The Big Farmer Bailout Was Never Debated

Farmers are getting billions of dollars in bailout money to compensate for the trade war with China. If big banks or big business were being bailed out there would be an uproar but big farmer bailouts seem immune to opposition as Dan Charles points out in this piece from NPR:

…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 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.

This is a telling example of how politics works–the process rather than the fundamental question determines much of the outcome. In this case, since the spending was not authorized by Congress there was no debate. No debate in Congress meant no opportunity for soundbites, no debate in the media and thus no debate among the public. The battle for attention was lost before it was begun. On the plus side there was no opportunity for grandstanding in Congress either and the money was approved and spent quickly.

Comments

#notmypresident

They should have spent that money building the wall.

Weren't Mexicans to pay for it?

Didn't trump say China was paying for the farmer bailouts in the hundreds of billions in tariffs China is paying on US imports from China?

Trump. He is not my president.

Nobody seems to be concerned about executive overreach which is rather ironic considering both sides took turns complaining when Bush and then Obama ran the show. Now we have bailouts without Congress. War without Congress. Trade wars without Congress. All these unilateral actions without the usual checks and balances mandated by the Constitution. The only counsel this current White House takes is seemingly on advice from foreign governments.

I argued on this website that back during the debt ceiling standoff conservatives were making the case that Obama should simply ignore the Constitution and the Supreme Court rulings and direct money wherever he felt. They were making this argument to create an imperial presidency because they knew that one day a conservative would again be president and would be able to rule without decree or consent of the governed. Looks like I was right.

>Nobody seems to be concerned...

Right. You can search far and wide across the US media, you will not find a single criticism of President Trump anywhere. It's been that way for over three years. We should all be Very Deeply Concerned.

Of course that's not true.

But clearly the leftist media is erasing all the massive Tea Party protests going on in every public square.

Is it just now hitting you that you do not live in a free country?

Not that there's anything wrong with that.

...by your implied definition, no 'free country' exists anywhere on Earth.

That is probably because Congress has become a tool for obstructionism rather than getting things done. The path of least resistance goes around it instead of through it

Actually, that was what I was hoping the biggest benefit of Trump getting elected would be. I vote third-party, but I figured that with Trump winning it'd be the best chance we'd ever have for Congress to finally exercise their authority and rein in the presidency.

Obviously, I vastly over-estimated our political class. All we're getting is "the other guy is bad" and it'll be back to business as usual as soon as possible.

"On the plus side there was no opportunity for grandstanding in Congress either and the money was approved and spent quickly."

How is spending money quickly without debate a plus?

Who objected to the auto and bank bailouts? The same people who are now Trump's followers. Indeed, they are still complaining about both of those bailouts, while completely ignoring the farm bailout. Why? Because Trump. In their eyes, he can do no wrong. Cheating on his wife? Okay. Lying repeatedly? Okay. Running up trillion dollar a year deficits? Okay. Being a foul mouth and degrading women? Okay. Getting chummy with dictators? Okay. Threatening nuclear war? Okay Bailing out big agriculture? Okay. The list is endless. Dysfunctional government: give credit where credit is due, Trump followers. [An aside, "process" has little to do with it. Rather, it's followers doing what followers do, follow, following Fox News and Trump. These folks are easily manipulated. Sure, everyone is susceptible, but with these folks, it's like shooting ducks in a barrel. It was Trump who said "I love the poorly educated".]

Yeah. I don't think libertarian, or public choice, theories give enough weight to personalities. The personalities of leaders, the personalities of their followers.

We get a lot of random stuff simply because Trump will do it, and 41% of the country is on board with literally anything.

The flip side is that we do have 57 percent supporting impeachment right now.

It would be a mistake to think that is driven by a "single issue" or that things like executive action on tariffs or farm subsidies do not figure in.

A) you don’t seem to understand what public choice is. All of the bailouts fall into the obvious outcome of the public choice model. That’s the whole point....

B) that is not at all what your linked poll says, try again. He’s already been impeached...

C) politics is not about policy, read your Hanson

Isn't Public Choice about benefits for one's self? The mass of Trump voters are actually paying for these things instead.

