Trump’s $12 Billion Farm Bailout

Many critics thought that Donald Trump’s policies were contradictory and incoherent. However, the latest policy launched by the White House has supplied proof of the same. Donald Trump has decided to offer $12 billion to the farmers of the United States. This bailout package is to protect the farmers from the business loss that will be caused by policies created by Trump himself. There is widespread outrage amongst all sections of the population including the Republican Party, to which Donald Trump belongs. The Republican Party has always been vehemently opposed to bailouts and handouts. However, even after having an absolute majority in both houses of the parliament, they still can’t seem to stop the handouts.

In this article, we will have a closer look at the $12 billion farm bailout plan unveiled by Donald Trump and some of the biggest criticisms that are being levied against it.

Criticisms against Trump’s Bailout Plan

• Self-Destructive: Donald Trump’s election slogan was to “Make America Great Again”. However, his policies have been causing immense damage to the American economy. President Trump keeps on harping on the fact that America is the world’s largest economy. However, he does not seem to understand that it became the largest economy in the world by trading with other nations. The other nations are therefore not really opponents, but actually allies. Even if Trump thinks that the economic interests of America are being wronged, he should take up the matter in a trade forum rather than unilaterally imposing tariffs. The problem with imposing unilateral tariffs is that other countries tend to retaliate. This is where the policy becomes self-destructive. The consumers of America are not able to obtain cheap products because Trump has imposed tariffs. Similarly, the producers of America are not able to sell their products because of Trump’s policies.
• One Time Relief: The $12 billion is akin to a welfare payment. This is the amount of money that the Congress has sanctioned for this particular year. For a similar sum to be paid out next year, the same will to be paid by the Congress once again. The problem is that Trump has caused permanent damage to the business of the farmers. He is taking away their markets and giving them welfare in return. The problem is that the farmers want markets and not welfare. Trump’s policies have caused long lasting and permanent damage to the business of farmers. This one-time bailout is just a cover-up effort and is not enough to make up for the economic loss.
• Picking Winners and Losers: Another major problem with Trump’s policy is that it is not allowing the economy to function naturally. Instead, Trump is trying to pick the winners and losers himself. For instance, the interests of the workers of the steel and aluminum industry in America are being kept over the interest of other people such as consumers and farm workers. Hence, Donald Trump is trying to play God, deciding which industry will gain and which will lose. This is a far cry from the traditional economic policy which is followed by the Republican party in which the market is allowed to decide the winners and losers. The problem with Donald Trump picking winners and losers is that the resources get allocated to industries which are not the most inefficient. In the long run, this will severely impact the competitiveness of American industry.
• Politically Motivated: Farmers also constitute a large part of the vote bank that has voted for Donald Trump. Many analysts are of the opinion that Trump’s moves may be bad economics but they make political sense. Trump wants to shield the farmers from the ill effects of his own policies. He knows that if he wants to get re-elected, he cannot afford to alienate the American farmers.
• Contagion Effect: The problem with trump’s policies is that more and more industries will start asking for bailouts. The interests of many industries are being impacted. By providing a bailout to the agriculture industry, Donald Trump is setting up a bad precedent. It is only a matter of time before other industries like fishing, automobile manufacturing etc. start asking for bailouts. Trump will have no reason to bailout one industry while not bailing out the others. This cover-up will cost America billions of dollars in the future as well. The problem is that America doesn’t have the money needed to support such bailouts. Ultimately, it will end up borrowing money at interest from the same countries that it is opposed to.
• No End in Mind: Another problem with Trump’s policies is that they are not thought through correctly. It does not seem like the policymakers have any end in mind. Rather, it seems like an impromptu game of one-upmanship. The problem with these games is that it can spiral into escalating tariffs which ultimately end up in trade wars. Contrary to what the President might say, trade wars are not easy to win. In fact, there are no winners in a trade war.

To sum it up, this bailout of $12 billion is nothing short of an admission of guilt by the government. Why would the government compensate farmers if there was no loss in the first place? If there has been a loss, then who is responsible for the same?

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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.