agricultural bounty, there is no justification for anyone to experience hunger or even uncertainty about the next meal. The Food Stamp Program continues to be fundamental in meeting the nutrition needs of low-income persons and families. It is particularly important now, as food stamp benefits help support families who leave cash assistance for entry-level jobs with uncertain futures and at the same time provide a direct stimulus to the Nation's economy. It is also important that we listen to the States and to the Governors who have asked us to simplify this complex program. That brings us to the second part of my amendment which is reforming the safety net for U.S. farmers and ranchers. As we debate the farm bill, it is important to understand the shortcomings of current farm policy. Virtually all agricultural subsidies go to producers of just five program crops: corn, wheat, soybeans, cotton, and rice. As a result, 60 percent, three-fifths, of all farms are excluded from Federal farm benefits. Agricultural subsidies have been distributed according to acreage. This has resulted in the bulk of payments being distributed, understandably, to large farming enterprises. In fact, 47 percent of all payments during 1996-2000 went to just 8 percent of farmers, a very focused concentration for payments. The cost of U.S. agricultural policy to taxpayers has been large and unpredictable, even as it has failed to alleviate the difficulties it is intended to address. Even with an overall net cash farm income for this year of $61 billion, many producers, particularly small family farms, struggle to survive. But that is paradise. Despite the rhetoric that has been heard on occasion during our farm bill debate this year, the facts are that we are enjoying--if that is the proper word--the highest net cash farm income ever for any year in American agriculture--$61 billion. Even the often cited year of 1996 did not exceed that amount, and this year's farm income is substantially greater than the years subsequent to 1996. Yet, as we have heard from testimony, and from Senators about constituent farmers, large numbers of farmers are obviously short in terms of income and many are growing short in terms of hope. I think the Chair and I understand that. We have heard from a good number of farmers in our States. The problem of course is that the benefits of the program, by tradition and history--and now that history is about to be repeated--go predominantly to five crops, so that almost half of the payments go to just 8 percent of the farmers. It is very difficult to argue logically that the farm program--at least the one that came out of the Agriculture Committee this year or, for that matter, the one that came out of the Committee in 1996--is going to touch even a majority of farmers. It will certainly not reach a majority of those who are fairly small. There may be an illusion that the program does this by chance, but there is certainly no program effort or focus involved. The current policy of Federal supports, in fact, defies economic logic. It perpetuates--I repeat that word--it perpetuates a cycle of low prices and overproduction, which is then reinforced by further emergency subsidies that create further low prices and overproduction. The history of these efforts to concentrate on five row crops and to attempt to guarantee prices that are clearly substantially above market prices, either in the United States or the world, creates incentives to produce for the Government program, not for the market. As a result, more is produced. Predictably, as demand in our country for major crops has not increased, the supplies overwhelm demand. In the best of all worlds, we would have free flow of our agricultural commodities in world trade, but we do not. Someday we may. It is a very tough thing, as we have all found, to negotiate. Meanwhile, with the flow constricted abroad, supplies mounting at home, prices predictably go down. The bill that came out of committee, in my judgment, will pound them down further. The promise of the committee bill, not economic reality, is, that notwithstanding what may be occurring in the market, farmers can count on prices that are much higher than the market and financed essentially by other taxpayers. So, in a 10-year period of time, it is estimated that with the so-called baseline expenditures plus the new expenditures, about $172 million will be transferred from all the taxpayers in the United States to a very few agricultural producers. Why very few? Because 60 percent of farmers don't get anything at all. Most of the benefits go to six States. Within the six States, the same national averages are replicated; namely, 8 percent of the farms get half of the benefits. There may be an illusion that somehow in agricultural America farms across all 50 States are being supported or rewarded by this bill. That simply is not the case. It has not been written that way this time nor has it been, really, since the New Deal days of the 1930s. Large farm payments also have the faculty to inflate land values and cash rents derivative from that, particularly for program crop producing regions. Why there? Because, given the desire of the Federal Government to support prices that are well above the market, land values have an expectation of those sorts of returns. Country bankers have an expectation of those sorts of returns. Landowners become accustomed to those returns and increase the rents. Why is that significant? Because 42 percent of farmers rent land. So they are losers in this process. So, on the one hand, we are hoping to boost income, while, in fact for the 42 percent of farmers who are renting, the land that is useful for farming program commodities increases in price and so does the rent for that land. This has especially unfortunate results for young farmers who typically must rent most of the land they farm unless they have inherited land or are part of a situation where they do not need the capital to buy in. The commodity bill that came out of the Agriculture Committee increases the CCC Farm Program spending by an estimated total of $44 billion over 10 years. That bill raises nonrecourse marketing assistance loan rates significantly and across the board. The only exception is the soybean loan rate which would remain largely unchanged at its current high level. These loan rights will be effective for 2002 through the 2006 crop. Compared to current law adopted in 1996, the new Senate bill coming out of the committee raises marketing assistance loan rates by 16.2 percent for wheat, 10.1 percent for corn, 5.9 percent for cotton, and 5.1 percent for rice. Without doubt, this will encourage even more production of these loan-eligible commodities given the attractive new loan rates that are available to those who produce them. In addition, the committee-passed bill will provide direct and countercyclical payments for program crops based on updated acreage and yield history, in effect rewarding producers for recent decisions to increase production of these commodities, and, thus, encourage their production in the future regardless of market signals because of the guarantees that come quite apart from whatever is occurring in the market. Altogether, these program crop provisions are expected to cost taxpayers about $34 billion in addition to the baseline expenditures over the next 10 years. Importantly, increased crop production will drive farm prices for these crops lower than they are today, thus further reducing crop market revenue received by farmers. Dr. David Orden, professor of agriculture economics of Virginia Tech University, estimates that after including the production increasing effect of such subsidies, about 25 percent, or $8.5 billion--of the Senate Agriculture Committee's $34 billion--will be lost by crop farmers due to lower market revenues. That is an astonishing phenomenon that, on the one hand, we congratulate the committee for increasing farmers' income by $34 billion, but we fail to acknowledge that, even as we are overstimulating production, another $8.5 billion is being lost by crop farmers due to lower market revenue as prices are pounded down. For the dairy industry, the committee-passed bill originally extended the milk price support at $9.90 per hundredweight through 2006. I say originally because, as with many, it has been hard to follow the changes and the chapters of this stock. I fear almost any figures that I quote from previous bills have been overtaken by events, perhaps even as we speak. But, in any event, suffice it to say that with the programs and significant restructures and committee-approved bill, instead of newly constituted boards in each Federal marketing order region administering the program, it may now be administered by the Secretary through existing Federal milk marketing orders. Overall, the dairy provisions are expected to cost taxpayers $3 billion over the next 10 years. A new target price and marketing loan support program is created in addition for peanut producers. The taxpayers' cost, therefore, is expected to be about $4.2 billion over 10 years, nearly $700 million more than the House-passed peanut provisions. The distinguished occupant of the chair will recall discussions in the Committee on Agriculture in which some of our members were insistent for more attention to peanuts, and they received that. Peanut processors and manufacturers are expected to benefit substantially from lower farm prices for peanuts that will occur as a result of this taxpayer financed buyout but peanut users are not asked to share the cost. The commodity title of this bill is expected to cost about $44 billion over baseline, and, if so, this would be only $4.8 billion less than the $48.8 billion the House spent on its commodity title over the same period. Current farm programs, however, have some problems as well. Due to the current program's focus on program crops, as I mentioned, 60 percent of farmers are excluded from the program benefits. Furthermore, farm payments are distributed based largely on historical program crop acreage and yields in the case of the fixed payments, the so-called AMTA payments, and the volume of program crops produced in the case of the marketing assistance loan program and the sufficiency payment program. I mentioned this because we have debated this issue during, as I recall, each of the three emergency or supplemental debates we had. Many Senators pointed out that technically a farmer might not now be farming but would receive an AMTA payment because the farmer was on the rolls in 1996 that established a history for program crops and, therefore, received the money. The rationalization was made--I must confess I accepted this as a practical matter--that to reconstruct the rolls would be to eliminate any possibility for relief of the emergency that we are attempting to meet; namely, the only way that checks could be cut and money get to the farmers would be to use the AMTA payment rolls from 1996, recognizing that each year that history became more dated. In fact, we are sort of back to square one in the bill out of the Committee on Agriculture. There is a thought about updating--not necessarily eliminating--that we still have the 1996 situation for some farmers who may or may not update. I gather that would be optional. And 47 percent of the payments now go to 8 percent of the largest farmers. It is not clear, but it would appear at least to some that concentration might increase, given the fact that the landowners who are involved in the situation have an opportunity to enhance their situation by updating the acreage--acreage that has been planted in response to the rewards of the program which, in my judgment, has contributed to an overproduction and lower prices. But those who have been increasing their production have, by and large, been among our most efficient farmers. They say we ought not to be penalized for using the benefits of research of our land grant colleges. The fact that we are good at it means we are able to produce for less than the loan deficiency payment, and, thus, finding it profitable to the last bushel to do so ought not be a consideration. I believe the bill which came out of the Committee on Agriculture does not deal with the shortcomings in policy that I have been discussing. Therefore, we tried to find an alternative that would not be production distorting, would not distort land values, and would not discourage young farmers and those who rent, but would, in fact, bring much greater equity not only to the program crops but to farmers who produce livestock, fruits, and vegetables, or various other things on their farms. The commodity title of my farm bill offers such an alternative. As the Chair may recall, I offered in the bill that I submitted an entire farm bill. It was the will of the committee, in which I was pleased to cooperate, that most of the titles were ones that we were able to adopt in a bipartisan colloquy, and all things considered, fairly rapidly, given the comprehensive nature of going into farm credit and conservation, and some very large issues. For example, energy, this time, is a very important issue. (Mr. DAYTON assumed the chair.)

