Trump's trade war is a disaster for farmers. Now he thinks he can make up for it with a $12 billion bailout.
The Trump administration is preparing a multi-billion-dollar, taxpayer-funded bailout in a desperate attempt to make up for Trump's reckless international trade war.
The administration plans to distribute $12 billion of funds from the Department of Agriculture (USDA) to farmers who are losing money thanks to Trump's bad trade policies, The Washington Post reports.
Normally, Congress would have to appropriate money for a big bailout like this. But Trump has a plan that lets him avoid seeking congressional approval.
The trade-war bailout funds will be distributed in part through the Commodity Credit Corporation, a program created during the Great Depression to give struggling farmers a safety net. The CCC, which is allowed to borrow up to $30 billion from the U.S. Treasury, was also used in the 1970s to boost prices for dairy farmers under the so-called "government cheese" program.
Trump claims that the financial pain for farmers, and the need to bail them out, is only temporary. He thinks that if he applies enough pressure, other countries will give in to his demands and drop their retaliatory tariffs on U.S. goods.
But so far, the retaliation has just gotten worse — and there's no reason to believe it will reverse anytime soon.
While Republicans in Congress have criticized Trump's self-inflicted trade war, they haven't lifted a finger to actively stop him from hurting American industry.
Now American taxpayers are footing the huge bill for a temporary solution to a long-term problem that Trump created out of thin air.
Joe Glauber, a senior research fellow with the International Food Policy Research Institute who previously served as chief economist at the USDA, slammed the idea when it was first floated.
"As a consumer, I’m going to have to pay higher prices as a result of this, and higher taxes, because of a bail out through the CCC Charter Act," he explained.
Former Congressional Budget Office Director Douglas Holtz-Eakin characterized the proposed bailout as "buy[ing] the political silence of the farmers."
Using the government for a bailout could even trigger a case against America in the World Trade Organization. The Washington Post notes that propping up farmers in this way could lead other countries to allege that the United States "has created an improper subsidy for farmers."
Americans hate Trump's trade war. Recent polling shows most voters — by a 2-to-1 margin — believe that Trump's tariffs will hurt consumers while failing to protect the economy.
Trump has continued to be deluded about the policy, tweeting on Tuesday: "Tariffs are the greatest!"
In reality, American companies and consumers are being hurt by the tariffs as other nations retaliate against Trump. Those retaliatory actions are blocking U.S.-made goods from foreign markets and hurting American producers, like farmers in the Midwest.
For example, $14 billion worth of soybean produced by American farmers is sold to China every year. Thanks to the Trump tariffs, that revenue is now in jeopardy.
Trump's tariffs have already led Harley-Davidson to move some of its motorcycle production offshore.
Trump's new bailout is an attempt to avoid admitting his trade war has been a huge mistake that continues to threaten the recovery that began under President Barack Obama.
Published with permission of The American Independent Foundation.