Once More Onto the Milk Cliff?

As Americans caught their breath after their fearless leaders in Washington pulled back from the fiscal cliff, with wheels spinning in mid-air, President Barack Obama appealed to Congress to employ “a little less drama, a little less brinkmanship and scare folks a little less” in future fiscal dealings. Less drama in the second term would certainly be appreciated.

The President borrowed (pardon the expression) the term “brinkmanship,” made famous — or infamous — by Secretary of State John Foster Dulles during the Eisenhower administration. “The ability to get to the verge without getting into the war is the necessary art,” was how Dulles defined his own belligerent posturing vis-à-vis the Soviet Union.

The red menace has since receded, and the art of brinkmanship is less applicable to foreign policy, but Republicans and Democrats apparently feel that it would be a waste of a daring concept to let it gather dust in the annals of the State Department. So they have brought the “necessary art” home, threatening each other (and civilian populations) not with thermonuclear annihilation, but with economic meltdown. For some, “better dead than red” has been replaced by “better dead than in the red.”

Latter-day brinkmanship, or fiscal cliff-ism, need not be confined to the “long twilight struggle” (as John Kennedy called the Cold War) over deficits and taxes. In fact, even as Washington was dazzling us with their amazing, death-defying exploits over the budgetary abyss, they barely missed driving us over yet another precipice — the “milk cliff.”

The fiscal cliff was so big and frightening that most of us were oblivious to that other cliff. But had Congress not acted — in the very last hours of 2012, of course — dairy farmers and consumers would have had to contend with a fresh dairy reality — milk at $7 a gallon.

At issue was the federal farm bill, which provides, among other arcane and dreary agricultural matters, price supports for farmers, including price “floors,” or minimums, for milk. If the farm bill hadn’t been extended by a wise and timely act of Congress, the 1949 Agricultural Act would automatically have gone back into effect. (Something like a Doomsday weapon.) Prices would have reverted to a 1949 “parity” structure, through which milk prices are set by the price of cheese and other commodities at the Chicago Mercantile Market. The wholesale price might then have soared to $39. That might have meant store prices of $7–$8 per gallon.

Although farmers could expect an initial windfall, consumer demand would quickly collapse, leaving those farmers with lots of cows and milk but no market. So it seemed to be in everybody’s interest to avoid the cliff.

Of course, this matter could have been settled some time before. In fact, a bill was almost ready to be voted on in both the Senate and the House well before December 31. However, an impasse developed over the economic merits of a new subsidized insurance program to ensure producer profits even when prices are low.

In the end, it was agreed to extend milk price supports, rather than take a chance on an insurance scheme that some economists said could turn out to be more expensive than the current subsidies. Sen. Susan M. Collins (R., Maine), who helped push the bill through, called it a stop-gap measure, but said she was pleased it averted serious problems in the meantime. (Incidentally, Collins has a better-than-average reputation on Gridlock Hill. She is associated with various efforts at bipartisan compromise and hasn’t missed a roll call vote since she was first elected to the Senate in 1996.)

But, as in the case of the fiscal cliff, the milk cliff will not go away for long. As a new Congress takes office, the next fight over the federal debt ceiling awaits them. Extension of the milk supports is only temporary, due to expire in September, when they will have another chance to drive the agricultural sector in Maine and elsewhere over a cliff.

Perhaps in the meantime, the nation’s lawmakers will take the opportunity to mull over the appeal for less brinkmanship. Perhaps it was a necessary art when the United States was confronted with a communist empire armed with weapons of mass destruction. Then, we depended on our own nuclear arsenal to deter the enemy from aggression; and a perceived readiness on our part to go to war — the credibility of the deterrent — was seen as a key to security.

But domestic brinkmanship is not only unnecessary, it undermines confidence at home and abroad in the democratic process itself, that it can sanely and safely manage the formidable economic and social problems that face us in the 21st century.

We can readily understand why some politicians thrive on brinkmanship. We can understand the need to impress constituencies with steely resolve in the face of spineless compromisers, as well as the sheer adrenalin thrill of veering sharply from utter destruction at the last possible moment.

But it is time to put the needs of the American people and the U.S. economy first.