[Congressional Record Volume 151, Number 159 (Tuesday, December 13, 2005)]
[Senate]
[Pages S13461-S13462]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MILK INCOME LOSS CONTRACT
Mr. CRAIG. Mr. President, in speaking to conferees this afternoon in
relation to the deficit reduction or the budget reconciliation process,
this is an issue that, frankly, most Senators probably have not heard
all that much about.
Everyone agrees that the reconciliation act, or Deficit Reduction
Act, is an attempt by Congress to rein in spending and to build the
appropriate budget in this climate. This legislation makes tough cuts
in important programs in all areas of Government.
While nearly all programs are taking their lumps--if you will,
sucking it up a bit--Congress is, ironically, considering increasing
spending in a bill whose sole purpose is to decrease spending.
The Senate's version of the Budget Reconciliation Act, or Deficit
Reduction Act, includes a provision renewing the Milk Income Loss
Contract Program, also known as the MILC Program, which currently
expired in September of this year.
The CBO has scored this renewal in costs to the taxpayers of $1
billion over a 2-year period. In other words, half a billion a year.
This deserves much more attention than it got in the Senate. The MILC
Dairy Price Support Program was included in the 2000 farm bill to
create a permanent direct payment program to the dairy producers.
During the farm bill debate, USDA warned that the new program would run
counter to the old dairy price support program in place since the
1940s.
Analysis by the USDA in August of 2002 concluded that the MILC
Program would cause overproduction, thereby lowering farm prices to
producers, forcing the government to purchase the excess until prices
stabilized. However, Congress ignored the USDA warning and authorized
the program to last until September of 2005, enough time to see dairy
producers through the tough times back in 2002.
Now, after over $2 billion in taxpayer-funded programs, some in the
Congress have easily forgotten about the agreement to sunset a program.
When we sunset a program it is the intent of Congress to conclude it.
Let me give some examples of how distorted it has become if the
program is in support and in relation to production in our country.
Idaho dairy production is now 4th in the Nation and one of the top
economic drivers in the economy of my State. During the 2003-2005
period, Idaho received $39 million in MILC payments, enough to be
ranked 12th in total payments received in the program, yet they are
fourth in production in the Nation.
In comparison, California received $149 million over the same time,
is ranked fifth in total payments and, of course, California is the No.
1 milk producer in the Nation.
There seems to be no relationship. I guess some hands are just too
sticky to let money pass just because the law is 3 years old and ready
to expire.
My point is this: It is important to understand just what this
program does and what the $1 billion for one program means in the
overall picture. It has become market distorted. It provides little to
no parity to all producers. It encourages inefficient overproduction in
milk and it sends the exact opposite signal to our trade negotiators
trying to sell the rest of the world on the idea that the United States
is willing to cut domestic subsidies and amber box payments.
Regarding the WTO negotiations, our United States Trade
Representative and USDA Secretary and many others are currently
attempting to negotiate in the latest Doha Round getting started in
Hong Kong as we speak. It is clearly important we send a message. It is
also important when we sunset a program after having found out it is
market distorting, we ought to do just that, instead of pump it up
again while we are asking all other programs that are federally
expended to reduce their overall expenditures, to reduce the budget
deficit and to bring this budget under control.
I hope our conferees, as they negotiate the budget deficit reduction
act, or the budget resolution, would decide not to fund the MILC
Program, adhere to the sunset provision provided and allow a program to
die as this program effectively did by the sunset in September of this
year.
Mr. President, I ask unanimous consent to have printed for the Record
articles in opposition to the MILC Program and also an article from the
Wall Street Journal.
There being no objection, the material was ordered to be printed in
the Record, as follows:
December 1, 2005.
Dear Representative: On behalf of the hundreds of thousands
of senior citizens we support across America, I urge you to
make every effort to be sure that MILC, the now defunct dairy
farmer giveaway program is not resurrected through inclusion
in Reconciliation, or any other measure. Costing roughly $1
billion (actual outlays could again top $2 billion), a new
MILC program, once more propping up inefficient dairy
farmers, should have no place in a budget that cuts spending
on Medicare, Medicaid, and other key senior programs like
LIHEAP. Outdated dairy farmer welfare has no business in what
should be a free-market. MILC, and similar government
intrusions into the dairy marketplace, cause instability and
price spikes. If extended, MILC will once again (as the USDA
admits) work in conflict with the federal milk price support
system. Worst of all, the oldest and the poorest among us
will suffer mightily to pay for the MILC giveaway to a select
few dairy farmers.
It would truly be outrageous to create a new MILC program,
or worse to have one included in reconciliation just to win
passage! Just look at what that nearly $1 billion in MILC
giveaway money will buy:
Medicare--The House proposal would cut $5 billion in
Medicare funding over five years. The almost $1 billion being
proposed for the MILC boondoggle could restore Medicare
funding and help provide better health care to some 140,000
elderly Americans.