Mr. LUGAR. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. LUGAR. Mr. President, I send an amendment to the desk and ask for its consideration.

Mr. LUGAR. Mr. President, I thank the distinguished Senator for his remarks. He always makes an important contribution in the Agriculture Committee and, of course, now serves as chairman of our Budget Committee in the Senate and has made an additional contribution because of the importance of that responsibility. Mr. President, before I offer my amendment, I ask for the yeas and nays on the pending substitute amendment.

Mr. LUGAR. I respond by saying I am pleased to yield time to the Senator. The allocation by the majority leader was equal time between the time he made the motion and 4:30. That is why we are in this particular situation. The previous speaker consumed the first half of the time. I will be recognized at 4:30 to offer an amendment, which I plan to do. I am pleased to yield to the Senator.

Mr. LUGAR. I suggest the absence of a quorum.

Mr. LUGAR

Mr. LUGAR. I suggest the absence of a quorum.

Mr. LUGAR

Mr. LUGAR. Madam President, it is a great honor to rise today to introduce legislation that would name the Department of State's Foreign Affairs Training Center after former Secretary of State George P. Shultz. I am pleased to be joined by Senators Helms, Hagel, and Domenici in honoring this outstanding public servant. Many of my most productive and enjoyable foreign policy experiences were those involving George Shultz as Secretary of State. Secretary Shultz celebrated the visits of foreign leaders to Washington by inviting hundreds of people to a luncheon or dinner at the State Department. If the guests were, for example, the President of Brazil, Shultz would identify prominent Brazilian business leaders, journalists, and scholars in the United States and a host of comparable Americans with interests in Brazil. He sprinkled the invitation list with members of the Reagan Administration and both houses of Congress. On most occasions, I was invited and introduced to a host of new friends deeply interested in international affairs. When I became chairman of the Senate Foreign Relations Committee in 1985, the Secretary invited me to breakfast about once a month when Congress was in session. He always had a list of Reagan Administration legislative objectives for me to achieve and good suggestions on people and resources needed to accomplish each task. In a two year period, I chaired extensive hearings on the Philippines, South Africa, and the prospects for democracy in Central America. Though the recommendations of Secretary Shultz, I co-chaired Presidential election observer efforts in Guatemala, El Salvador and the Philippines. These experiences led to considerable post-election interest and diplomacy, especially in the Philippines. These events and the influence of Secretary Shultz played a large role in the context of my book ``Letters to the Next President''. In recent years, I have been a participant in the Asia Roundtable meetings sponsored by Stanford University and inspired by the leadership of George Shultz and his ability to bring statesmen from each Asian country to his meetings. Similarly, he brings distinguished leaders from all over the world to Stanford University Advisory Committee meetings and I have been the beneficiary of those rich experiences. My continuing service in the United States Senate has received constant support from Secretary Shultz. His letters and wise counsel during conversations have made a significant difference in my understanding of complex issues. From the years at the State Department dinners to the present, he has introduced me to a legion of friends in many countries, and this network of friends and advisors has been invaluable. Secretary Shultz decided to back President George W. Bush very early in the Presidential Campaign of 2000 and has offered strong support to President Bush's bold diplomacy and the importance of employing and retaining the best foreign service personnel to achieve our international goals. Naming the National Foreign Affairs Training Center after George P. Shultz will be a fitting tribute to a great public servant who continues to exemplify the hallmark qualities in United States international leadership. This bill has the full support of the Department of State. In fact, it is at Secretary Powell's request that we are seeking to expedite its consideration. Secretary Powell has invited former Secretary Shultz to visit Washington in January. I understand that Secretary Powell hopes to announce the dedication of the Foreign Affairs Training Center during Shultz's stay in Washington. It is my hope that the Majority and Minority Leader and the Members of the Senate will fine the opportunity to move this important legislation in the near term. Congressman Hyde and Lantos have offered the same legislation in the House and have similar hopes for speedy passage.

Mr. LUGAR

Mr. LUGAR. Madam President, it is a great honor to rise today to introduce legislation that would name the Department of State's Foreign Affairs Training Center after former Secretary of State George P. Shultz. I am pleased to be joined by Senators Helms, Hagel, and Domenici in honoring this outstanding public servant. Many of my most productive and enjoyable foreign policy experiences were those involving George Shultz as Secretary of State. Secretary Shultz celebrated the visits of foreign leaders to Washington by inviting hundreds of people to a luncheon or dinner at the State Department. If the guests were, for example, the President of Brazil, Shultz would identify prominent Brazilian business leaders, journalists, and scholars in the United States and a host of comparable Americans with interests in Brazil. He sprinkled the invitation list with members of the Reagan Administration and both houses of Congress. On most occasions, I was invited and introduced to a host of new friends deeply interested in international affairs. When I became chairman of the Senate Foreign Relations Committee in 1985, the Secretary invited me to breakfast about once a month when Congress was in session. He always had a list of Reagan Administration legislative objectives for me to achieve and good suggestions on people and resources needed to accomplish each task. In a two year period, I chaired extensive hearings on the Philippines, South Africa, and the prospects for democracy in Central America. Though the recommendations of Secretary Shultz, I co-chaired Presidential election observer efforts in Guatemala, El Salvador and the Philippines. These experiences led to considerable post-election interest and diplomacy, especially in the Philippines. These events and the influence of Secretary Shultz played a large role in the context of my book ``Letters to the Next President''. In recent years, I have been a participant in the Asia Roundtable meetings sponsored by Stanford University and inspired by the leadership of George Shultz and his ability to bring statesmen from each Asian country to his meetings. Similarly, he brings distinguished leaders from all over the world to Stanford University Advisory Committee meetings and I have been the beneficiary of those rich experiences. My continuing service in the United States Senate has received constant support from Secretary Shultz. His letters and wise counsel during conversations have made a significant difference in my understanding of complex issues. From the years at the State Department dinners to the present, he has introduced me to a legion of friends in many countries, and this network of friends and advisors has been invaluable. Secretary Shultz decided to back President George W. Bush very early in the Presidential Campaign of 2000 and has offered strong support to President Bush's bold diplomacy and the importance of employing and retaining the best foreign service personnel to achieve our international goals. Naming the National Foreign Affairs Training Center after George P. Shultz will be a fitting tribute to a great public servant who continues to exemplify the hallmark qualities in United States international leadership. This bill has the full support of the Department of State. In fact, it is at Secretary Powell's request that we are seeking to expedite its consideration. Secretary Powell has invited former Secretary Shultz to visit Washington in January. I understand that Secretary Powell hopes to announce the dedication of the Foreign Affairs Training Center during Shultz's stay in Washington. It is my hope that the Majority and Minority Leader and the Members of the Senate will fine the opportunity to move this important legislation in the near term. Congressman Hyde and Lantos have offered the same legislation in the House and have similar hopes for speedy passage.