1) That’s not what public choice economics is, but your misunderstanding of public choice makes a lot more sense now. Not sure what your angle is here tbh.

2) Caplan’s Theory is different here, you’re conflating very different things. Caplan has a theory called rational irrationality, which he outlined in an interesting book.

Yes, rational irrationality means voters are being rationally irrational by playing to their biases. Votes are completely meaningless on an individual level, but contain a private utility benefit because the voter gets to express his anti-market bias.

No, they are not paying the cost of the tariff and subsidy, because it’s dispersed among everyone.

Tl;dr
You’re misunderstanding Public Choice
You’re misunderstanding rational irrationality theory
You’re confusing socially dispersed costs with private costs

That Caplan quote was off the Wikipedia Public Choice page, fwiw.

It does seem a very economic hope, that somewhere beneath the irrationally there must be a cost benefit analysis.

Yeah dude, it was obvious from a cursory google search, because it didn’t include context at all. It’s exactly what I would expect from a 20 year old facing a final or 65 year old Boomer trying to stay relevant.

We get it, you’re a partisan troll. Dude you’ve come to the wrong place.

It’s sad. You never took linear algebra, or calc 3. This is the limit of literal retard.

We get it. You’re an incompetent. You didn’t go to an Ivy League school. You don’t understand linear algebra. Shit! You don’t understand what linear regression is, let alone actual econometrics. You never graduated with basic public community college California standards.

HELLO WORLD!

this is a man who can’t do arithmetic. Excel is dark magic to him.

Good god. Public sector employee

So, to recap.

I make a statement. You dispute it. I back it with Wikipedia. And then go off about me and Wikipedia being wrong.

Another day in the comments section.

"According to Caplan, democracy effectively subsidizes irrational beliefs. Anyone who derives utility from potentially irrational policies like protectionism can receive private benefits while imposing the costs of such beliefs on the general public. Were people to bear the full costs of their "irrational beliefs", they would lobby for them optimally, taking into account both their instrumental consequences and their expressive appeal."

They do bear the costs in tariff-and-subsidy, but don't care.

Adjectevial longing such as what was this nostalgia for the moment, for the moments about to appear, tomorrow was more exhausting than today was. Yesterday was as nonexistent as tomorrow, my aloofness surpassed my being bogus, a sense of lunacy filed like insects on the walls, crawling, flying, scattering, these insects were always black, and on a white wall, the scattering of insects, their vision of me, I could see myself from their longing.

Who objected to the auto and bank bailouts? The same people who are now Trump's followers. Indeed, they are still complaining about both of those bailouts, while completely ignoring the farm bailout. Why? Because Trump.

I didn't know about it til I read Alex's post just now. Did you?

It's interesting. I'd consider it widely known, but in my searches I didn't find much here at MR. On the other hand, Tyler did object to those other subsidies:

https://marginalrevolution.com/marginalrevolution/2008/09/did-we-really-n.html

Maybe MR is a little typical of media/politics in letting these farm bailouts slide through "because what can we do?"

I did find a page where Tyler criticised *Warren* on farm subsidies.

https://marginalrevolution.com/marginalrevolution/2019/03/elizabeth-warren-on-food-and-agriculture.html

Still looking for the real-time criticism of Trump.

I think many people realized after 2016 that the segment of Americans who don't understand much is larger than they thought. These are people who are giving access to incredible amounts of information, a volume which a person even 50 years ago would balk at, and they don't possess the tools to evaluate the information. Instead, they have Fox and Trump to do it for them, to mediate the tidal wave of information in a way that is comprehensible.

Its laughable to think that much of his base understands the implications for a farm bailout, or a deficit, or a trade war. Fortunately, as long as they display absolute loyalty, they can abdicate their responsibility of being an informed voter.

Derrick:

I think this is just what democracy looks like. Most voters aren't very well-informed, and they never were. The ones who watch Fox/MSNBC/CNN are more informed than the average citizen, because at least they're consuming a little news. But those news sources have biases, and also they get a lot wrong and omit a lot of important things either because they don't make a good story or the reporters don't understand them.

