Interest rate reality check looms

Rik Dalvit/For the Capital Press

Editorial

Most experts agree that it's only a matter of time before the cost of borrowing money goes up. That's bad news for farmers and ranchers who depend on both short- and long-term loans to capitalize their operations.

Producers plagued by low prices will have to squeeze by on tighter margins as borrowing becomes more expensive.

It will be particularly hard on those producers who have burned through significant portions of their equity as they've tried to weather downturns in any number of sectors within the industry. Even farmers with solid credit ratings who hope to expand will find it more expensive to take advantage of opportunities to expand their operations.

One of the reasons farmers will find it more expensive to borrow money is that they will be competing for loans with their federal government. There is only so much investment capital available. The government is commanding an ever-increasing share and pushing the cost up for everyone in the process.

With the U.S. government already in debt to the tune of nearly $12 trillion, automatic increases in entitlement spending and new programs being pushed by the Obama administration and Congress are expected to add another $10 trillion in red ink over the next decade. Because everything costs more than the government expects, we will be lucky if the tab isn't a few trillion more.

It would be convenient to lay this at the feet of a liberal president and a Democratic Congress. True, they passed unbudgeted stimulus and bailout programs and plan massive expansions in social spending that will greatly accelerate the increase of the national debt. But the Bush administration and a mostly Republican Congress bought both guns and butter for nearly eight years with a fairly large pile of borrowed money.

Politicians usually become serious about balancing the budget only when they are out of power and can no longer shower their constituents with coins from the public purse.

But the pols are only partially responsible. The United States has arrived at this point because the stockholders -- we, the people -- have asked for it. We have grown accustomed to the largesse without any thought of paying the bill.

A task force appointed by the American Farm Bureau came to the obvious conclusion that there are two solutions to the country's debt crisis: the government must spend less, or raise more revenue.

We cannot go on borrowing one out of three dollars we spend. Eventually, the interest alone on that debt will consume so much of the budget as to make other necessary functions of government impossible to fund. The disaster that would follow would make last year's collapse of the financial sector seem insignificant.

If we begin to sacrifice now, we can still avert catastrophe.

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