Trade Aid isn't the latest news but, now that there are rumblings of another government shutdown, I'm starting to feel like it was the first light tap in a combo that will bruise if not stagger the economy. The president has said the government might face a shutdown if the $18 billion he was hoping would fund his prized southern border wall aren't secured. But before that, the president set aside $12 billion for American farmers hit by foreign tariffs which came while he was plying the art of the deal abroad. The national debt is around $21 trillion at this point, so Trade Aid is only about half a percent of what we owe — maybe not so bad. That said, we owe an awful lot, and $12 billion is indeed a lot of money. Why, at it's appraised value, you could buy just shy of 10,909 Okoboji Middle Schools for that price and still have a bit left to spend (though that situation's pretty high in the air at this point) Math's fun.
Now, first off, Rep. Steve King of Iowa's District 4 told Des Moines' WHOTV last month he had personal assurances from the president "agriculture would be held harmless as he worked on trade, and today's announcement of $12 billion in USDA assistance for disrupted markets confirms his intention to keep his promise to me."
That statement rings a bit oddly in my ears. I don't believe being held harmless and remedying the harm done are the same thing. But, to be fair to King, he did say during a recent visit to the area Chinese tariffs on soy and pork hit our area of the state harder than any other congressional district in America, and he would rather support the president as negotiations continue. Even that idea had its limit though.
"But when the beans start to turn, if we haven't got a better solution coming out of this, then the heat's going to come up, and it's going to get serious," King said.
Some of Iowa's other legislators recognized the harm to our ag producers.
"I don’t fault the President for trying to get a better deal for Americans, but it’s not fair to expect farmers to bear the brunt of retaliation for the entire country in the meantime," U.S. Senator Chuck Grassley said after the Trade Aid announcement.
He later said farmers are hurting from the limited exports, but a new deal with the EU or NAFTA would be welcome news.
U.S Senator Joni Ernst called for the administration to seek a long-term solution.
“In Iowa alone, more than 456,000 jobs are supported by global trade, and these new tariffs are threatening $977 million in state exports," Ernst said. "While a trade mitigation package could boost farmer morale in the short term, this is ultimately a short term fix."
Even U.S. Representatives from Iowa's other districts agree the tariffs are harmful to the state.
"What this really is though, is the administration, the president, admitting that his trade policies are hurting Iowa farmers and producers, and all across the heartland for that matter," Rep. David Young of Iowa's District 3 said during a WHOTV interview. "Farmers want markets, they want trade, and not necessarily this aid."
The station also quoted District 2 Rep. Dave Loebsack who said much the same.
"Today’s announcement by President Trump is proof positive that his not fully thought-out policies are having a real economic impact on Iowans," Loebsack said. "Although I am pleased that some steps are being taken to reduce the harm from these misguided tariffs on Iowa’s farmers, we must not stop fighting for greater opportunity and market access."
In fact, Loebsack even requested Canada be exempt of the new U.S. tariffs so our neighbors to the north would continue to buy $1.4 billion (1,272 Okoboji Middle Schools) in Iowa ag products.
Oddly, District 1 Rep. Rod Blum hasn't said very much on the subject, but I did find a Facebook post of his saying, "I appreciate President Donald J. Trump's effort to help farmers who will bear the brunt of the short-term retaliatory tariffs as better trade deals are consummated." I guess, while he believes this will be a short-term issue, he does think it's hurting Iowa farmers.
Now, I didn't go and find all those statements just to rag on Trade Aid. I just wanted to demonstrate that basically everybody, both Republican and Democrat, agrees this program is a $12 billion band-aid. It will cost us money, but will not solve the problem in and of itself. Of that, there is no doubt. And we can make the Margaret Thacher argument, saying this is a bitter pill to swallow but will make us healthy again. That's fine, and that may well be, but don't forget the other fist in this one-two combo — threats to shut down the government if funding for the border wall isn't secured. Suddenly the price of that pill — like other prescriptions in the U.S. — will go up quite a bit.
As Grassley told me in a September 2017 interview:
"Maybe in 1995, I thought a shutdown was the right thing. I found out it wasn't. I didn't think much of the one we had in 2013 and wouldn't consider myself as believing the 2013 (shutdown) was the right thing to do after the lesson learned in 1995. But, evidently, the president doesn't learn what I've learned. It costs money to shut down government. It costs money to open up government. It raises the interest rates while there's a period of uncertainty for the national debt and the bonds that we sell, and we shouldn't be talking about shutting down the government."
Newsweek estimated the 2013 government shutdown cost about $2.5 billion between losses in productivity and revenue — but keep in mind, you could only buy 2,272 Okoboji Middle Schools with that figure. So all totaled, a shutdown and the aid necessary to compensate for the tariffs is about 13,181 Okoboji Middle Schools.
In the end, I question whether the coupling of these two actions is fiscally conservative. And I know what some will say — Obama. Yes, we can blame Obama for the situation Trump inherited, just as we can blame Clinton for the situation Bush inherited, just as we can blame Washington for the situation Adams inherited. That's fine. But, if I recall, we were promised something different if Trump took the Oval Office.
So, either we got what we always get out of politicians, and Trump is exactly what he promised he was not, or spending 10,900 middle schools to temporarily curb a government-spurred market dip and seeking to spend another $18 billion (16,363 Okoboji Middle Schools) on a border wall to keep illegal immigrants from entering by land from but one of the four cardinal directions is what we were promised. Both are temporary solutions (because, let's be honest, if gun legislation isn't going to stop illegal arms sales, a wall on one border isn't going to stop traffic on the other three) and both will cost us plenty in the long run — a combined 27,263 Okoboji Middle Schools by my math, not counting the 906 middle schools worth of product Ernst says are threatened. And that puts us in a bit of a bind as a largely red region of the country. Either spending lots of money on temporary solutions is fiscally conservative and we should support it, or more liberal spending of tax dollars is what will solve problems and we should reconsider our principles.
Yes, math is fun.