Only a tiny fraction of voters pay close enough attention to be voting based on what people actually did, what their policies actually accomplished, etc. This is true of Trump voters, but was also true of Obama, Bush, and Clinton voters. It's hard to imagine mass democracy working any other way.

Correct, +5 i.p.

I think an additional reason is that the program was for farmers.

There are in the US certain categories of workers that both the right and left consider not subject to any critiquing. I believe most people would say that to criticize them is kind of “un-American”. Among them, soldiers, cops, firemen, miners and of course farmers.

I suspect that it is a hypocritical form of patronizing, because, even if they would never recognize it, they think that only people without any other decent option would accept such employments. It assuages people generic feeling of guilt for the natural uneven distribution of wealth.

Of course, most of the members of those categories are actually pampered with incomes much higher than their real opportunity cost and despicable advantages like those get-out-of-prison cards that Alex showed cops receive to distribute among family members or sell them on e-bay.

It's unfortunate if miners got on that list but the special status of farmers has a more prosaic origin: rural areas carry disproportionate weight in the U.S. electoral system.

Even if that is true (which I doubt, because rural areas in Texas, California, Florida, and New York are being drowned out by large metropolises) most people in rural areas aren't farmers. Those that were, have had their farms overtaken by the large corporations who are receiving these bailouts.

Are rural areas being drowned out at the state level in those states? Maybe, but I wouldn't be surprised if even in the bluest of blue state rural areas are overrepresented in the state capital.

That's correct. These categories are automatically heroic as a class despite the fact that some of their members are despicable. The army has MPs and stockades to attempt to control their criminal element, the navy sends their own to Portsmouth Naval Prison. The busiest part of any city police department is internal affairs, cops are always in the news for some kind of corruption.

In the case of farmers, everyone who lives in a rural environment knows the difference between good farmers and incompetent ones because their land and buildings are easily visible. Yet, in the eyes of the USDA, they are all the same and receive benefits regardless of their level of commitment or talent. The USDA, which had 16 employees during the Lincoln administration, is now a bureaucratic behemoth with a budget of $141 billion and a workforce of roughly 100,000, most of the money and manpower being devoted to the Supplemental Nutrition Assistance Program. The current administration has little to do with USDA activities. The bailout of the farmers was initiated and carried out by the ag component of the bureaucratic deep state itself.

Oddly unmentioned so far but the current administration's policies are the reason a bailout was necessary

It wasn't necessary.

What would happen otherwise is lesser production and higher prices per unit. if enough farms go out of business, prices increase enough that it is no longer hand to mouth.

It was politically necessary.

More colloquial analysis: whose ox is being gored.

If only bank bailouts were that small. I'm against farm bailouts too but these are much smaller than the bank bailouts.

Someone else ran a story last year, maybe it was NPR again, which basically said that the biggest beneficiaries of the bailout were the ag. corporations, not family farms. This would have been a good point to debate about, should public money be used to defray cost to a company like Monsanto, or more specifically targeted toward family farms which are living season to season?

One could argue, though maybe not in all seriousness, that food security is important enough that we should use public money to absorb a shock to food demand. I'm not sure that this argument carries any water, but maybe would have been worth debating.

"Family farms" are themselves incorporated. Interestingly enough, farming is a tiny part of the US economy.

And what are the odds that these payments end up being permanent rather than temporary? We're now at a point where the only party objecting to massive spending and deficits is the Libertarians. This is a problem.

yawn.

it's always been obvious that Congress is dysfunctional, corrupt, and drivern by special interests... this recent episode is unremarkable to even casual Federal Government observers.

Why does the general American public tolerate such blatant malfeasance by their government "representatives"?

"it decided that an old law authorizing a USDA program called the Commodity Credit Corp. already gave it the authority to spend this money."

So no debate because it was already authorized. This is the problem with Congress giving up too much of its authority to the federal agencies. Agencies get vague permissions and do whatever the hell they feel like without any further approval.

Funny how we are now lamenting the loss of an "opportunity for sound bites."

Ex-Im Bank too: https://www.wsj.com/articles/a-reversal-by-trump-revives-agency-that-aids-exporters-11578565800?mod=hp_lead_pos7

I was reading that big investors like investing in farmland because of the guaranteed farm price support.

