A $12 billion federal bailout for farmers is designed to offset the devastating effect of President Trump's trade policies.
The U.S. Department of Agriculture announced that it plans to not only send checks to farmers but also purchase some of their products for food banks to dispense. In addition, officials pledged to find more international customers for farm exports.
The Trump administration admitted that its trade policies have cost farmers about $11 billion, due to other countries responding to U.S. tariffs by slapping import taxes on American goods. The USDA claims it can provide the bailout without congressional action, instead obtaining the funds from the Commodity Credit Corporation. President Franklin Roosevelt and Congress created the CCC during the Great Depression of the 1930s.
Some Republican lawmakers were quick to denounce the proposal. “At no point have I heard a farmer or rancher say 'we want more bailouts; we want more welfare,'” Sen. Ben Sasse of Nebraska told CBS News. “What they want is less trade war. There's no ambiguity about this from the producers in my state.”
Sasse called trade wars “stupid,” adding: “The president often talks as if governments are at the center of this transaction. They aren't. And American families and American producers would like governments to get out of the way so they can buy and sell the stuff they want, and so that our farmers and ranchers can feed the world.”
GOP Sens. Bob Corker of Tennessee and Rand Paul of Kentucky also have spoken out against the bailout. “Our farmers have been in nonstop, saying they want trade, not aid, and now they’re being put on welfare,” Corker told The Washington Post. “So the tariff policies that have been put in place by the administration are now causing them to invoke a welfare policy for our farmers, which I’m sure is not what they wish.”
Another Republican member of Congress who represents a farm state, House Speaker Paul Ryan of Wisconsin, recently remarked: “I just don't think the tariff route is the smart way to go.”
Trump argues that he is protecting U.S. jobs by imposing the import taxes. On Wednesday, he tweeted: “China is targeting our farmers, who they know I love & respect, as a way of getting me to continue allowing them to take advantage of the U.S. They are being vicious in what will be their failed attempt. We were being nice, until now! China made $517 Billion on us last year.”
When the president hit China with $34 billion worth of tariffs earlier this year, the Asian nation retaliated with import taxes on soy, corn, wheat, pork, poultry and other U.S. agricultural products.
The industry was having enough trouble without a trade war. Soybean prices were already at their lowest level in a decade, and the money farmers receive for corn was down 15 percent. Producers are losing money on dairy and pork, as well. Agricultural income has plunged 50 percent in the past five years, and farmers' debt-to-income ratio is the worst it has been in 34 years.
China's tariffs are making matters considerably worse because the country buys about one-third of the soybeans grown in the United States. Iowa soybean farmers are bracing for a projected $624 million in losses, state Agriculture Secretary Donnelle Eller warned during a CBSN interview in June.
The administration does not want to call its financial-assistance plan for farmers a “bailout.” Instead, they describe it as a “short-term solution” to protect food producers until the trade wars are settled.
Farmers are not the only U.S. workers suffering. The oil industry, carmakers, the Harley Davidson motorcycle company, and manufacturers of cheese and whiskey are among others who have seen retaliatory tariffs drive up the price of their products in foreign countries. In many cases, those hurt the worst are in states that voted for Trump.
“These new duties are often described as 'tariffs on China' or 'tariffs on the United States,' but they’re really taxes on American businesses, workers and consumers,” Ed Gerwin of the Progressive Policy Institute told Salon. “The administration’s new trade taxes on items like auto parts, electrical components and machinery will raise costs for American businesses, make it harder for them to compete and destroy many more American jobs than they protect. And even if American consumers don’t pay the tariffs directly, they’ll ultimately pay higher prices.”
Former Sen. Joseph Lieberman of Connecticut, who was a Democrat before he became an independent, pointed out that “there's only so much we can make and sell to one another.” He explained: “For the good of our economy, we've got to be able to sell the stuff we make here, the services we create around the world, and that requires trade. … So the lower tariffs are in other countries, the better our economy is going to be.”