Medicaid--The House proposal cuts Medicaid spending by
$11.4 billion, compared with $4.3 billion in Senate cuts.
That $1 billion MILC giveaway could be better used to give
over 248,000 of the poorest Americans access to health care
through Medicaid.
Low Income Heating Assistance Program or LIHEAP--Through
LIHEAP, that wasted $1 billion in MILC money could help some
2,680,965 people cope with sky-rocketing heating bills. It
could be their only chance to stay warm this winter.
Student Loans--At a time when student loan programs are
being slashed ($14.3 billion in the Senate and $8.8 billion
in the House), $1 billion in special interest MILC funding
could help our grandchildren attend college at a time when
college costs are rising faster than inflation. The House
cuts will cost each student up to $5,800 more in interest and
fees over the life of their loans.
Food Stamps--Adding the $1 billion in MILC money to this
important program that helps feed needy seniors would fully
restore the $800 million in Food Stamp funding cut by the
House.
We believe the wasteful, expensive MILC program should be
left to rest in peace, thus helping to keep needed senior
health care and nutrition programs fully funded. As one
recent Wall Street Journal Editorial, Milking the Taxpayer
notes, the USDA identifies no less than a half-dozen support
programs for dairy farmers. We urge you to oppose the same
tired old politics of vote trading and ever more pork barrel
largesse for just a handful of dairy farmers on the dole.
Instead, we urge you to stand up for all of the seniors,
[[Page S13462]]
the poor, the needy, the students, and the veterans who will
have less, just to fund MILC. As the Journal Editorial says
so well, ``Taxpayers have been MILCed enough by this
particular boondoggle.''
Please do the responsible thing for all Americans by
working to put an end to MILC once and for all. Rewarding
inefficiency should never be the function of any government
program, even when there are surplus funds to spend. Now,
when important health care and nutrition programs are being
cut or cancelled, MILC should not be allowed to rear its head
again.
Sincerely,
Michelle Plasari,
President, RetireSafe.
Jim Martin,
President, 60 Plus Association.
____
[From the Wall Street Journal, Nov. 14, 2005]
Milking the Taxpayer
It is a sign of just how unmoored from fiscal
responsibility the current Congress has become that in the
midst of a loud struggle over mostly symbolic budget cuts,
the party in power is having trouble even letting dead
programs stay dead.
One such program is the Milk Income Loss Contract program--
MILC for short, cleverly enough--which passed its sell-by
date at the end of September and expired. The House budget
bill does not include its revival. But the Senate version
reauthorizes MILC, and in 2004 the President promised
Wisconsin voters that he would fight for its extension, so
its fate lies with the House-Senate conference that will
reconcile the two massive budget bills.
MILC was one product of the 2002 farm-subsidy bill, and
even by farm-subsidy standards it is perverse. At the time
the program was voted into law, Congress asked the Department
of Agriculture to study the effects of the various
government-support programs on the dairy business. The USDA
duly issued its report in August, and for a technical
document the report was unequivocal that ``there is a basic
incompatibility'' between MILC and other pre-existing dairy
subsidy programs. (The USDA report identifies no fewer than a
half-dozen support programs for dairy farmers.)
The conflict is this. One of the oldest programs is the
milk price-support program, which dates to the Depression-era
Agricultural Adjustment Act. Under that program, the
government steps in and buys milk when the price falls below
a certain level. If that support price is set low enough, it
provides some income security to farmers while allowing the
market to clear and production to fall to the point where
prices can rise again.
Here's where MILC pours in and clouds the picture. MILC
makes direct payments to farmers based on their production
whenever the milk price falls below a certain level. What's
more, MILC kicks in at a much higher level than the price-
support program. The effect of this is that production is
encouraged by MILC even as prices are falling, which drives
the price down toward the support level and prevents the
shakeout that the price-support program is intended to allow.
The Agriculture Department found that MILC does in fact
artificially depress the price of milk by encouraging
overproduction, which is just what you'd expect. Then,
through the price-support mechanism, the government winds up
buying the milk that MILC encouraged the farmers to produce.
Thus, in the Ag Department's dry bureaucratese: ``The price
support program and the MILC program provide an example of
problems that can be caused by conflicting policy outcomes.''
In short, MILC distorts the market and conflicts directly
with other pre-existing subsidy programs. It has also cost
close to $2 billion since its inception, nearly twice the $1
billion originally budgeted for it. Letting it expire should
have been a no-brainer, not least because dairy farmers still
enjoy numerous other forms of government handouts. It was
kept alive in the Senate through the exertions of Vermont
Democrat Pat Leahy, who isn't known for helping the GOP
agenda. With no GOP Senators in either Vermont or Wisconsin,
Republicans don't even have a political motive for keeping
this subsidy alive.
Two billion dollars over three years may be a drop in the
fiscal milk-bucket, but Republican lawmakers used to insist
on sunsetting government programs for a reason. Taxpayers
have been MILCed enough by this particular boondoggle.
____________________