The Department of Agriculture announced this week that it would hand out $4.7 billion in taxpayer dollars to farmers in response to the increasingly dire impact that its trade war is having on U.S. agriculture products. The total bailout for farmers has already been assumed to be around $12 billion.
Additionally, the U.S. government is about to buy over $1 billion of domestic agricultural products to “offset” the impact of China’s retaliatory tariffs (i.e. taxes) imposed against American farmers.
Our government’s severe case of the dumbs—which we highlighted a few weeks ago—seems to be worsening.
The Administration is characterizing these payments as “temporary.” As Milton Friedman once famously opined, “Nothing is so permanent as a temporary government program.”
And as commodity prices fall and up to $200 billion in tariffs are readied to be levied against the Chinese government—who is expected to return the favor as they proved last week—the likelihood that these “temporary” hand outs will be extended is almost guaranteed.
Ironically, Congress eliminated the direct payments for farmers back in the 2014 farm bill. That was about the only good thing one could say about that legislation, but nevertheless, even Congress realized such a scheme was politically and morally unpalatable.
But, like a toddler trying to fix red crayon marks on the wall by coloring over them with blue and green, the White House continues to just make things worse.
The vast majority of this initial bailout is going to the U.S. soybean industry—which was explicitly targeted by the Chinese government in July. As the U.S. government enacts tariffs on Chinese imports and China responds in kind, consumers, taxpayers, and businesses are all negatively impacted with higher costs, lower profit margins, and job losses.
No one wins a trade war.
But some industries have a better chance of survival than others. And it largely depends on the preferential treatment of government.
In this instance, the White House is attempting to placate soybean farmers and alleviate the pain that U.S. policies have caused them. If China targets corn or cotton for tariffs as aggressively as they’ve targeted U.S. soybeans, then those industries will demand to be treated “fairly” by the U.S. government and will ask for similar taxpayer-funded bailouts.
And since Republicans added cotton into the commodity title of the farm bill this year, opening it up to a bevy of taxpayer-funded subsidies and price supports, the U.S. cotton industry will only view itself as equally worthy of additional bailouts to offset the potential impact of Chinese tariffs.
The cost of the trade war will continue to increase and the likelihood of this “temporary” aid becoming permanent will only increase because these industries will assume these payments into their annual baseline.
One could say that the Administration’s policy is less ‘farm to table’ and more ‘farm to debt.’
This is the worst kind of cronyism and only encourages government and big business to collude together to benefit themselves at the expense of everyone else.
At some point, someone needs to take the crayons out of the Administration’s kid hands and prep a fresh coat of paint to undo the damage that’s been done.
There’s legislation introduced to do just that.
Are there any adults left in the room?