On the subject of governmental support, be sure not to bite the hand that feeds you:

"Oil and gas conglomerate Koch Industries and its subsidiaries have received at least $422,796,782 in local, state and federal subsidies beginning in 2007, according to research by the Checks and Balances Project using the subsidy tracker built by Good Jobs First. The actual figure is probably even higher: Of the 231 government subsidies to Koch companies Good Jobs First found after 2006, 49, or 20 percent, had an “undisclosed” dollar value.

Much of that value is coming to Koch Industries from cash-strapped states. In 2014, Koch Nitrogen received a $148.7 million subsidy from the state of Oklahoma in the form of a tax increment financing district, the largest in state history. The subsidy helped make possible the construction of a $1.3 billion fertilizer plant in Enid, Oklahoma, which employed 143 people as of April, according to Tulsa World, a local newspaper. That’s more than a million dollars per job. Meanwhile, Oklahoma’s budget is so tight that 20 percent of the state’s school districts have shifted to four-day school weeks due to lack of funds, and the state’s K-12 funding dropped 15 percent between 2008 and 2015." https://www.ibtimes.com/political-capital/koch-brothers-receive-400-million-subsidies-want-government-out-thanksgiving

The cap on the number of recipients per farm was lifted in the recent farm bill, making it easier for large farms to get more than they had in the past; this was supported by the Trump Administration:

Second, there are effectively no caps on subsidies to individual farms. The 2018 Farm Bill allowed each family “member” to be eligible for up to $125,000 in federal subsidy payments. It also changed the rules from a maximum of two people to an unlimited number of “family members.” This change enables large farms legally to obtain hundreds of thousands and even millions of dollars in MFP payments." Here is the link: https://www.marketwatch.com/story/how-the-biggest-farms-are-getting-more-per-acre-in-trade-war-subsidies-2019-12-11 And Chuck Grassley agrees: "Grassley said in a statement to AP that some of the nation’s largest farms are receiving huge subsidies “through underhanded legal tricks. They’re getting richer off the backs of taxpayers while young and beginning farmers are priced out of the profession. This needs to end. The Department of Agriculture needs to re-evaluate its rules for awarding federal funds and conduct more thorough oversight of where it’s funneling taxpayer dollars.” https://apnews.com/75df5e7bf56e43df99d091bc4d16a87d

The Agriculture Department is just doing what Congress tells them to do. The problem is undue influence on Congress, not employees at the Department of Agriulture.

Trump administration proposed this, and it also had to pass the Senate. I believe the house sought to limit this in the bill.

HR 2 provided: "With respect to agricultural disaster assistance programs, H.R. 2 amends the limits on payments received under the programs and waives the AGI requirement if more than 75% of the producer's income comes from farming, ranching, or silviculture. The bill also expands payments for livestock losses caused by disease." This is from a Senate and House Comparison prepared by the Congressional Research Service.

Stuff like this really exposes the hypocrisy of the right/GOP. And those that choose to ignore the hypocrisy.

I'm not sure it's hypocrisy -- do they still pretend to be in favor of fiscal responsibility, smaller governments, and balanced budgets anymore?

"do they still pretend to be in favor of fiscal responsibility, smaller governments, and balanced budgets anymore?"

They do when a Democrat is in charge!

"the hypocrisy of the right/GOP"

Every day Dems/Progs/Libs rage about climate change THE SCIENCE!! yet 95% of the editorials about climate change are written by poets, journalists, teenagers and children who make blatant mis-statements about the actual science and indulge in outrageous hype.

Politician = Hypocrite + Liar. They go hand in hand, they're not restricted to any party or POV.

Meanwhile, let's turn to renouned military experts Ari Fleischer, Karl Rove and Thomas Friedman to get their take on the Iran situation.

Plenty of hypocrisy to go around...

All of which argues strongly for reducing taxes and reducing the government, which Trump actually is doing.

No, he is not. He is making debt even worse.

Yeah, and it was his Ag Department and administration which supported the rules changes.

I got an idea: why not have a wealth tax kick in if Donald fails in any of his promises--great infrastructure, cheaper and better Obamacare, no cuts to Medicare and SS.

