The costs of irresponsible policy.
It is difficult to keep track of the ways in which this administration is engaged in poor governance. There is, for example, the possibility of doing serious harm to our relationship with Japan and South Korea, not to mention ongoing strains with our NATO allies. And then there’s this (via Bloomberg): Trump Pledged to Help Small Farms. Aid Is Going to Big Ones.
As per the headline:
Half of the Trump administration’s latest trade-war bailout for farmers went to just a 10th of recipients in the program, according to an analysis of payments by an environmental organization. The study asserted that payouts have been skewed toward larger operations and wealthier producers.
The top 1% of beneficiaries from the trade aid received 13% of the money distributed in the first round of payments under this year’s Market Facilitation Program, with an average payment of more than $177,000. But the bottom 80% of recipients received an average payment of $5,136, according to the Environmental Working Group, which analyzed records obtained through the Freedom of Information Act.
This is not particularly surprising, although it perhaps should be concerning. And, of course, the current mess (i.e, the trade war with China) is unnecessary and utterly man-made (with the man in question being Donald J. Trump).
Moreover, the following is pretty stunning:
The farm rescue is now more than twice as expensive as the 2009 auto industry bailout, which ultimately cost taxpayers $12 billion. Almost 40% of projected U.S. farm profits this year will come from trade aid, disaster assistance, federal subsidies and insurance payments, according to the American Farm Bureau Federation.
The Trump administration announced an additional $16 billion round of trade aid for farmers this year as the dispute with China drags on. That’s on top of a $12 billion pledge in 2018.
I would note that the auto bailout, which was controversial and opposed by the GOP, was in the context of the biggest global economic downturn since the Great Depression and was an emergency measure. The only reason for the bailout that Trump is funding is because of the trade war he started.
If ~40% of farm profits for the year will come from aid, assistance, federal subsidies and insurance then that looks a lot like the dreaded “socialism” that the Republicans say they are protecting us all from. Worse, it is the crude kind of meddling in the economy that is the worst kind of socialism. It is the ad hoc results of a president who really doesn’t know what he is doing engaging in a vainglorious, simplistic policy choice (the ever popular, and always “easy to win” trade wars). As that policy choice fails, he finds himself having to use public resources to prop up some of his constituents in an attempt to maintain their support going into 2020.
Meanwhile, the Business Insider reported back in October: Farm bankruptcies jump to highest level since 2011 as Trump’s tariffs bite.
Farmers filed 580 Chapter 12 bankruptcy filings between January and September, according to the American Farm Bureau Federation, the largest farm advocacy group in the country. That was a 24% increase from the previous year and the highest level since 2011, when there were 676 filings.
Farm bankruptcies rose to or above decade-highs this year in Iowa, Kansas, Maryland, Minnesota, Nebraska, New Hampshire, South Dakota, Wisconsin and West Virginia, according to the federation.
And note: these bankruptcies are in the context of an overall good economy and with billions in federal subsidies flowing in. The trade war really is a an utter disaster of a policy.
At a minimum, this reality does not match up with the rhetoric of fiscal responsibility and pro-market policies. Instead this is the kind of recklessness one expects from a amateur and a populist: simplistic policies and the usage of public funds to paper over the failures thereof. These kinds of things are far easier to hide in solid economic times, but if these conditions continue and we go, as we inevitably will, into recession again, this is going to be catastrophic.