Why Do Farmers Get Federal Welfare, No Questions Asked?
Many of us contribute to society and don't have the easiest time keeping our heads above water financially.
As I've pointed out before, you can be a Fifth Avenue-dwelling Rockefeller who owns a farm, and you get one of these subsidies.
One recent excuse given for subsidies to farmers is the Trump trade war tariffs.
NPR's Dan Charles writes -- in a piece titled "Farmers Got Billions From Taxpayers In 2019, And Hardly Anyone Objected":
In 2019, the federal government delivered an extraordinary financial aid package to America's farmers. Farm subsidies jumped to their highest level in fourteen years, most of them paid out without any action by Congress.The money flowed to farms like Robert Henry's. When I visited in early July, many of his fields near New Madrid, Mo., had been flooded for months, preventing him from working in them. The soybeans that he did manage to grow had fallen in value; China wasn't buying them, in retaliation for the Trump administration's tariffs.
That's when the government stepped in. Some of the aid came from long-familiar programs. Government-subsidized crop insurance covered some of the losses from flooding. Other payments were unprecedented. The U.S. Department of Agriculture simply sent him a check to compensate him for the low prices resulting from the trade war.
"'Trump money' is what we call it," Henry said. "It helped a lot. And it's my understanding, they're going to do it again."
Indeed, a few weeks later, the USDA announced another $16 billion in trade-related aid to farmers. It came on top of the previous year's $12 billion package, for a grand total of $28 billion in two years. About $19 billion of that money had been paid out by the end of 2019, and the rest will be paid in 2020.
...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 Corporation (CCC) 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 CCC 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 percent of the money.
We aren't subsidizing the taxi industry because Uber's eating their business -- nor should we.
The same goes for countless people who have found themselves in dying businesses and industries.
And we should not be subsidizing farmers. Especially not those who are extremely wealthy people who own farmland or big corporate organizations in the business of farming, but really, nobody should be getting subsidies from the government.
If your business model no longer works, the market demands that you change it -- the market unmucked-with by politicians with their ears to lobbyists' clients' dollars and an electorate voting for whomever pledges to keep the bribes to farmers coming.
Bureaucrats love re-interpreting existing laws to mean whatever they want them to mean; as long as it gives them more regulatory power. Witness the "Dear Colleague" letter that kicked off the transgender kerfuffle.
Does it ever?
Conan the Grammarian at January 2, 2020 4:44 AM
So, the soybean farmers needed a subsidy, because China wasn't buying soybeans.
I wonder what the alternative is for subsidizing soybean farmers. Legal mandates that soy be included in all our food to ensure the product gets sold?
Patrick at January 2, 2020 6:34 AM
Aww, damn.
Go BE a farmer for once.
If you're not ADM/Beatrice{insert conglomerate name here}... well, wait a minute.
Suppose you DO go out of business. Do you really think you can start a farm right back up?
Do you know how American farming gets affected by foreign trade?
Radwaste at January 2, 2020 8:29 AM
Back in the 80's, when I worked in the oilfields in California, some of the guys I worked with who had homes on 10 or 20 or 40 acres of land had sheep because the government paid a generous subsidy on wool. Some of them paid a small amount to the owners of unused property adjoining theirs to have more space for bigger flocks. The subsidy wasn't enough for them to get rich off of, but it was enough to cover the cost of owning the sheep and, along with the better-than-average wages they made in the oilfields, make a substantial improvement in their families' standards of living - i.e. nice homes, nice cars and pickup trucks, recreational motorcycles, horses, private schools for their kids.
Ken R at January 2, 2020 9:20 AM
First of all, the NPR reporter couldn't resist making it all about Trump, which is incredibly dishonest. Farm subsidies have wide bipartisan support. You'll note Obama didn't kill them, or even try to.
Second, that's the problem... farm subsidies are nearly as unkillable as Social Security. And they distort markets and cause consumer prices to be artificially high. And these programs and rules always have unintended consequences, which the government always tries to fix with more of what didn't work the first time.
I don't know what the answer is. I'm afraid there isn't one. Farm subsidies will survive, and continue to grow, until the day that the government checks either start bouncing or are paid in hyper-inflated money.
Cousin Dave at January 2, 2020 9:26 AM
Subsidies exist for a reason:
https://www.investopedia.com/terms/d/dumping.asp
Companies do it. Governments sponsor it. The markets favors guile over principles.
Sixclaws at January 2, 2020 9:36 AM
Oh, stop complaining.
Farmers grow the wheat and corn and soybeans we need to make high-fructose corn syrup, gasoline additives, and estrogen-rich protein supplements to feed developing young boys.
Without them America wouldn't be what it is today.
Gog_Magog_Carpet_Reclaimers at January 2, 2020 10:45 AM
These subsidies were created during the depression. But gov programs never go away. If you have a cow or horse your second home property is a "farm". This may account for a lot of the horses out there. The Dept Agric extension offices lost so many farmers that they have started consulting with urban dwellers about their weeds and pests.
cc at January 2, 2020 11:40 AM
I'm gonna go out on a limb and say the reason farms get subsidized is because it is a national security issue, and if any country stopped producing their own food, and relied on outside sources, they would be totally fucked when the supply lines got cut off.
NicoleK at January 2, 2020 11:54 AM
@NicoleK,
There's no better example of that than the drama that happened when Bush Jr. signed that stupid ethanol fuel bill into place.
The entire production chain all over the world was messed up. It proved how sensitive the whole world was to a price disruption on such a humble commodity crop like corn.
Sixclaws at January 2, 2020 12:59 PM
As CC notes most of these subsidies started during the depression and just never went away. At the time it was a big issue with people going bankrupt. If too many farms went bankrupt we would have mass starvation. Even so a lot of farm went out of business and hunger became a national issue. This is also when the food stamps program started. A 100 years later and both programs are still with us.
On the financial side, federal farm subsidies are around $25 billion. Sounds like a lot but the budget is $4.1 trillion. So this is only 0.6%. As far as the budget goes it doesn't really matter.
For reference federal spending on food stamps is around $75 billion.
Ben at January 2, 2020 1:18 PM
To further put things in context, Elizabeth Warren is proposing to raise taxes by roughly $2 trillion a year. She also wants to raise spending by $4-5 trillion. $25 billion for farmer or even $75 billion for food stamps are all just chump change when considering the federal budget. It is the equivalent to arguing over $25/month spending for the average American. It doesn't really matter.
Ben at January 3, 2020 8:03 AM
NicoleK, that's pretty much what I always thought.
Also, during WWII, in the UK at least, farm workers were told they were not wanted in the armed forces because it was essential that they stick to their jobs.
lenona at January 3, 2020 1:57 PM
Leave a comment