Don't stop now, Alex, keep going: there's a whole helluva lot of insidious crap that comes our way courtesy of the "political economy" of consumerism and convenience.

How many of us ever VOTED for:
--traffic intersection surveillance cameras?
--surveillance drones?
--wireless telephony ever permitted to function inside of any moving vehicle?
--wireless telephony which is now a common feature inside every federal and state prison?

Manufacturers deem any product that sells as some grandiose affirmation of "democracy". No: their practices only demonstrate their abuses of democracy.

I don't know that I would ever oppose political voting dedicated to whether novelty products and technologies and gimmickry should ever be allowed for sale, especially when the proffered technologies demonstrate clearly their potential for fomenting social disruption and political discord.

Wireless phones operating inside a vehicle is the natural default since action would have to be taken to prevent it from functioning.

Seems neither too early nor too late for us to insist that our tech tyrants introduce a NEW natural default that would prevent wireless telephony from functioning in ANY moving vehicle (not even police/EMT/fire personnel need functional wireless telephony while driving, they have their dedicated consoles already, which they ostensibly have been trained to operate with care even while driving).

Whatever conveniences are said or thought (or felt) to come with wireless telephony for drivers, the conveniences sure do gum up the works on our streets and highways: when not imperiling traffic with risks of collisions, mindless American drivers on wireless phones contribute to fuel inefficiencies galore by driving slower than posted speeds, driving faster than posted speeds, missing timed traffic intersection signals and causing drivers behind them to do the same, et cetera et cetera et cetera.

The "tech tyrants" didn't create nature even if they act like they did. And the problem isn't the tech, it's the drivers.

Anyone here complaining about food prices these days? Investment in Ag is kicking butt, and benefits the poorest people the most. Compare current food prices to the prices of pickup trucks, electric vehicles, college educations, medical care, cable television, electricity, and the collection of wealth orchestrated by Wall Street who uses information asymmetry to skim massive wealth off of middle-tier investors. All industries that get massive subsidies.

No one complains about farm subsidies because you can't do it without looking like a massive, massive hypocrite, because your pet projects and industries get more subsidies than the ag industry with far less return. The ag is exceedingly successful at reliably delivering high quality food to Americans at real prices that are lower and lower every year. And if there is some kind of screw up, and a bunch of people get sick from tainted lettuce, the response is swift, thorough and largely effective.

In order to accomplish this, Ag has done a great job of incorporating innovation to drive down costs, from genetic engineering to water conservation to drone crop monitoring to autonomous tractors.

If Ag was doing as bad of a job as other industries mentioned before, and food costs were skyrocketing even though subsidies were being paid out, I think a lot more people would care. Why rock the boat too much when everything is going so well?

In the meantime, I am exceptionally happy with my $0.99 cent avocados and $1.09 a pound pork roasts in Texas.

My only complaint about the food industry is that hipster jerk Aaron Franklin used YouTube to teach the rest of the country how to cook decent brisket , and I can't find an acceptable one for less than $2 a pound. Hopefully the hipsters will come out with a new fad soon and I can get back to real Texas BBQ instead of cooking pork all the time.

In 1955 a display of watermelons in the produce department of a supermarket on Christmas Eve was a fantasy.

The funniest thing about the auto bailout was the eventual managed bankruptcy was Romney’s idea from a Nov. 2008 NY Times column...and then Obama attacked Romney for promoting a managed bankruptcy during the 2012 campaign. So in a few short years the public just forgot GM and Chrysler literally went bankrupt!?!

Yah, let's bankrupt the creditors -- the auto parts suppliers, dealers, etc. and give them a haircut in bankruptcy. Brilliant.

Do you know what "managed" bankruptcy is?

Are you joking? A managed bankruptcy is exactly what happened. So a lawyer for GM started working on the plan right after Romney published his column. If you recall before Romney’s column everyone dismissed a managed bankruptcy out of hand because of the car warranties.

Who made the loan to GM? Not the banks, buddy. Do you know the difference between a Chapter 11 without a lender and one with a lender? Get better informed.

