Former Ag Secretary John Block says with ratings agency Standard and Poor's lowering its outlook on U.S. debt farmers and others face a grim economic landscape without swift action by Washington. Block says the U.S. must cut spending and raise some taxes or face the loss of its triple-A bond rating that allows the government to borrow money so cheaply.
Standard and Poor's warned that the U.S. could lose its coveted status as the world's most secure economy if lawmakers don't rein in the nation's nearly $14.3 trillion debt. S&P changed its U.S. debt outlook from stable to negative. Block says that adds new urgency to the debate over whether to allow continued borrowing by the Treasury.
"This sends a shockwave throughout the country that we've got a big problem on our hands," Block said. "The reality is that the public is well ahead of the Congress, certainly well ahead of the Administration, because the public already knows this. They don't want to see us raise the debt limit, we're probably going to have do it, but we've got to solve our problem otherwise we're not going to be able to borrow the money."
Block says it's inevitable agriculture will face spending cuts, but without them producers could face even steeper costs.
"If we don't address the problem everyone is going to pay a price and farmers will not be exempt," Block said. "Interest rates will go up a lot higher, they're going to increase taxes, inflation, which for those people that are on retirement, they are going to find that they don't have the money for their retirement. There is all kinds of serious problems."
Agriculture will have to swallow some bitter medicine in squeezing the farm bill for savings, although Block is convinced agriculture can live through it.
"We do need to cut some of the food programs, we need to cut some money everywhere," Block said. "The direct payment programs, I know that there's a reason we've had them because we're not getting into trouble on the international trade side. But direct payments, frankly, I think are hard to justify because you don't have to do anything to earn them."
Block concludes that it's a new world today with new problems that must be addressed.