"A Great Debate"

In the teeth of a cold, hostile, subsidy-loving audience, the President of the U.S. last week laid down his philosophy that Government aid should be a stopgap thing and hinted strongly that it was high time for his listeners to stop asking for more subsidies. Occasion: the meeting of 8,000 delegates to the 17th annual convention of the National Rural Electric Cooperative Association, lobbyist for the farm co-ops subsidized by the U.S. under the Rural Electrification Administration.

Born during the Depression, REA sought, by offering loans at a less-than-cost rate of 2% interest, to bring electricity to thousands of farm families that had none. REA did its job, and well: now more than 95% have such service. The necessity for a federally subsidized REA system has obviously decreased with REA success, yet REA has continued to grow as a dug-in interest, representing assets, loans, etc., worth billions and often generating as much political as electrical power.

Beer Bottles? All week long, Democratic speakers had paid homage to REA's power. Massachusetts' Senator Jack Kennedy, a strong presidential hopeful, promised that the Democratic Congress would "not go back on our word" by raising REA interest rates. Senate Democratic Leader Lyndon Johnson sounded a call to man the barricades against any Administration attempt to raise the interest rates: "We will fight them with beer bottles. The time has arrived when you must ask no quarter and we must give none.'' House Speaker Sam Rayburn, co-author of the 1935 act that created REA, asked plaintively: "Why not a little subsidy for the millions who, until a few years ago, were the underprivileged?"

The President, invited to address the meeting, entered Washington's National Guard Armory almost unheralded to face the delegates with his answer. Government, said he, has a proper duty to take steps to help special groups that have suffered economically, and such help is given in housing, urban renewal, farm support programs, rural electrification and other ways. But "the effort here is not to give one group of citizens special privilege or undeserved advantage. Rather it is to see that equality of opportunity is not withheld from the citizen."

Ruinous Route? "It is our obligation, as I see it, if we belong to one of the groups for which the Government has made special provision, to use that help responsibly and constructively. It is up to us to do our level best to re-establish speedily our own equality of opportunity ... I believe that when this has once been accomplished, and my special requirements satisfied, then certainly [as a member of any special group] I do not need, do not deserve, and should not accept any special help from the Government. If I do so, I help deny equality of opportunity to all my fellow citizens. No longer am I a fully independent member of society. Rather I am, to the extent I profit unfairly at the expense of others, dependent on their bounty."

REA, the President suggested, has come to the point where it should pay normal interest rates on its new loans. "America is engaged in a great debate on the rule of government in the lives of her citizens. Shall government live within its means; shall our citizens, in a prosperous time, meet the cost of the service they desire of their government? Or is it to be our established policy to follow the ruinous route of free republics of the past ages, the route of deficit financing, of inflation, of taxes ever rising, until all initiative and self-reliant enterprise are destroyed?"

Probable answer in the Democratic 86th Congress: REA's low interest rates will not be raised.

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