Speaking at the Ag Issues Forum sponsored by Bayer CropScience, policy expert Jim Wiesemeyer started with a promise to be an equal opportunity finger pointer at what's going on-–and not going on--in Washington, D.C. these days. Weaving together the knowledge, candor and humor that are his trademarks, Wiesemeyer covered the waterfront but really drilled into what he calls the debt sentence for the U.S.
"The numbers are starting to add up to a size where they can't hide,” said Wiesemeyer, senior vice president for farm policy and trade issues for Informa Economics and consultant for Pro Farmer newsletter, who has covered Washington for 32 years.
Faced with an overall national debt that is growing at more than a trillion dollars – with a "t” a year, the Obama administration is predicting the total debt as a percentage of the U.S. economy at 90% in the future. That places the country in a spot where it would take a 36% increase in personal income tax just to cover the interest on the national debt.
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"As perspective, President Obama will add more red ink in his first two years in office than President George W. Bush did in eight years,” he said. "The projected $18.5 trillion debt in 2020 would more than double the size of debt when Obama took office, and the annual interest on that debt would exceed $800 billion.”
In another comparison, Wiesemeyer noted that in the first 15 months of office, the Obama Administration will raise the debt burden (debt as a percent of the U.S. economy) by more than President Ronald Reagan did in eight years.
Noting that the sizes of the two countries' economies are quite different, Wiesemeyer pointed out that even though Greece is often in the news with its financial woes, the statistics for the U.S. are not far behind. "Right now, the U.S. budget deficit is almost 11% of GDP while Greece is at 13%,” he said. "At the same time, the long-term debt burden is at 90% and Greece is at 120%.
The result: a debt sentence that will impact every corner of the country. Prefacing his predictions of what that could mean for farmers, Wiesemeyer said he hopes he is wrong.
Here are some of his key predictions:
- Look for more finance issues than anticipated for agriculture a year from now. That difficulty will come from bank consolidation and tighter credit conditions. The same pressure and difficulty that has been seen in the mid-South and Delta will move into the Midwest.
- Increased interest rates.
- There will – without a doubt – be cuts ahead for agricultural programs. "Those will come after the November 2 election,” he predicted. "That's why Collin Peterson is desperately trying to get farm groups to start the next farm bill discussions now – to help drive the outcomes of change rather respond to it.”
- Changes to crop insurance, which he characterizes as "being under a microscope now”.
- Cuts in programs such as Medicare and Social Security.
- Fewer dollars spent on research and development.
On the upbeat side, Wiesemeyer finished by focusing on "the rise of the rest,” – the growing number of middle class of people in China, India, Indonesia and Latin America. "That can be a growth generator for U.S. agriculture as long as our farmers are allowed to competitive,” he said. "That means we need a balanced regulatory approach and a trade policy that gives U.S. farmers an opportunity for increased market access.”
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