"President Trump has great affection for America's farmers and ranchers. He knows that they're fighting the fight and that they're on the front lines," Secretary of Agriculture Sonny Perdue told reporters while announcing the aid package.
The announcement aroused little controversy. "I was surprised that it didn't attract more attention," says Joe Glauber, the USDA's former chief economist, who's now a senior research fellow at the International Food Policy Research Institute.
Glauber says it deserves more attention, for a whole collection of reasons.
For one thing, it's an enormous amount of money, more than the final cost of bailing out the auto industry during the financial crisis of 2008. The auto industry bailout was fiercely debated in Congress. Yet the USDA created this new program out of thin air; it decided that an old law authorizing a USDA program called the Commodity Credit Corp. already gave it the authority to spend this money.
"What's unique about this is, [it] didn't go through Congress," Glauber says. Some people have raised questions about whether using the Commodity Credit Corp. for this new purpose is legal.
Glauber sees a risk of "moral hazard" — a situation in which someone is shielded from the consequences of poor decisions. The decision to start the trade war was costly, he says, and the Trump administration, by tapping the federal Treasury, is avoiding the political fallout from that decision. "The sector that is hurt the most, and which would normally complain, all of a sudden it's assuaged by these payments. To me, that's a problem," he says.
Also, the payments are quite generous. According to studies by several independent economists, the USDA is paying farmers roughly twice as much as the actual harm that they suffered from the trade war. And the payments are based on production; the bigger the farm, the bigger the payments. Thousands of farmers got more than $100,000 each. According to an NPR analysis of USDA records of payments made through July 2019, 100,000 individuals collected just over 70% of the money.
Catherine Kling, an economist at Cornell University, says the government could at least have demanded some public benefits in exchange for that money. "I think it's a real lost opportunity," she says.
What farmers do with their land has a huge impact on water quality, wildlife and climate change, Kling says. The USDA has programs that pay farmers to help the environment, doing things like restoring wetlands.
The budget for those environmental programs is just a quarter of the size of this year's trade-related payments. So Kling's reaction to this year's farm bailout is, "Wow, [there are] so many things that money could get spent on that could really be beneficial to taxpayers, who are ultimately footing the bill."
On Capitol Hill, there has long been a quiet alliance between lawmakers who support farm subsidies and those who support food stamps, or SNAP. Together, they've supported the budget of the USDA, which runs both programs.
Events in 2019 tested that alliance, as the USDA helped farmers while restricting SNAP payments.
"They've already given out $19 billion to farmers, but they're cutting $5 billion from people in need," says Rep. Marcia Fudge, D-Ohio, who sits on the House Agriculture Committee. "I don't even know how to describe it except to say that it is cruel, it is unfair, and it is clearly designed to support the president's base, as he sees it, as opposed to those whom he sees as being undeserving."
The USDA has not yet announced whether it will deliver another round of trade-related payments to farmers in 2020.
