Agricultural Credit Improvement Act of 1992

Bill to assist beginning farmer to acquire his or her own farm. This act required the U.S. Department of Agriculture’s (USDA) Farm Service Agency (FSA) to target a percentage of its direct and guaranteed farm operating and farm ownership loans to beginning farmers and ranchers. In 1992, the average age of farmers had increased to 52 years of age. Twice as many farmers were 60 or older as were under the age of 35. The increased cost of farming since the 1970s and the farm crisis of the 1980s had washed many younger farmers out of the business.

To get the loans, the beginning farmer had to draw up a detailed 10-year plan of action for his or her farm. Once the USDA Farm Service Agency approved the plan, new farmers became eligible for direct, subsidized, operational loans from the FMHA for 10 years and federal loan guarantees for the next 5 years. After 15 years, these farmers became ineligible for the program. The federal government took up liability for 80 to 90 percent of these loans if they were defaulted on.

Another minor change in the law allowed banks, rather than the Farmers Home Administration (FmHA), to decide which farmers met eligibility requirements for this program. Members of Congress believed that this would get money to the farmer faster. The bill also called for special efforts to make loans more available to those who are “socially disadvantaged,” including women.

Science and Technology

Government spending during wartime has led to many breakthroughs in the fields of science and technology. In the post–Civil War period, medical professionals explored the cause of diseases and infections. By the 1900s army surgeons had discovered the cause of malaria and the public learned about germ theory.Wars also resulted in the development of penicillin and other antibiotic drugs. During World War I, Americans improved the airplane, and after World War II an entire aviation industry developed. During the cold war, the federal government funded the missile and space programs, which yielded such inventions as the computer chip and eventually the Internet.

Welfare

From the 1930s to the present, the federal government has increasingly used economic policy to deal with social and cultural issues. In the immediate post–World War II period, Americans experienced an unprecedented period of prosperity because of the accumulation of personal savings and the expansion of industry during the war. But by the 1960s, it was apparent that although most Americans’ standard of living had increased, African Americans and other groups had fallen deeper into poverty. President Lyndon B. Johnson attempted to correct the problem by using tax revenues to fund a new welfare state—the Great Society, which had programs ranging from Head Start to Medicaid that supported health, education, and community development. The Great Society redistributed the wealth but also created a group of people who became dependent on the federal government. After several decades, states including Wisconsin began to experiment with ways to eliminate this dependency on welfare. As of 2003, the number of people on the welfare rolls has dropped because similar efforts have also been undertaken at the federal level. This change in economic policy led to a drop in the number of births to unwed mothers and the number of abortions.

Economic Policy

Economic policy has shifted many times over the course of American history. During colonial times, the British colonies operated under a mercantilist system in which all trade benefited the mother country. After the American Revolution, the fledgling United States attempted to operate under the Articles of Confederation, but the economic restrictions it placed on the national government caused that system to fail. Delegates meeting at the Constitutional Convention agreed that the federal government must have the power to tax. A decision to tax only imports, not exports or direct income, proved to be decisive in the development of domestic industry. Congress passed revenue tariffs (taxes on imports) during the early years of the Republic; after the War of 1812, a shift to protective tariffs occurred. These tariffs continued to increase reaching their apex during the Civil War under the Morrill Tariff. After the Civil War, tariff rates remained high, ensuring the rise of big business that did not have to compete against foreign manufacturers. The extreme wealth accumulated by captains of industry such as Andrew Carnegie and John D. Rockefeller stood in sharp contrast to the poverty of many Americans, especially new immigrants who crowded into tenements in major cities in the North and East. Public awareness of this economic inequity resulted in a movement to replace the tariff as the primary source of tax revenue with a direct personal income tax. However, Congress lacked constitutional authority to institute such a tax unless the states passed a constitutional amendment to allow direct taxation. Republicans finally agreed to lower the tariff rates if the amendment passed, thinking that the states would fail to pass it. The plan failed, and ratification in 1913 of the Sixteenth Amendment opened the door for direct taxation—a shift that has influenced capital accumulation, investment, and personal savings ever since. that has influenced capital accumulation, investment, and personal savings ever since.

After reducing the tariff rates and increasing personal income tax rates, Congress once again increased import duties because of World War I. After that conflict, European countries that had been carved out of the old empires raised their tariff rates to protect their own industries. Consequently, trade slowed at the same time that the U.S. stock market collapsed under the burden of overvaluation of company worth and market overstimulation due to purchases on margin. Within nine months of the crash,Congress passed the Hawley- Smoot Tariff, which raised tariff rates to a record high.Meanwhile, the Federal Reserve Board increased interest rates, contracting the money supply. The net effect was a prolonged depression that finally ended when the United States entered World War II.

The Great Depression and World War II mark a shift in U.S. economic policy. President Franklin D. Roosevelt followed the economic philosophy of John Maynard Keynes, who advocated deficit spending during periods of financial difficulty. Deficit spending would allow the federal government to initiate programs that politicians had traditionally shunned. For the first time, the federal government assumed the role of employer to thousands of the country’s unemployed workers. Programs like the Civilian Conservation Corps and Works Progress Administration created jobs. Social Security was established to promote early retirement and so open up jobs to younger workers. In addition, the federal government funded projects such as the Rural Electrification Administration and the Tennessee Valley Authority to improve the lives of Americans in rural or poverty-stricken areas.