Ask GM or its supply chain to choose between government loan program and private bank managed bankruptcy.

Report back.

Lol, so you think the loan came from Obama’s bank account?? Romney supported a taxpayer funded loan too because it isn’t his money either. Yeah, I need to get “informed” while you didn’t even know GM and Chrysler went through managed bankruptcies!?!

Gene, again, do you understand that even though it was Chapter 11, it was not a private managed bankruptcy. No one would have loaned the money. The supply chain would have collapsed.

You can have whatever fanciful beliefs you want. But, here are some facts: https://www.cnn.com/2008/POLITICS/12/11/congress.auto.bailout/
and https://www.politifact.com/wisconsin/statements/2015/oct/15/erick-erickson/paul-ryan-one-few-gop-house-members-have-voted-eve/
and https://www.thebalance.com/auto-industry-bailout-gm-ford-chrysler-3305670

By the way, it was President Bush who signed the bailout bill after deciding that private market mechanisms wouldn't work.

Decide, as a New Years resolution, to do research and get your facts right. Or get any facts for that matter.

What happened was exactly what Romney advocated for. The notion Obama performed magic and created magical money that only he could create is absurd! In fact the reason Elizabeth Warren’s candidacy has floundered is because every one of her “solutions” involves cranking up ye olde printing press and printing us to “solutions”!?! Throwing federal money at problems doesn’t actually solve problems which can be seen with student loans.

Gene, I gave you the facts and you choose to ignore them. Give me your cites; I have given you mine.

By the way, it was Bush, not Obama, who signed the auto bailout as part of TARP.

Your comments proved my point. My cite is for you to read the comments on this thread. Thanks.

Flying Farma?

"In fiscal year 2014, Ex-Im authorized $10.8 billion in long-term loan guarantees, which is the Bank’s largest program. The first chart (left) shows that $7.4 billion of that amount, or 68.3 percent, belonged to Boeing. The second chart (center) shows that, of the $20.5 billion in total authorizations across all programs made by Ex-Im last year, 40 percent belonged to Boeing."

https://www.mercatus.org/publications/export-import-bank/export-import-still-boeing’s-bank

Trump socialism in action. Republicans have always been into central planning and big govt., just via different agencies, just ask any Neocon.

Biggest unspoken irony for neocons is that Israel has universal healthcare, I wonder how they pay for it given their enormous military costs!

Tangential: "I Support Trump’s Tariffs but Need an Exemption:
His economic policies led me to reopen a steel plant. The tax on imported steel may force me to idle it."

https://www.wsj.com/articles/i-support-trumps-tariffs-but-need-an-exemption-11578441310

> Some people have raised questions about whether using the Commodity Credit Corp. for this new purpose is legal.

If I understand correctly Australia has a constitutional provision that forbids (or at least tries to forbid) this kind of slush fund. Everything supposedly has to be authorised by Parliament and so all revenue is meant go into a fund that only Parliament can tap.

As far as I know, there is no similar provision in the US. But I guess the question is what the enabling legislation allows. But we can trust the Roberts court to rule that it allows whatever he department says it allows. (Or does that only happen when a Democrat is president?)

On the converse, why *do* self-described Libertarians have this tendency to seem to object so much more to subsidies to agrobusiness and manufacturing while apparently raising much less objection over subsidies to tech and finance?

I'm assuming it is mainly because Libertarians tend to be tech and finance guys, and cheer for their ingroup. They tend to see tech and finance as "doing important stuff" that deserves to be funded and deserves to be high status, while food and manufactured goods and their employees aren't important and deserve to have lower status (unless it's engineers for Tesla and Impossible Burger and what have you). But is there anything more to it?

Of course this is all relative to their norm of talking the talk about being "pro-market, not pro-business" but walking the walk much less!

The NPR claim that the auto bailout was debated in Congress is false.
Yes, TARP yes debated in Congress. But at no time during that debate was it suggested that TARP would or even could be used to bailout auto companies.
At least the Commodity Credit Corp. was designed for the express purpose of bailing out farmers!!!
TARP was never sold on that basis!
If any program was "created out of thin air" it was the auto bailout, not the farm bailout!

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