Christmas on the Hustings

By KURT ANDERSEN

Reagan hands out election-year goodies to key voters

Between high interest rates and falling land prices, many farmers are in serious trouble, suffocating in a credit squeeze.

So what is the presidential candidate's solution?

During a campaign trip to rural Iowa, he outlined "a major initiative to assist farmers trying to cope with debt burdens." It was an emergency aid scheme of the kind Democrats are wont to suggest, involving a stretched-out repayment schedule for Government loans and federal guarantees of private credit. The package could cost as much as $1.3 billion.

And what does the candidate propose to do about high unemployment among steelworkers? He announced a plan to negotiate with foreign governments for a 30% reduction in the amount of low-cost steel exported to the U.S.

Such special-interest sops are just the kinds of Government interference in the free market that Ronald Reagan has spent his political career decrying--and condemns nowadays when they are advocated by Walter Mondale. Yet last week it was the Republican President, not his Democratic opponent, who unveiled the relief programs for agriculture and steel.

Those election-season announcements showed the kind of political leverage that comes with incumbency. Mondale can only talk; the President can do. Indeed, Reagan exploits the political powers of the White House at least as well as any predecessor. He showed last week that it is more than a matter of handing out goodies to farmers and Big Steel. Whether in an Iowa field, on a street in Hammonton, N.J., or on the Waterbury, Conn., town green, he was highly visible but almost invulnerable. His handlers continue to limit his contact with insistent journalists and give him vague, breezy speeches to deliver to friendly crowds. His upbeat rhetoric in Waterbury was quintessential Reagan: "We say America should shoot for the stars, strive for the best and, like our Olympic athletes, go for it." The strategy seemed clear: keep people smiling, and avoid potentially unbecoming wrangling with Mondale on matters of substance.

Reagan disclaimed any political motivation for his farm package. "Now I know that none of you . . . are going to believe this," he told reporters. "It wasn't done with that in mind. It was done because there are people out there who need help." Reagan instructed the Farmers Home Administration, the federal lender for growers and ranchers who cannot get private credit, to permit many distressed farmers extra time to pay back their loans: debtors can arrange for as much as 25% (up to $100,000) of outstanding principal and interest payments to be postponed for as long as five years, without penalty. Furthermore, the Government will guarantee local banks' outstanding loans to farmers if the bank will simply forgive 10% of the debt. Cost to the Treasury: at least $1 billion.

Although Reagan's steel-import restriction plan does not involve direct Government expenditures, it will be costly: consumers will pay billions more for everything from automobiles to canned goods. Moreover, it may be a significant Administration nod toward protectionist trade policy (see ECONOMY & BUSINESS).

Imported steel has now captured at least a quarter of the U.S. market. Steel companies and the United Steelworkers have lobbied for import restrictions.

The election-year largesse began to flow before Labor Day. In July Reagan came out in favor of an irreducible 3% cost of living adjustment in Social Security benefits. Without Reagan's initiative, the law would rule out an adjustment if inflation, now running at 3.5%, dipped below 3% for the year.

Throughout his term, Reagan has let plainly political considerations influence policy. He violated free-trade principles as early as 1981, when he negotiated auto import limits with the Japanese. He supports tuition tax credits for parents of private school students (estimated five-year cost: $3 billion), an idea that appeals to Roman Catholic voters. Reagan came into office promising wholesale deregulation of business, yet his Administration has dawdled where the heavily regulated trucking industry is concerned. The International Brotherhood of Teamsters, the only major labor union to back Reagan, is strongly opposed to trucking deregulation.

The new aid to farmers is minor compared with the Reagan Administration's earlier generosity. Government commodity price-support payments totaled $30.5 billion over the past two years, as much as during the previous nine years combined.

The temporary payment-in-kind (PIK) deal, which doled out accumulated Government grain and commodity stocks to farmers who agreed to keep some of their fields fallow, cost $9.7 billion in 1983. Last week the President recalled those and other Administration policies that helped farmers: lifting the embargo on grain exports to the Soviet Union, eliminating estate taxes for widowed spouses (important to land-rich farmers) and getting Japan to double its imports of American beef.

Reagan was back at the White House by nightfall Thursday. His campaign schedule is no grind. On the road only two or three days a week, he tries to avoid addressing complicated issues or difficult audiences. His strategists prefer a succession of snapshots: Reagan amid a lift-off of 5,000 balloons in Waterbury last week, Reagan surrounded by smiling workers during a planned visit to an Akron steel plant this week. The idea is simple: just keep the jaunty President walking on the sunny side of the street.

--By Kurt Andersen.

Reported by Laurence I. Barrett and Douglas Brew/Washington

With reporting by Laurence I. Barrett, Douglas Brew/Washington