Farmers Got Billions From Taxpayers In 2019, And Hardly Anyone Objected

Jan 2, 2020
Originally published on January 6, 2020 9:54 am

In 2019, the federal government delivered an extraordinary financial aid package to America's farmers. Farm subsidies jumped to their highest level in 14 years, most of them paid out without any action by Congress.

The money flowed to farmers like Robert Henry. 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.

Loading...

"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.

: 1/05/20

The U.S. government approved billions of dollars in aid for U.S. farmers in 2019. A previous version of the graphic said millions.

Copyright 2020 NPR. To see more, visit https://www.npr.org.

AILSA CHANG, HOST:

The federal government delivered an extraordinary financial aid package to U.S. farmers this year, more than $20 billion, the highest level of farm subsidies in 14 years. Most of it was paid out with no congressional approval and little public debate. NPR's Dan Charles has the story.

DAN CHARLES, BYLINE: This past summer, Robert Henry was showing me his farming disaster. The fields along the Mississippi River near New Madrid, Mo., where he normally plants soybeans, were flooded.

ROBERT HENRY: It's just been so wet. They said it was the wettest year on history so far.

CHARLES: Just as bad, the soybeans he was able to grow weren't worth as much. China wasn't buying them in retaliation for the Trump administration's tariffs. There was some good news though. Government-subsidized crop insurance would cover some of the losses from flooding. Also, the U.S. Department of Agriculture had sent him a check just to compensate him for the damage from the trade war.

HENRY: We call it Trump money (laughter) is what we call it. And it helped a lot. Yeah. And it's my understanding they're going to do it again.

CHARLES: Indeed, a few weeks later, the USDA announced another round of trade-related aid to farmers, $16 billion on top of the previous year's 12 billion - $28 billion in two years. Here's agriculture secretary Sonny Perdue.

SONNY PERDUE: President Trump has a great affection for America's farmers and ranchers, and he knows that they are fighting the fight. And they are on the front lines.

CHARLES: The USDA's former chief economist, Joe Glauber, found the whole thing amazing.

JOE GLAUBER: I think I was surprised at that, that it didn't attract more attention.

CHARLES: Glauber, who's now at the International Food Policy Research Institute, says it deserves more attention for a bunch of reasons. This is more than the U.S. ended up paying to bail out the auto industry during the financial crisis of 2008. Yet the USDA just created this new program out of thin air. It decided that some old laws gave it the authority to spend the money.

GLAUBER: What's unique about this is, again - didn't go through Congress.

CHARLES: Some people have raised questions about whether it's legal. Also the payments are really 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 your farm, the bigger your payments. Thousands of farmers got checks for more than $100,000.

Catherine Kling, an economist at Cornell University, says the government could at least have demanded some public benefits in exchange for all that money.

CATHERINE KLING: I think it's a real lost opportunity.

CHARLES: What farmers do with their land has a huge impact on water quality and wildlife and climate change, Kling says. And the USDA has some programs that pay farmers to help the environment.

KLING: Putting wetlands back where they have been drained.

CHARLES: But the budget for those environmental programs is just a quarter the size of this year's trade-related payments.

KLING: Wow, it's so many things that money could get spent on that could really be beneficial to taxpayers, who are ultimately footing the bill.

CHARLES: On Capitol Hill, there's been an alliance for a long time between lawmakers who support farm subsidies and others who support food stamps, now called SNAP payments. Together, they support a big budget for the USDA, which runs both programs. This past year tested that alliance because the USDA was helping farmers while restricting SNAP payments. Here's Democratic Congresswoman Marcia Fudge from Cleveland.

MARCIA FUDGE: They've already given out $19 billion-plus to farmers, but they're cutting $5 billion from people in need. I don't even know how to describe it except for 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 that he sees as being undeserving.

CHARLES: The USDA has not yet said whether farmers will get another round of trade-related payments next year.

Dan Charles, NPR News.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.