Mr. LUGAR

Mr. LUGAR. Madam President, I appreciate very much the words of the distinguished Senator from Florida. I share his feelings completely. We had the privilege in the Foreign Relations Committee of having a meeting with the President of Bolivia just this morning. President Ramirez is in Washington to meet with President Bush tomorrow. Obviously, the President of Bolivia, an extraordinarily talented person, a great leader in South America, expressed very considerable anxiety over the end of the Andean free trade situation. Bolivia has taken extraordinary steps against the drug trade at great cost but with great effectiveness. Our foreign policy really depends upon the support of extraordinary leaders such as the President of Bolivia. The words of the Senator from Florida are timely, and his leadership on this issue really has been exemplary. I congratulate him and look forward to working with him. I suggest the absence of a quorum.

Mr. LUGAR. Mr. President, I thank the distinguished Senator from Colorado for yielding that time. I thank him even more for his message. It has been a genuine pleasure to work with him on the Agriculture Committee in trying to formulate good legislation. I look forward to supporting the ideas he has presented this afternoon. Mr. President, as a part of the background for our debate, we ought to consider carefully the status of the farm economy presently. Many views have been given, and they are earnest views of Senators and their States' particular agricultural interests. Let me review a summary of where we stand at this particular point in the year 2001. Current USDA forecasts suggest that the underlying farm economy, exclusive of Government payments, is stronger this year than last. While U.S. agriculture continues to face the prospects of somewhat reduced income and outgoing structural change, many indicators remain favorable. The indicators that remain favorable are: Exports are up; asset values for agriculture throughout the country are up in the aggregate; debt levels are down; the rate of inflation for the overall economy, of course, has been down; interest rates are down; productivity and prices appear to be strengthening. Clearly, in the soybean and corn markets, which I know the occupant of the chair watches, as I do, we have seen mercifully an upturn, after bottoming out. In any event, the price levels across the board for all crops appear to be slightly stronger than last year. World markets are extremely important to us, and this is why we are all encouraged that export sales apparently will finally come in somewhere close to $53.5 billion in 2001, as compared to $49 billion a year ago, an increase of $4.5 billion. They could grow to as much as $54.5 billion in 2002, according to USDA's best projections. These levels are still below the record levels of 1996, often cited primarily in response to continuing problems in Asia, and production increases by competing exporters--many of them in Latin America. Nevertheless, the sales appear to be increasing significantly. Year over year, forecasts of grain, poultry, and horticultural exports in 2002 will exceed 2001, largely due to increased volume. Exports to major U.S. markets in Asia and the Western Hemisphere are projected above 2001, even in spite of slowing economic growth or, in some cases, recession in those areas. Overall farm income has this projection: The intermediate term economic outlook for agriculture is uncertain, as always. It is clear that many underlying farm economic conditions are stronger this year than last. Farm cash receipts could be near high record levels for 2001, and, indeed, earlier this morning I discussed this subject. We found figures from USDA that showed roughly $60 billion of net cash income. This would be, in fact, a new all-time record for any year, including 1996. Farm cash receipts have been driven largely by a 9-percent increase in livestock sales. Overall crop sales appear to be up about 3.1 percent. Gross cash income is up 4 percent and net cash income is up 5.7 percent over last year. The $20 billion in payments from the Federal Government, including the AMTA payments, which we voted on in the summertime, come to $20 billion less, in fact, than the $23 billion that the Congress allocated last year. That is significant because the net cash income record was received, even though Government payments have come down this year by, apparently, something close to $3 billion. The projected increase in sales in 2001 will more than offset the modest decline in the Government payments and could boost cash income to $239.3 billion, up significantly by $9.2 billion from last year. I mention all of this, Mr. President, not that these are figures that are likely to lead anyone to a false impression about agricultural prosperity but it seems to me important because this debate thus far has been about a necessity of having the farm bill passed during this calendar year. One of the reasons offered by some Members has been the gravity of the situation for many farmers. Each one of us has many such farms in our States that are not working well. But the overall picture is important. The overall picture is one of higher net cash income. I found it to be extremely important to study the USDA tables on farm balance sheets. One of the factors of obvious debate that always seems counterintuitive to many who listen to them is that, each year, I and others have made the point that the total value of farms in America has been growing. By that I mean the estimates of the total value of farms, the equity, after all liabilities, real estate debt, or any other farm debt have been subtracted, is $1.36 trillion. That is up from $1.4 trillion last year. In other words, the equity in farms in this country--the bottom line is there has been an increase of 3.2 percent. That is not unusual. Simply tracing back over the course of time, USDA points out that in 1995, the net equity in farms in America was $815 billion. In 1996, often cited as the high water mark in terms of farm prices and prosperity, farm values were $848 billion, but in 1997, this went to $887 billion, in 1998, to $912 billion, and in 1999, to $964 billion. Last year, it went to $1.4 trillion, and this year it went to $1.36 trillion. Throughout this time, however--Senators wish to argue the ups and downs of agricultural prosperity or difficulty--the value of their farms went up every single year without exception. Many have asked: How can this be? I have tried to answer that question in earlier statements. The programs we have adopted, for better or for worse, finally add up to more land value. They go essentially to landowners. That is capitalized in the land. They are able to borrow more on it, and they become more prosperous. The market value is higher because a stream of payments guaranteed by the Federal Government appears to be behind those values. Some, without being spoiled sports, have raised the question of whether these land values have a reality to them that is solid for the future. They have not suggested a so-called bubble effect that land values, much like communication or telecommunications firms in our economy in the last 2 years, simply exceeded the potential for income streams that might come from them. Nevertheless, it is difficult to argue that these land values, increasing each year, do not have built into them certain expectations of Federal policies that are very generous. Perhaps over the course of the next 5 years, or in the case of the House bill the next 10 years, the general public in the United States; that is, taxpayers, everyone who is not a farmer, are prepared to make very large transfer payments of their moneys to those who are farmers and to do so in such a predictable way that anyone who owns land can anticipate that kind of flow. It would have no relationship to whether or not there was an emergency. It simply is a guaranteed transfer of payment with the same certainty as a pension right or some other property right involved. That is a judgment for Senators, Members of the House, and the President to make, and we all have our different views on this issue. I have always wondered whether those who are not farmers understood the transfer that was occurring and the seeming permanence of that, as opposed to payments that came in emergencies. Senators have risen throughout this debate and condemned the farm bill of 1996 as a terrible failure, pointing out that it is so bad that we are compelled as Senators to meet almost every summer and vote to send more money to farmers. With some degree of political realism, I would say the compulsion for us to meet every summer to do this is probably being propelled much more by our own desires. To a certain degree, I have noted an amount of political competition in this--some persons purporting to be stronger friends of farmers than others, all believing we ought to be able to help out by sending more money in that direction. There has been no reticence on the part of Senators on both sides of the aisle to vote this money. I predict, I think without being too far off the mark, that whatever kind of a farm bill we finally enact this time, there may be those among our number who will ask us each summer to come to the Chamber to vote more money, to supplement whatever it is we have done. In other words, I have never found in my