Subtotal..... 850 1,069 1,189 1,068 Total Commodity Credit Corporation outlays... 4, 670 8, 451 5,334 4, 444 normal weather would result in substantially higher outlays for income stabilization programs. An important element of the administration's food and agricultural policy is the establishment of food reserves as a hedge against crop failure here and abroad. Two reserves are being created: a farmer-held grain reserve and an international emergency wheat reserve. Having these reserves on hand will help to dampen price fluctuations. Agricultural credit insurance fund.-Agricultural loans, including emergency loans from the agricultural credit insurance fund, increased sharply in 1977 when more than two-thirds of the counties in the United States were declared eligible for emergency financial assistance because of adverse weather conditions. The impacts of such loans will continue during much of 1978. Loan volume is expected to decline from $2.4 billion in 1977 and $2.9 billion in 1978 to $2.1 billion in 1979 because of more normal weather and the expiration of the emergency livestock loan guarantee program. Currently, the Small Business Administration also provides loans for such crop losses. In order to avoid overlap with loan programs of the Farmers Home Administra 1 Includes sale of loan assets. tion, the 1979 budget reflects a proposal to delete farm lending assistance under the Small Business Act. Crop insurance.-Farmers are offered insurance against crop losses from natural hazards by the Federal Crop Insurance Corporation. Federal crop insurance is available in selected counties for selected crops to cover the farmers' variable production costs. Indemnity payments are estimated to total $168 million in 1978 and $98 million in 1979. In addition, the CCC provides disaster payments partially to offset reductions in income from supported crops due to adverse weather conditions. Outlays for these disaster payments are estimated to be $522 million in 1978 and $357 million in 1979. The administration is currently reviewing its disaster aid programs for farmers, including emergency loans (estimated at $1.2 billion in 1978 and $578 million in 1979) financed by the agricultural credit insurance fund. The administration is considering recommendations for eventually replacing certain disaster aid programs with insurance programs to meet needs for protection from losses from natural disasters. Agricultural research and services. This mission is to improve production and marketing efficiency through better technology. It also provides information on agricultural markets, at home and abroad, controls and suppresses plant and animal pests and diseases, and regulates the marketing of farm products. Research and extension.—Research helps increase agricultural productivity resulting in more abundant domestic supplies, a large volume of competitively priced exports, and more nutritious food products. Proposed outlays of $774 million are recommended for agricultural research and extension services in 1979, about the same level as in 1978. Budget authority of $35 million will be redirected, principally from marketing and tobacco research, formula grants, and construction. This permits proposals for increases in nutrition ($14 million), conservation and natural resources ($3 million), small farm and integrated pest management research ($5 million), and basic plant research ($9 million). Emphasis will be placed on carrying out needed research through competitive grants and contracts with non-Federal organizations. The advantages of extramural research include: more options in research resources, a broader range of scientific skills that can be tapped and a substantial reduction in the administrative burden and in the number of Federal employees. Animal and plant health.-The Federal Government carries out a number of programs to prevent the introduction and spread of plant and animal pests and diseases that could result in severe losses in yields or in the output of livestock products. Estimated outlays for these services in 1979 total $219 million, about the same as in 1978. Tax expenditures.—The use of cash rather than accrual accounting, and the treatment of certain farm income as capital gains results in tax expenditures estimated to be $0.9 billion in 1979 under current law. Tax reform proposals include requiring certain farm corporations to use accrual accounting in order to prevent tax shelter abuse. Related programs.-Several programs that fulfill other national needs complement the programs in agriculture. The most important of these programs is the food for peace program which is discussed in the international affairs section. FEDERAL PROGRAMS THAT SUPPORT THE AGRICULTURAL MISSIONS [Outlays in millions of dollars) Primary 1977 1978 1979 Program title function actual estimate estimate - in budget Disaster relief and insurance-------------------- 450 634 1,686 1,007 Conservation and land management--------------- 300 468 685 432 Food for peace (Public Law 480)----------------- 150 850 1,068 1,069 Food safety (Food and Drug Administration).------ 550 245 283 298 COMMERCE AND HOUSING CREDIT National Needs Statement: • Ensure that an adequate supply of mortgage credit is encourage the development of jobs and a sound economy. The following missions and programs are designed to meet the commerce and housing credit national needs and foster sound credit policies that encourage and enable homeownership, which helps to revitalize distressed urban and rural areas. The most important actions that the Federal Government can take to encourage commerce and housing production are to pursue fiscal and monetary policies that support continued growth in real incomes, business investment, and mortgage credit. The availability of credit at reasonable interest rates is particularly important to potential homebuyers and business investment. A balanced expansionary economic policy should provide an adequate supply of funds for both business investment and mortgage credit. In addition to attempting to achieve a balanced expansionary economic policy, the Federal Government also undertakes the following major missions to help achieve our national needs for the development of commerce and housing credit: • Mortgage credit and thrift insurance: for 1979, offsetting receipts are expected to exceed gross outlays, resulting in net outlays of —$0.3 billion. • Postal Service: $1.8 billion in outlays estimated for 1979. • Other advancement and regulation of commerce: $1.4 billion in outlays estimated for 1979. The goal of the administration's policy in the credit area is to ensure that credit is available in areas not well served by the private market, such as declining central cities and rural areas. Federal incentives will be provided to induce the private market to increase the amount of credit available in these areas. Where this is not sufficient, Federal credit will be provided. Direct housing assistance programs are discussed in the section on Income Security. Numerous Federal programs in this functional area also contribute to the general support of business and to the maintenance of a free flow of commerce. In addition to increasing assistance to small businesses, the administration's efforts in 1979 will be directed toward improving statistical information and promoting the maintenance of basic scientific and engineering capabilities. To help to carry out these missions, the following proposals are emphasized in the 1979 budget: • $2.0 billion of mortgage purchase authority to provide interest subsidies that will support the construction of multifamily housing in distressed urban areas. • Targeting of rural housing programs to lower income residents, including a proposed special homeownership assistance program. • An expansion of guaranteed loan assistance to small business, with new commitments of $3.3 billion in 1979. • Intensified efforts to encourage volunteer and other management assistance to promote small business development, with emphasis on minority and women business owners. These major missions are supported by the programs shown in the table on the following page. Mortgage credit and thrift insurance.—Federal housing policy continues to focus on the basic goal of providing a decent home in a suitable living environment for every American family. Federal housing programs carry out this goal by: • ensuring an adequate supply of mortgage credit; rehabilitation programs; and income households. Most of these subsidy programs are discussed in the income security section. Mortgage credit programs are aimed at increasing the supply of i credit for housing. Mortgage insurance, guaranteed and direct loans, and secondary mortgage market activities support the smooth opera tion of private mortgage credit markets and supplement those mar2 kets, particularly in rural and central-city areas. By making credit available at affordable interest rates, Federal credit policies stimulate the demand for, and, therefore, the production of, housing. During 1978, the administration will undertake a study of the Nation's existing housing and credit policy needs and the criteria used to measure the need for increases in housing stock and credit. In January 1978, the Secretary of Housing and Urban Development (HUD) authorized the Government National Mortgage Association |