Thursday, May 23, 2019

What did Donald Trump do today?

He announced a second round of a "one-time" bailout for farmers hurt by his trade war.

Farmers have suffered some of the worst effects of Trump's trade war with China, which is now in its second year. Last year, he tried to offset some of the damage by providing a partial bailout for some farmers using an obscure Depression-era program called the Commodity Credit Corporation. At the time, his administration insisted that it was "a temporary, one-time response" to retaliatory tariffs.

Even this attempt at damage control worked poorly. Farmers found the payments stingy. They were held up in January when Trump shut down the government for over a month in a failed attempt to get border wall funding. And a huge chunk of the total funding—$62 million—went to convicted Brazilian criminals unaffected by the tariffs.

Today, Agriculture Secretary Sonny Perdue announced a second round of the "one-time" bailouts. Echoing Trump's basic confusion about how tariffs work, Perdue insisted that China—and not American taxpayers—would really be paying for the $16 billion bailout.

Trump himself said the same thing later in the day: "Just so you understand, these tariffs are paid for largely by China. A lot of people like to say by us."

But in reality, American consumers pay when the United States imposes tariffs on foreign goods through increased prices, meaning that taxpayers will be paying for both the cost of the bailout and the amount of the tariffs.

It's now been almost 15 months since Trump declared that "trade wars are good, and easy to win."

Why should I care about this?

  • A president who doesn't know or can't remember what a tariff isn't competent to hold office.
  • It's bad if the catastrophe that requires a massive government bailout of a critical sector of the economy was an easily avoided mistake made by the president.
  • The more important a government program is, the more important it is to administer it competently.