experience in the Senate that the issue is ever settled. The emergencies occur every year and in many parts of the country and sometimes vary widely. Let me offer a reason why that is so. This is not a cynical reason. This is a reason rooted in the reality of my own experience. One of the questions I frequently ask witnesses before the Agriculture Committee when we are having debates on programs or incomes is to give me an estimate of the return on invested capital that they obtained from their farm operation. Most witnesses, even those who are fairly sophisticated, do not know. They really have not thought that problem through. They say that is almost irrelevant: My problem is keeping the farm alive, keeping the dairy operation alive. I do not know what the return on investment is; the problem is paying the banker and having enough capital to buy new equipment to be competitive. I understand that, but it illustrates part of the problem. When I have had discussions with very prosperous farmers in Indiana, whom I respect for their abilities and have learned a lot from them, their answer to that question is usually a 3 to 5-percent return on invested capital over several years. Some years it is much better, but some years it is close to a wash. Some suggest, of course, that depends on how leveraged the farm is. If, in fact, a very valuable property has an almost equally valuable mortgage on it, the amount of equity that the farmer has in play is fairly small; therefore, any income fluctuation makes the return on income either go up or down very rapidly. Let us say for the sake of argument that the farm has no debt. That has been essentially my case for many years, and my own experience has been roughly 4 percent on invested capital. When that figure arises in a forum that is not a farm meeting, many people raise the question: That is pretty low for a large enterprise over a long period of time. For example, many people who are skeptics about this would say you could have gotten a 6-percent return just by investing in U.S. Treasury bonds for 30 years during many recent periods. For that matter, prior to this lower interest rate period we are in now, you probably could have bought the bonds maybe even for 7, 8, or 9 percent at different times during this decade, with absolutely no risk economically, no risk from markets drying up abroad, no risk from the weather. This raises the question: Why is $1 trillion of American capital tied up in farms--which, indeed, it is--2 million such entities, at least with the definition of $1,000 in sales? The reason ultimately, in my case, as well with most people, is that we like what we are doing. Frequently, it is a family tradition. That is my case. My dad bought the farm 70 years ago. It is something very important to me as a person. It is more than simply a business enterprise. But I have to recognize there are alternative things I could do with the capital and probably do better than 4 percent. This 4 percent is anecdotal in a sense but not entirely. If, in fact, as the distinguished chairman of the committee pointed out this morning, net farm income in this country for 2001 is 49.4 percent, and you factor that with a divisor of $1.36 trillion for the value of real estate and so forth, you come to something like 4.8 percent. Taking a look at all of American agriculture, that net was earned on this amount. So my experience is not too far away from the mainstream, which is comforting to know, but not for farmers generally because there is not much leeway. I suggest the reason we have debates almost every year is a good number of farmers do not have any leeway. If farms that are fairly large and well managed do no better than 4 percent on average, and in some years 3 percent or 2 percent, situations that are not so well managed, do not have modern equipment, the research into seeds or planting processes, or have not done conservation work that has proper drainage, they are going to have problems meeting it at all every year; there is so little leeway. Intuitively, we have known it even if we could not quantify it, and our policy has generally been, regardless of which farm bill I have been involved in, to save every family farmer. We have tried, in fact, to think through how there could be a safety net and ad hoc emergency payments and whatever was required. We have not succeeded, although, as I mentioned in an earlier debate today, we have stimulated a lot of people to come into farming, many of them in a small way. It is not a major income. So the numbers of farmers do not trail off as rapidly as they did at the turn of the century, 100 years ago, or all the way through the 1930s. Nevertheless, the concentration into about 170,000 large farms in this country is pronounced. These farms are doing the majority of the business, and about 600,000 farms in America plus or minus a few do about four-fifths of all we do. Trying to fashion a farm policy, therefore, that fits these situations, these diverse situations, is virtually impossible. At the same time, we have tried--all of us have tried. The bottom line has been we have succeeded in good part, but the debate continues because farms that do not make very much on invested capital are in trouble every year. I do not know the answer to that question. My guess is, in part, it is being answered by age. The average age of people who are farming increases. The people who come to the distinguished occupant of the chair and to me, who have, say, a 30-, 40-, 50-herd dairy situation, say: What are we going to do? I am 65, one farmer will say. I would like to retire. I would like to get a pension or my money out of this. The son who is about 40, it is very doubtful whether he wants to continue, whether there is enough for a livelihood at a middle-class level in our society, and they come to us and ask for counsel as to what to do. There is no good answer. It finally has to be a gut feeling on the part of that farmer. The farm bill on which we are about to embark, if we adopt the bill passed by the Senate Agriculture Committee, in my judgment, makes the situation substantially worse. I do not paint this in disastrous hues. My own judgment is, regardless of what we do, this will not be an irrevocable disaster for the country, but I think some people will get hurt. Among those who will get hurt are probably the small, simply because most of the payments will go to the large. The payments will be much larger than they were before, so the large will be even more consolidated and confirmed in their situations. Land values will continue to increase, maybe not to a bubble situation but clearly rising on the basis of not much behind them. The return on capital is still pretty sketchy. If one were to take a look at this, such as the people at the stock market, it would be seen as a pretty precarious kind of investment, and based largely upon the general mood of the public as a whole. Since this prosperity would not have been based on the market necessarily but really on the basis of our political debate and public policy, that which is given can be taken away. I have no idea what the mood of the Congress will be 2 or 3 years from now, if in fact we have sustained deficits for 3 years as the Director of OMB has prophesied we will. There is no farm program that is engraved forever. We can pass a bill that has 5 years' duration or 10, but each Congress can amend that very substantially and change it materially and must have the right to do so on the basis of whatever the crisis the country faces or its priorities then. That is why I fear the idea of 5 or 10 years of very large fixed payments to 40 percent of farmers who are in the program as opposed to 60 percent who are not, based on nothing more than the fact that one has been a farmer in the past, whether they are farming now or not. It has some problems to it. They are not being glossed over. I think Senators must understand what they are doing. Having heard a lot of criticism about fixed payments in the past, these so-called AMTA payments, I am astonished so many Senators are fully prepared to do more of it now really without any limitation. The bill I presented does have limitations. The 6 percent credit that one receives on the basis of all the total whole farm income is finally limited to only $30,000 a farmer. The Senate Agriculture bill we are now considering could pay as much as $500,000 to a single farm entity. In fairness to my chairman, Senator Harkin, who has long believed there were problems in having such distortions, he readily admits in order to obtain a majority support in the committee, he acquiesced to those who wanted more. For all I know, those limits are still being raised, even as we speak, to accommodate the situations of particular crops. This does not bode very well for the small family farm situation, or the saving of everyone, or the general ethic of the bill that is often presented that way, or even those particular cases of distress in the midst of the overall increasing prosperity I described in the overall report. These are concerns that have led me and others to suggest alternatives. In the event the debate proceeds, we will have that opportunity. I utilize this time of deliberate and thoughtful debate on the farm bill to bring forward some of these facts and some of this information. Mr. President, I yield the floor.

