An Urban's Rural View

The Donald and Nick Tapes

Urban C Lehner
By  Urban C Lehner , Editor Emeritus
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What was President Donald Trump thinking when he proposed a budget that would slash spending on crop insurance 36%, ag research 25% and conservation technical assistance 21%? Only the president and his advisors know, but I have a theory.

I've framed the theory in a conversation between the President and his budget guru, Nick Mulvaney. It's an imagined conversation, to be sure. Washington is leak-prone these days but it's not so leaky that a mere retired ag editor has access to Oval Office tapes. But while the conversation is imagined, the considerations the president and his budget writers had to take into account are, I would argue, very real.

DT: OK, it's budget time, Nick. Remember, I promised voters a huge infrastructure program, a huge military and huge tax cuts.

NM: Yes, Mr. President, you did, and that's good. We should keep in mind the national debt, however. It's approaching $20 trillion. You told voters you could eliminate it in eight years. There's no way we can do that, actually, but we really ought to try to restrain its growth.

DT: Why should I care about that?

NM: Well, because if the debt grows too much more, it could scare away investors and cause a financial crisis. That's what happened to the Greeks, you may recall. Years have passed and their economy is still in the tank.

DT: But Greece is a small, relatively powerless country. We're the United States. Surely we can service our debt.

NM: We can, Mr. President, especially at today's low interest rates. But interest rates are likely to rise over the next few years. If the economy were to slump into recession at a time of higher interest rates, tax revenue would fall. Investors in Treasuries could get nervous.

DT: So what do I do to keep the situation under control?

NM: One thing you could look at is Medicare and Social Security. I know you're a baby boomer who still has a job, but a lot of the boomers are retiring these days. And there's so many of them that Medicare and Social Security will soon eat up huge chunks of the federal budget.

DT: I may be a neophyte as a politician, but I know Medicare and Social Security are untouchable. You mess with them, you lose elections. Besides, I promised not to in the campaign. Couldn't we just count on our tax cuts to stimulate economic growth?

NM: Yes, Mr. President. But economic growth can only take us so far. The debt will keep rising if we don't slow down the growth of Medicare and Social Security.

DT: Give me a break. There must be something else I can do.

NM: Without touching those programs, you'd have to make huge cuts in almost everything that isn't military or infrastructure.

DT: Like what?

NM: For one thing, you could cut disability benefits. Most of the voters who don't receive them don't know they're part of Social Security.

DT: That sounds good. Let's do that. What else?

NM: Well, there's Medicaid, Mr. President. There's food stamps. There's scientific research. We could shrink the EPA, which you don't like anyway. And while we're at it, we might as well take a whack at rural development and farm programs.

DT: OK on all those. Wait. Didn't a lot of farmers vote for me?

NM: They did, Mr. President.

DT: Can't we leave their programs as they are, then?

NM: Social Security and Medicare account for 40% of federal spending. If we exempt them from cuts, we have to squeeze everything else. The math gives us no choice.

DT: Won't farmers feel betrayed? How will I explain this to them?

NM: Don't worry. You won't really be betraying them. Congress always ignores presidential budgets, and we've proposed such massive cuts that Congress won't give this one a second's thought.

DT: What's the point of doing it, then?

NM: You're the master of the art of the deal. Think of this as your opening shot in the next farm bill negotiation. Bush and Obama wanted to cut farm programs but couldn't get Congress to go along. By proposing huge cuts now, you shift the terms of the farm bill debate. You encourage the farm lobbyists not to ask for too much.

DT: I am the master of the art of the deal, aren't I?

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5/31/2017 | 6:31 AM CDT
Much truth in his comments. However, crop insurance is just a drop of the problem. It seems all programs of the Government(s) develop never ending lines of people at the trough.
Urban Lehner
5/30/2017 | 9:43 PM CDT
I received the following comment by email from a farmer in Michigan. I found it interesting and thought others would, too: Your comments on crop insurance on DTN tempt comment. I'm a 72 year and have been a farmer all my life. You wouldn't believe the greed, deceit, and fraud in crop insurance. I have never used crop insurance and manage just fine. Everything is paid for and last years 2016 PC Mars (MSU record keeping system) showed an income that covered the FULL economic cost. Corn's total FULL economic cost was $3.37 per bu. with a net profit of $0.03. Soybeans FULL economic cost was $6.44 per bu. with a net return of $3.31 per bu. Knowing I can produce a profitable crop without insurance using a very conservative approach, leaves me with little sympathy for someone who spends money with no end in sight and then whines for the government to bail them out. I'd vote for and support a serious reduction in crop insurance. Thanks for your time.