Mr. LUGAR. Mr. President, I yield myself as many minutes as are required. I deeply appreciate the thoughtful comments of my colleague, the chairman of our committee. Let me reiterate the importance of what he has said on the bipartisan cooperation on major titles. He has touched upon them. I shall do so again because each represents superb staff work and work by Senators to achieve virtually unanimous results: The rural development title, the research title, the energy title, the forestry title, the trade title, the credit title, and the conservation title. With regard to research and nutrition, during the course of the debate and events and the will of the Senate to continue with this bill, I would want to say more. I believe we can improve both of those areas very substantially. We can do so through substantial change in the commodity section. So there will be an offset to do that. But giving credit where credit is due, a substantial number of titles are reasonably settled and I think will meet with the favor of the vast majority of Senators. The debate we are having during this hour is on a motion to invoke cloture so that we can proceed to the Agriculture bill today. Therefore, that is the issue on which the Senate needs to focus. The question is, Why today? What is the compelling need to proceed to this legislation? First of all, most Americans who are presently watching television, if they are not on the C-SPAN channel watching this debate, are watching developments on the war in Afghanistan. They are watching a gripping drama in which Americans are at risk. There is, in my judgment, a compelling need for us to be discussing the defense budget and issues that are involved with terrorism, whether they involve a continuation of the insurance industry, for example, or other aspects of the war. We are in a war. This has been the case really throughout this strange preoccupation with the Agriculture bill. I say ``strange'' because the Agriculture legislation we now have on the books does not expire until next September 30--over 9 months from now. During that period of time, so- called AMTA payments--fixed payments--will be made to all the farmers who are in the program. A seventh year of payments will occur automatically. So will loan deficiency payments to farmers who have the row crops that are covered by the loan deficiency program. In short, the stable safety net that has been sought remains, plus very large, fixed payments. None of that changes during the coming months. Parenthetically, there is a need, I suppose, to discuss the defense budget and to do so in line with things which have occurred in our American economy since the first thoughts about a new farm bill began. For example, at the time the Senate and House Budget Committees began to formulate the resolution last year, I note from the chart that was prepared by OMB that the surplus was estimated at $313 billion for the fiscal year commencing October 1. As a matter of fact, I recall that the President of the United States, during the State of the Union Address, discussed surpluses in the future that might approximate $3 trillion--if one extrapolated further, as much as $5 trillion--and suggested how responsibly the Congress might allocate that money. That was February. But by May, there were at least some signs of a weakening economy seen by the same persons who prepared the chart. I look at it here. We now know officially that a recession occurred, or started, in March. But this was being picked up by the budget officials. They then estimated in May that the surplus would be only $304 billion, only incrementally down from the estimate of $313 billion. But we went on recess in August. Things had changed abruptly by the time we returned on Labor Day. By then it was $176 billion for the fiscal year commencing October 1. Then, in the post-September 11 period, the first time the authorities had another chance to take a look at this, $176 billion had evaporated, and it was down to $52 billion--just double digits--some distance from $313 billion barely 8 months before. The head of OMB in an address to the Press Club last week gave the very bleak news that for the next 3 years--not just for the year immediately ahead of us--there will be deficits in the Federal accounts--not $313 billion of surplus, or the $176 billion, or even the $52 billion, but red figures. The entire farm bill debate in Congress has proceeded almost as if we were in a different world from the one in which there is war, recession, and deficits. Senators with a straight face have said: We were told in the Budget Committee a long time ago that there was $73.5 billion above the current baseline--$100 billion--allocated to agriculture over a 10-year period of time. By golly, we are going to claim it. You can have a war, you can have a recession, and you can have deficits, but that additional $73.5 billion remains inviolate above any other priorities of the country. Post-September 11, some Senators who held that point of view became nervous. They said: At some point people may begin to make estimates that it is gone and that there is no money. But harking back to the budget resolution, there is the additional $73.5 billion, and ignoring reality, or whatever may transpire now, not for just the next year but for 3 years down the trail, if we do not pass a farm bill--and in a hurry--somebody may question whether the $73.5 billion is there. Indeed, most Americans question it. We have an extraordinary ``Alice in Wonderland'' quality about the agriculture debate in which people with blinders on ignore the rest of the world, but I think at their peril. One reason all of this has accelerated is that my distinguished colleague, the majority leader, the distinguished member of our committee, Senator Daschle--seemed to want to accelerate the farm bill, and wanted to see a bill on the floor. He was not alone. It was suggested by others that Senators who are moving into reelection phases in various farm States did not want to go home without not only discussing it but passing it, nailing down that additional $73.5 billion whether it is there or not. Furthermore, their political judgment was there would be liabilities if they did not succeed in that quest. Each Senator has to be the best judge of his reelection prospects. I don't fault anybody who believes they need to proceed to a farm bill and spend as much money as the law will allow. And maybe that will help that Senator. But I doubt it. I doubt it simply because the political facts of life are that this time the American people are looking in on the debate. One reason they usually don't look in on these debates is they are very complex issues. Most Senators would be hard pressed to go through a glossary of agriculture terms that are a part of these bills. So they do not try. They do not want to be embarrassed by indicating they really do not understand what this is all about. But I think they will by the time this debate and the discussion of it is concluded. If I were a Senator running for reelection, I would not want to vote for cloture today. I would not want to put any stamp on a bill coming out of the Agriculture Committee. It contains, in its commodities section, bad policy, which will be harmful to agriculture, not helpful. I think the exception, perhaps, is my distinguished friend from Iowa, Senator Grassley. I understand the distinguished Senator from Arkansas, Mrs. Lincoln's family may collect some payments from these programs. But I receive payments from the programs. The Lugar stock farm ranks No. 22 in Marion County in terms of the payments received. How do I know? Because the Environmental Working Group has a Web site. The Wall Street Journal introduced the country to this just last week. If you are curious, you can go into that Web site and find out, down to the dollar, how much every farmer in your State has received during the period of 1996 to 2000. It will be a revelation. Let me just discuss the politics that seems to drive the issue today. One prominent farmer in my State, who was named in an article that the Associated Press picked up, having taken a look at this Web site, was found to have received almost $2.9 million in farm payments in the last 5 years. That came as a shock to my constituents in Indiana who are not farmers. Worse still, this farmer criticized my stand. He said: Lugar is way off base; he wants to limit these payments. At the time, he had it wrong. He thought I wanted to limit the payments to $1 million, say. He said that $1 million does not go as far as it used to go. This was shocking. People wrote in to the papers, and they had no idea that farmers were receiving subsidies, farm payments-- these very programs we are discussing--to the tune of, say, an average of $500,000 or $600,000 a year in our State. We do not have farms that are that large. This particular farmer was identified as having only 12,000 acres, dwarfed by many farms farther to the west of us. So this started an interesting debate. The Indianapolis Star has written very strong editorials in favor of the comprehensive bill that I prepared for the Agriculture Committee debate. The other papers in Indiana have, by and large, chimed in. This is not a lonely quest. I think I have the majority behind me. I certainly do of those who favor conservation and who are deeply interested in the environment and those resources, of people who are poor and want to make certain the Food Stamp Program works at a time of recession and unemployment, of people who are interested in research, not only at Purdue University but anywhere else where they know the cutting edge of agriculture is not more payments to farmers but research that gives us some hope of feeding the world as well as ourselves. In the course of all of this discussion of who is getting subsidies, some unusual figures have come up. If it is the will of the Senate that we must discuss this for a long time, I will have a lot of those. It will be exciting, I think, for friends and neighbors to know who is receiving what. But let me just give you a capsule summary. Eight percent of the farmers of this country identified as having commercial farms--single digit 8--receive 47 percent of all the payments. It is a very concentrated sort of payment schedule. There is another group known as intermediate farmers. These are farmers who have roughly 300 to 800 acres--a harder time on that amount of acreage. These folks receive about 35 percent of the payments. So you add that to the 47 percent, and that takes care of over four-fifths of the payments. We have accounted for, say, only 20 percent of the farms in this country. I never heard one of these debates before without many Senators rising to address the Chair and pointing out that farmers in their States are desperate, the weather has failed again, the floods, the rains, a lack of any trade initiative that seems to make any difference, and rock-bottom prices, about the lowest that one has ever seen. In due course, if necessary, I will cite chapter and verse from USDA's very fine publication in which they explain why prices are low and why they remain low. I will explain why the bill that Senators may or may not wish to debate will drive them lower still. The bill the Senate will have passed will stomp down prices. They will have no hope of ever getting up. This may not concern Senators who will say, after all, the bill provides for fixed payments anyway. It does not matter how low the price goes. That is irrelevant, although it is useful in a debate to point out that agricultural policy has failed and prices go low. Of course, they go low because the very policies give incentives, strong incentives, to plant and produce more every year. We have very efficient farmers in this country who produce, say, an incremental bushel of corn for much less than the loan rate of $1.89. I point this out just for the sake of the debate. Every bushel of corn I produce on my farm this year--and it would be true of anybody else--is going to get at least $1.89. That is not the market price. That is irrelevant to the argument except in terms of the Federal payments that have to be made. The taxpayers pick up the difference between that $1.89 and wherever the market price went. Yet these policies are going to drive the market price down further. The taxpayer exposure is higher, thus the need for the additional $73.5 billion for 10 years--a perpetual price crisis for agriculture without relief predicted by the very definition of the bill. Let me just point out that if, in fact, we were in an income crisis situation, that might temper my remarks. But quite to the contrary, the Secretary of Agriculture pointed out for our last agriculture debate in August--and this is coming to pass--that net cash income to farmers this year, 2001, will be $60.8 billion. That compares to $57.5 billion last year, $55.7 the year before, $54.8 billion the year before that, and even in the record year of 1996, that the chairman has cited, net cash income of $57.6 billion, about $3 billion less than this year. This is the all-time high. We never had such large net cash income as this year. The skeptics will say: Aha, but $20 billion of that comes from Federal payments, not the market. You bet. Given the policies we have that drive down prices every year, more loan deficiency payments are almost bound to come, plus the fact we took action, as the Presiding Officer will recall, in August to send another $5.5 billion as an emergency tranche, as we have the previous 3 years. Some farmers will say we need to have certainty with this bill because each year the Senate votes for more money. Do you believe for a moment, given the political competition in this body, there will not be somebody on the floor of the Senate next June, July, August, suggesting we have a crisis at hand and, by golly, we ought to send more money on top of the fixed payments as we have done the previous 3 years? That is the nature of the debate we are having today. The fact is, farm income is at a record level. We have a situation in which we are at war, and we have need for money to pay for the war. We have a recession in which we have deficits around us. A prudent person, seeing we have a farm bill on the books that is going to pay fixed payments plus loan deficiencies, would say: This is not the time for the debate. That is what I say. I hope Senators will not move to proceed to this bill and will not vote for cloture on the motion to proceed. I think it would be a mistake. Having said that, if that mistake is made, let me mention to the distinguished chairman that, indeed, we will try to remedy the bill in a big way. I have a comprehensive commodity title, a lot to say about enhancing nutrition, a lot to say about conservation and research. Furthermore, finally, we will get to reform of the sugar program and reform of the peanut program and big reform of the dairy program. This bill has an egregious dairy section, and Senators are already quoted as being dismayed to proceed. It creates in a big way a consumer problem throughout America. But this time something very sensitive, the price of milk, goes up for everybody. That really is unacceptable. Other Senators may also have amendments. This is a list of those we already prepared on the bill I gave to the Agriculture Committee. These are not figments of the imagination. The amendments are drafted and the talking points are ready. I hope it will be an educational experience Senators will enjoy and, furthermore, that they will vote with me and reform this bill. Let me conclude by saying I do hope we will get to the defense bill quickly. I take the time I have on the floor to say that I noted with some concern--perhaps there will be an explanation for this--in the release coming from the Defense Appropriations Subcommittee, a note that it provides $357 million for former Soviet Union threat reduction, the Nunn-Lugar program, a cut of $46 million from the budget request. I find that to be inexplicable. At a time in which our President and President Putin are talking about reduction of nuclear weapons, in which the fundamental thrust of the war is to keep weapons and materials of mass destruction from terrorist cells, I am dismayed. I want to get to that debate. I think that is serious with regard to the world, with regard to our security. That is a real issue. In due course, we will discuss the subsidies. Senators will have parochial interests, I understand that. But I hope we can hold it to a dull roar. I hope there will be some proportion given the deficits of the next 3 years, not a 10-year program but a 5-year program which the Senate did adopt but which we still have to work on in conference, if we come to that point prematurely. For all these reasons, I hope the Senate will vote no on cloture, that we will get on to the serious business that really faces the country in its defense, and that other issues such as this we may be able to work out more amicably in the Agriculture Committee or elsewhere in the ensuing weeks. I yield the floor.

Mr. LUGAR. May I respond to the distinguish Senator? In the event the Senator does not use his hour, if he were to yield the balance of that time to me, that would be helpful in the expedition of the debate. But the Senator should be prepared to utilize his full hour.

Mr. LUGAR. Mr. President, as we are in preparation for a debate on farm legislation, I want to call to the attention of the Senate a very useful and, in fact, remarkable publication called ``Food and Agricultural Policy, Taking Stock for the New Century,'' published by the U.S. Department of Agriculture this summer to state the views of the Department, and to offer data for Senators and members of the public as we began the farm debate. I want to quote extensively from chapter 3, entitled ``Farm Sector Policy'' because I believe it gives a very good outline of USDA's opinions on farm policy as it has progressed in our country, and as we hope it may progress through constructive debate on this bill. Mr. President, the chapter begins by saying that: If farmers and farm families all across the country share the same goals and face the same challenges and opportunities, fashioning farm policy today would be straightforward. And, indeed, that is the way it must have seemed in the 1930s, when farm families depended mainly on farm earnings and grew crops and livestock on much the same acreage as their neighbors. Then, policy had a more focused objective--helping to reduce the wide income disparity between farm families and their urban counterparts--and a ``one-size-fits-all'' approach was more appropriate. Supporting field crop prices provided widespread assistance, since most farmers grew some field crops, and helped stabilize the entire sector. The farm sector and all of agriculture are vastly different today, as is much of rural America. Yet our farm policy retains vestiges of the New Deal programs and reflects a time of greater homogeneity across American farms and farm households. Today, the farm sector is diverse beyond the imagination of those who framed the New Deal legislation. On average, farm family incomes no longer lag, but rather surpass those of other U.S. households. That, I found, Mr. President, to be a remarkable statement, counterintui- tive to much of the debate we have on the subject. I will mention again: On average, farm family incomes no longer lag, but rather surpass those of U.S. households. Most farms are run by people whose principal occupation is not farming. Markets have changed, too. Domestic demand alone is no longer sufficient to absorb what American farmers can produce. Demand by well-fed Americans grows slowly, with population growth. The promise of new, much-faster growing markets lies overseas, in countries where economic prosperity is emerging for larger numbers of people. As a result, the United States must consider its farm policy in an international setting, helping farmers stay competitive while pressing for unfettered access to global markets. At the same time, Americans' expectations with respect to food have moved well beyond assurance of adequate quantities to include quality, safety, convenience, and many more attributes. And expectations now extend to environmental preservation and enhancement. More than seven decades of farm policy have provided a rich, full experience upon which to draw as we contemplate appropriate 21st century policies for our industry. The view of policies and programs across their history has proved very instructive, providing invaluable lessons which, at very minimum, can help us avoid the obvious mistakes of the past. History shows us that growth in farm household income was largely due to rapid improvements in productivity, supported by a strong research base, along with better opportunities to market products, including export markets and off-farm employment opportunities. Many of the program approaches since the 1930s proved not to work well, or not at all, produced unexpected and unwanted consequences, became far costlier than expected, and have been continually modified over time in the long succession of farm laws. Some major and still highly relevant lessons learned include: History has shown that supporting prices is self-defeating. Supporting prices is self defeating. Government attempts to hold prices above those determined by commercial markets have simply made matters worse time after time. Artificially higher prices encourage even more unneeded output from the most efficient producers. At the same time, they discourage utilization, consequently pushing surpluses higher and prices lower. Costs to taxpayers grew until the point was reached where something had to be done. All too often, that turned out to be finding ways to restrict output. The second lesson, Mr. President, of the USDA book is supply controls proved unworkable, too. These usually involved restricting the amount of land farmed in attempts to reduce output. But the remaining land was farmed more intensively, and supply rarely was cut enough to boost prices to politically satisfactory levels. The programs were costly to taxpayers and consumers and the unused resources were a drag on overall economic performance. But, perhaps the most important of all, limiting our acreage was a signal to our competitors in other countries to expand theirs, and we lost market share that is always difficult to recapture. The third lesson of the farm bill is stock holding and reserve plans distort markets enormously. Isolating commodity stocks from the market when supplies are abundant is attractive for its short-term price stimulus. But, because such stocks eventually must be returned to the market, they limit the recovery of prices in the future. Moreover, time after time, stocks have proved costly to maintain, distorted normal marketing patterns, ceded advantage to competitors, and prove tempting targets for political tampering. The fourth lesson is: Program benefits invariably prove to be disparate, providing unintended (and unwanted) consequences. The rapidly changing farm sector structure produced a wide array of farm sizes and efficiencies. Many farms were low cost and the programs were of enormous benefit, enabling them to expand their operations. Others did not receive enough benefits to remain viable and thus were absorbed along the way. That situation still maintains to some extent today, even though we now have fewer farms. The clarity of these lessons provided several emphatic turning points in national policy. The 1985 farm law proved to be one such point when, after long debate on fundamental philosophy, a more market-oriented approach was adopted. That market orientation was extended in the 1990 farm law, making a less intrusive and expensive role for government in farmer decisionmaking and in the operation of the markets. The Federal Agricultural Improvement and Reform Act of 1996-- A law that currently we have in place-- proved to be historic in that it removed much of the decades- old program structure, provided unparalleled farmer decisionmaking, flexibility through ``decoupled'' benefits, and set a new example throughout the world for providing domestic farm sector support. While that approach is arguably still the least distorting of markets and resource use, its direct payments-- These are the so-called AMTA payments, Mr. President-- do share some unintended effects with price support programs, namely the artificial inflation of farmland prices. The effect clearly has been exacerbated by the size of payments in recent years, some $28 billion in the last 4 years above the amount provided in the 1996 law. While the rise in land prices creates wealth for some, it works to the disadvantage of others. Direct government transfers distort real estate markets, keeping land prices artificially high when commodity prices are low, as we are seeing today. Higher land prices for consecutive years of large program support make it more difficult for beginning farmers by increasing capital requirements. This inflation also makes it more costly for existing farms to expand to achieve size economies, either by purchasing or renting additional acres (since land rents move in tandem with prices). Higher land values do benefit local tax authorities and the collateral base of farm lenders, but add directly to production expenses through higher interest and rental costs. Since the land charge is such an important component of a farmers' total cost, sustained increases in land prices and rents have a decidedly adverse effect on the competitiveness of our farmers in the marketplace compared with those in other exporting countries, a cause of growing concern in recent years. To come to the nub of the problem, the farm sector chapter says: Squaring Today's Realities With Policies. Because of their historical evolution, current program benefits still are largely directed to specific commodity producers, resulting in only 40 percent of farms being recipients. That is a remarkable figure. After all is said and done and the payments are made, only 40 percent of farmers receive anything; 60 percent receive nothing, a fairly large majority. And, there still is no direct relationship between receiving benefits and the financial status of the farm. The most financially disadvantaged segment of farmers today is the low-income, low-wealth group. And this is defined in appendix 1 of this book. Essentially, the book points out that there are commercial farms, intermediate farms, rural residence farms, and then they are distributed by size and income. In any event, the most low-income, low-wealth group comprises 6 percent of farms, had an average household income of $9,500, and received less than 1 percent of the direct payments in 1999. In contrast, 47 percent of payments went to large commercial farms, which contributed nearly half of program commodity production and had household incomes of $135,000. These are families, obviously, that are middle class, upper middle class, and they received half of the payments. Our current broad-scale, commodity-oriented approach to farm support does not recognize existing wide differences in production costs, marketing approaches, or overall management capabilities that delineate competitive and noncompetitive operations. It thus is impossible to provide enough income support for intermediate farms without overly stimulating production by the lower cost, large-scale commercial producers. Even though many intermediate farms and rural residence farms receive some program benefits, only one in four generated enough revenue to cover economic costs. Even more problematic is the inability of these farms to improve their cost efficiency at the same pace as larger commercial operations, whose investment in new technologies and ability to expand are aided by program benefits. Another unintended consequence of current programs stems from the increasing disconnect between land ownership and farm operation. While program benefits were intended to help farm operators, most support eventually accrues mainly to landowners in the shortrun through rising rental rates and, in the longer term, through capitalization and to land values. Land prices in recent years have been relatively robust, especially in areas producing program commodities, despite concerns about low commodity prices and the future direction of farm programs. For many farm operators, renting land is a key strategy to expand the size of business in order to capture the size economics, as evidenced by the fact that 42 percent of farmers rented land in 1999. Clearly, operators farming mostly rented acreage may receive little benefit from the program. The impact of income from any source, including program benefits on land values, depends on whether that income is viewed as permanent or transitory. The degree of certainty that the income will continue in the future and even though production flexibility contract payments were intended as transitory when authorized by the 1996 farm bill, subsequent emergency assistance and a 70-year history of Government involvement in agriculture have reaffirmed expectation that support will continue in the future. Indeed, Mr. President, in both the bills offered by the House of Representatives and by the Agriculture Committee of the Senate, the so- called AMTA payments continue throughout the entirety of the bills. There was no expectation that they would be phased out as in the 1996 farm bill, no anticipation that they would be transitory. As a matter of fact, in both bills they are larger, and therefore the impact, which has been found in the chapter I am reading, the difficulty for farming, is likely to be exacerbated. The 1996 FAIR Act also continued the marketing loan program, another evolution of the old price support idea, but importantly modified to avoid government stockholding which proved so burdensome in times past. Marketing loan payments effectively provide a large countercyclical component to farm income but distort markets by limiting the production response to falling market prices. The program guarantees a price for traditional program commodities: Food grains, feed grains, cotton, and oil seeds. As market prices have fallen below this guaranteed price, total marketing loan benefits have risen less than $200 million in the 1997 crop to $8 billion for the 1999 and $7.3 billion to date for the 2000 year crops. Since 1996, countercyclical marketing loan benefits have totaled about $20 billion. While the current policy made large strides toward greater market orientation, a careful evaluation in the context of today's diverse farm structure and increasingly consumer-driven marketplace still reveals several misalignments among policy goals, program mechanisms, and outcome. Improvement could support more sustainable prosperity for farmers, agriculture, and rural communities without engendering long-term dependence on direct government support. I will translate that in many ways to the debate we are now having. Essentially, the bill that is before the Senate as reported by the Agriculture Committee attempts not only to continue fixed payments for 10 years without accuracy, thus implying a perpetual agricultural crisis the last farm bill in 1996 had in mind, that essentially we would move toward more of a market economy and transition payments would go to certain farmers who have been in the business. This has led to substantial debate in the last 5 years because essentially, as many have said, there are landowners receiving payments who are no longer farming at all. They literally are not in the business. The contract we made with farmers in the 1996 farm bill was that if one had a history of planting corn or wheat or cotton or rice-- and eventually soybeans have entered in through a marketing loan situation--they receive money on the basis of that history. Thus a part of the distortion that the USDA now points out: The payments are heavily loaded toward people who own land, but 42 percent of those who are actually in the fields this year rent land. They do not own it. Their rents are higher. As a result, their net income is lower. The policy we have adopted essentially of the fixed payments plus the other aspects, the marketing loans, the other countercyclical situation, increase essentially the land values. If someone is a landholder, that is helpful. As the USDA publication points out, if one is a mortgage banker holding a note, the value of that land increasing is useful. But for young farmers coming into the business, this is potentially disastrous. There is very little entry. For those renting, 42 percent, certainly they have higher costs year by year. Furthermore, as the USDA publication points out, all of this is occurring to the benefit of only 40 percent of farmers to begin with. The other three-fifths are out of the picture. One of the interesting facets of farm debates is many farmers must surely believe they are benefiting from this. It is apparent that, really, for time immemorial, a minority of farmers have received any benefit. A substantial majority are not touched by this, certainly in terms of their income. In addition, the farm policies, whatever their intent, have stimulated overproduction. As USDA points out, essentially the most efficient farmers, using the very best of research, using the best of machinery and equipment and seed, are able to produce a bushel of corn or a bushel of wheat for substantially less than their domestic competitors, fortunately for much less than almost all of their foreign competitors. Therein lies the advantage of the United States in terms of exports. The problem comes, to take a very specific example of corn, as I mentioned earlier in the afternoon, the loan deficiency payment for a bushel of corn in Indiana and in many other locations is $1.89. That figure was meant to be a floor. It was anticipated the price of corn would be more than $1.89 and seldom would it reach $1.89, but in the event that it did, a farmer could be certain of receiving $1.89 regardless of what the market price might be. The taxpayers generally picked up the difference between the market price and the loan deficiency payment level, the loan rate at $1.89. But what if corn farmers who were very efficient find that they can produce additional bushels for much less than $1.89 per bushel? The incentive obviously is to produce as much as possible because $1.89 is guaranteed for every bushel, and if one is producing for less than that, it is a profit on every single additional bushel. That does not escape the attention of many of our most efficient farmers, and they have increased their production. By and large, they have grown. Other competitors have not grown and, as the USDA points out, in many cases have either sold their properties or rented them to others who are able to obtain better results, I suspect. This has led to a certain amount of decline in the number of farmers in the country. But as many farm statisticians have pointed out, in recent years the numbers of farms have grown in various sectors of our society, in large part because many Americans who are professionals in the city, or who simply wanted a rural life-style, purchased small farms or at least some acreage. They qualify under USDA standards as a farm situation if they have $1,000 of sales. That is the cutoff point. Many do have $1,000, and many maybe have $10,000 worth of sales, but increasingly large numbers, hundreds of thousands of persons, have qualified as operating farms on that basis. Seventy years ago, no one would have considered attempting to think through a farm bill that would be of assistance to all of these additional farmers. But as USDA points out, a majority of persons now obtain more of their income from something other than farming, even as they are classified as one of the 2.1 million farm situations in our country. I mention that simply because in rhetoric in this debate, or at other times, about farm bills, a great deal is said about the plight of the small family farmer and saving that person. In fact, I would contend most of our farm bills have done a pretty good job of that. There literally is a pretty broad safety net but only if you are in certain types of farming; namely, the row crops--corn, wheat, soybeans, cotton, and rice. For instance, if you are a livestock farmer--hogs, cattle, sheep--these programs do not pertain to you at all. Increasingly in our farm debates, we have been hearing Senators describe strawberries, cherries, peaches, nuts, and cranberries. These are sometimes known as niche crops, specialty crops, but clearly are not crops contemplated by farm bills. No money in these farm bills goes for these crops. That has not been very satisfying to most Senators who come from States with these constituents. The situation now with the specialty crops is, Senators come to the floor and ask quite candidly: What is in this farm bill for us? We understand from the New Deal days onward, people in cotton, rice, corn, and wheat were taken care of; a safety net was there for them. But no one thought about us in those days. We are thinking about ``us'' now. As a result, the Senate fields annually a large number of disaster bills. Somewhere in the United States of America, the weather is not good for whoever is doing whatever they are doing. They point out that although corn growers or cotton growers are having their problems, the strawberry growers and others are also having a very tough time in other areas. Or the cranberry situation is a disaster. As a result, the plea comes for disaster assistance payments to these farmers. The USDA, as a rule, has not been geared up to make these payments because there is no particular crop history or there is not a tradition of making the payments. As a result, the payments don't occur for a while because USDA must establish regulations as to who is eligible, how to verify this, and how to audit these situations. Nevertheless, as we have had the disaster bills or supplemental bills, each summer more and more Senators are finding the focus of these disaster bills is not very wide. This is also the case with the farm bill. The 40 percent who get the money are not 100 percent; the Senators who represent the other 60 percent say: What about us? We have had hearings before the Agriculture Committee, and there are debates among people in the so-called specialty crops--fruits and vegetable and so forth. Some say: Leave us alone. You have pretty well mangled other markets. Supply and demand still pertains in what we are doing without government supports, without subsidies. As a result, there is risk but there is also reward. The market works for us. Don't gum it up. On the other hand, many well-meaning Senators trying to help constituents are not prepared to take that for an answer. They visit with many farmers who have had genuine disasters caused by the weather or other problems, and they want relief for these constituents. Again and again, the disaster bills try to address all of these localized problems. The so-called stimulus package offered to the Senate--which we are not considering for a variety of reasons, and which I gather is now grist for the mill, with the overall group discussing this in a bicameral way--had about $6 billion worth of agricultural provisions in it. Many of them duplicate items in the farm bill we are now considering. Perhaps Senators were nervous that the farm bill would never get to them, and the urgency, at least as they saw it, was that the money in the stimulus package might be spent sooner. Perhaps so. We found these same ideas popping up in the debate we had in August, when the Senate sent $5.5 billion to farmers in the country, mostly to row crop producers, but with a debate on specialty crops and other things that ought to be covered to address their particular problems. This simply reinforces what USDA has started in chapter 3 of its recent policy book; namely, one size doesn't fit all. As a matter of fact, the number of farming operations in terms of size, scope, altogether the things they are doing, is so diverse, it is very difficult for any farm bill to encompass a majority, or even a small minority of operations, for that matter. This is why, as we have this debate on the farm bill, I look forward to the opportunity to offer an amendment to the commodity section. I tried to look realistically as to what is occurring on American farms today. I am saying that in Federal policy, strawberries and cattle should be treated no differently than wheat. In essence, we should take a look at the whole farm income. Each farmer must file with the Internal Revenue Service the proper returns that indicate all income generated on the farm. For many farms that are fairly diversified, that have income from cattle, from hogs, perhaps some from timber, perhaps some corn and soybeans, sometimes some wheat. In the South, more likely it is from cotton or rice, along with the livestock. In essence, we are saying, income earned from all agricultural production should be treated equally in federal farm policy. Take the example of a farmer who receives $100,000 a year in agricultural sales from all sources. Under the bill I presented to the Agriculture Committee, that farmer would declare that income, and he would receive a $6,000 credit from the Federal Government (or 6 percent of that $100,000) to be utilized in one of three ways. The $6,000 could be used to purchase whole farm revenue insurance, guaranteeing 80 percent of the 5-year income to that farm; in other words, a genuine safety net created on the basis of the history of that operation. If the farmer has had $100,000 of income 5 years in a row, obviously, the average is $100,000, and the farmer would receive a $6,000 government credit. This would buy an 80 percent whole farm revenue insurance policy, which means that in a case of a disaster or a downturn of income, that farmer is guaranteed at least $80,000 of income. That premium would be paid for by the $6,000. Say the farmer has some money left over. He could utilize that then for a so-called farm savings account. A farmer puts the money from the Federal Government into this account and he matches it with an equivalent amount. At that point, that account remains for a rainy day purpose--once again, to stabilize farm income and to offer a genuine safety net. Or the farmer may use more sophisticated means of risk management. He also has the option to use the $6,000 to purchase other risk management or marketing tools that are of equivalent value. In essence, we recognize all of agriculture, all of America, all the diverse ways in which people make money. We offer a genuine market- oriented program through a variety of risk management options (including whole farm revenue insurance) so that essentially no farmer could do worse than 80 percent of his annual income in any kind of disastrous year. We encourage savings accounts with a matching Government contribution, to increase the farmer's financial reserves and enhance the financial viability of the family farm. This has the virtue of being relatively inexpensive. That particular virtue has escaped the debate thus far altogether, in large part because Senators have competed with each other to provide more subsidies for more constituents. I understand that urge. But I have also suggested that this debate is occurring at a time in which it is prophesied by the Office of Management and Budget that we will have 3 years of Federal deficits. One can say, after all, if we are doing deficit spending into deficits for all sorts of other things, the farmers ought to have their share of the deficit spending, too. But that is not the way this debate began. It began with the thought that we were going to have a $300 trillion surplus for the coming year and, for that matter, for most of the years in the coming decade. I have argued earlier on that the outlays, in my judgment, lead to overproduction and lower prices, distorted land values, and make it tougher for young farmers, tenent farmers, and farmers that rent land. But leaving aside that argument, I make the argument now that we do not have the money. We have not had the money for some time. It is obvious to everybody who has common sense outside the agricultural debate. But sometime it will dawn upon most Americans, and they will wonder what we are doing here. Senators who rush back to their constituents and say, ``I got $173.5 billion in farm subsidies for you,'' may find some skeptics who will say, ``Where was the money? Where did you find the money?'' The Senator may say, after all, the farmers deserve the same benefits as everybody else. There was not any money, but there will be someday. Surely, this thing will turn around. Maybe so, maybe not. My constituents in Indiana are wondering about this. Two percent of us, and I include myself among this group in Indiana, actually are in the farming business. That is a declining number. But 98 percent are not. Maybe those of us who are in the 2 percent count upon the 98 percent never looking into this picture and wondering how in the world it is all formulated and why we are receiving money. But more and more of the 98 percent are looking into it. What is occurring is not a mystery to editorial writers in Indiana. They write about it all the time. So do people in the Associated Press. So do people who are local reporters. They are reporting how much money farmers are receiving in Indiana, county by county, by dollar. This comes as a revolutionary surprise. Many farmers are able to explain--I try to do so, too--that these payments come because we have a farm program which was supposed to be a transition program. We were going to move from heavy subsidies to the market in a 7-year period of time in the last farm bill. These were transition payments. Other payments come, likewise, because of the loan deficiency payment business that I just explained. There is a floor price, really, for every bushel of corn, every bushel of soybeans. Some payments come because of conservation and cooperation by farmers to do things that are very helpful as stewards of land and water. So there are good reasons for some of these payments. Most constituents understand that. But they do find it difficult to understand why persons on Indiana farms that appear to be very prosperous receive hundreds of thousands of dollars from the Federal Government. They are wondering, have we missed something here? Was it the argument about the devastation of rural America, the loss of income of people, the loss of farms, young farmers coming in, and so on? And they wonder how are any of these persons helped in the process? I am saying that these folks whom we intend to make beneficiaries are not in fact helped and have not been for some time. Let me conclude this explanation with some principle that I found to be useful in an USDA publication, and I commend it to the attention of Senators because I think it offers a fairly good foundation for this debate on farm policy. As the debate continues, I want to return to other aspects that I found especially illuminating in the same publication, but I offer this, at least as some basis for an amendment I intend to offer in due course in the commodity section, which I believe will be constructive, which will be more fair, and which will clearly be less expensive, and which has at least some semblance of reality, considering the times we are in, fighting a war and recession and attempting to do common sense things as Senators. I yield the floor.