Trump Pushes New Bailout for ‘Patriot Farmers’ Hurt by His Trade War

Plus, remembering a policy giant

Trump Pushes Another Bailout for ‘Patriot Farmers’ Hurt by His Trade War

As he escalates his trade war with China, President Trump is pushing to provide some additional bailout funds to placate the U.S. farmers being hurt by his tariffs.

“Out of the billions of dollars that we’re taking in [from tariffs], a small portion of that will be going to our farmers,” Trump said Monday. “We’re going to take the highest year — the biggest purchase that China has ever made with our farmers, which is about $15 billion — and do something reciprocal to our farmers.”

The president tweeted a similar pledge on Tuesday: “Hopefully China will do us the honor of continuing to buy our great farm product, the best, but if not your Country will be making up the difference based on a very high China buy,” he wrote. “This money will come from the massive Tariffs being paid to the United States for allowing China, and others, to do business with us.”

The tweet underscores again Trump’s misunderstanding of how tariffs work. They are paid by U.S. importers, and ultimately passed on to U.S. consumers.

The background: The Trump administration last week raised tariffs on $200 billion in Chinese goods and threatened to extend the tariffs to an additional $300 billion in imports. China responded in part by announcing that, as of June 1, it would impose tariffs on $60 billion of U.S. goods.

Farmers feeling the pain: Farmers are feeling the impact of the trade war and, while many still stand by Trump, some are growing weary of his trade policy. "Farmers have been patient and willing to let negotiations play out, but with each passing day, patience is wearing thin," said National Corn Growers Association President Lynn Chrisp in a statement last week, according to CNN. "Agriculture needs certainty, not more tariffs."

Net farm income dropped by $12 billion, or 16%, in 2018. The $15 billion in aid Trump has suggested would be on top of $12 billion he directed the Department of Agriculture to provide last year. That first farm-support program has reportedly paid out more than $8.5 billion thus far, with producers of soybeans, corn, wheat, cotton and sorghum getting much of the money.

The latest bailout is still being devised, Trump said Monday, and it’s not yet clear who would be eligible for the aid. “The question of how this would be done, whether it would apply to wheat and corn and other crops and not just soybeans, is going to be a question that’s going to have to be answered,” Sen. John Thune (R-SD) said, according to The Washington Post.

Perhaps a bigger long-term question for farmers is whether an important market for their products has been destroyed.

Consumers are getting hit too: Here’s one way to look at Trump’s proposed aid to farmers, The Washington Post’s Philip Bump: “Trump is taxing consumers to bolster farmers, a core part of his political base.” One estimate Bump cites puts the additional cost to consumers at $8.8 billion a month. Since November, the total estimated cost is $22.4 billion in tariffs and $21.6 billion in higher costs resulting from related supply-chain changes.

The politics: The new tariffs have drawn criticism and concern from both Democrats and Republicans. “The American worker is getting killed by this," former Vice President Joe Biden, who’s running for the Democratic presidential nomination, said Monday on a New Hampshire radio station. "The American farmers are getting killed.” And the additional bailout being proposed has once again raised cries of Trumpian hypocrisy — that the president is looking to protect his voter base at the expense of the broader public. “During the administration of Barack Obama, Trump and his party regularly excoriated Obama as ‘picking winners and losers,’ shunting government resources to programs that he supported at the expense of the free market,” The Washington Post’s Bump notes.

Dems May Agree to Some of Trump’s $4.5 Billion Border Request: Report

Democrats may be willing to provide some of the $4.5 billion in additional border funding requested by the Trump administration for humanitarian and security needs. Andrew Taylor of the Associated Press reports: “Democratic aides said Tuesday that Trump’s request for additional Immigration and Customs Enforcement detention beds is off the table, but that Democrats are willing to fund care for more than 360,000 migrants apprehended since October.”

The funding would be part of a long-stalled disaster aid bill that appears to finally be making progress, with differences over aid to Puerto Rico reportedly having been resolved.

Do Drug Companies Need High Prices to Pay for Research, or Is That Just an Excuse?

Critics of the pharmaceutical industry have long complained that drugmakers use research and development costs as an excuse for their sky-high prices. A new study from a coalition of health care industry organizations attempts back up that claim using data from Security and Exchange Commission filings for the 10 largest U.S.-based pharmaceutical companies.

According to the study by the Campaign for Sustainable Rx Pricing, which represents more than two dozen major health insurers, hospitals and pharmacy middlemen, the 10 largest U.S. drugmakers spent an average of 22% of their revenues on research and development in 2017. By comparison, advertising, corporate overhead and profits accounted for 46% of revenues, more than twice as much as R&D (see the chart below).

The coalition says this proves that high research costs are not the source of high drug prices. “For the top ten U.S. companies, nearly 80% of every Big Pharma dollar goes to something other than R&D,” the group said in a statement. “Big Pharma likes to hide behind R&D as an excuse for price-gouging American patients and exploiting monopolies, but the math just doesn’t add up.”

Surprisingly, the coalition’s analysis comes close to the pharmaceutical industry’s own estimate that 20% of its revenue goes to R&D. Holly Campbell, a spokesperson for PhRMA, the drugmakers’ trade group, pushed back against the new study’s conclusion, saying that the drug industry invests more in R&D as a percentage of sales than any other manufacturing industry in the U.S.

STAT ’s Nicholas Florko wrote Tuesday that the dispute over R&D costs reflects a larger uncertainty about how life-saving drugs should be treated in the U.S. health care system: “The two very different talking points — despite the largely very similar figures — highlight the deep discord over what drugs and drug development are worth, and who should bear those costs.”

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Alice Rivlin died Tuesday. A giant in the public policy world, Rivlin was the founding director of the Congressional Budget Office, where she served from 1975 to 1983. She later became the first woman to serve as director of the White House Office of Management and Budget and then was vice chair of the Federal Reserve’s Board of Governors from 1996 to 1999. “Her name may not be widely known outside of Washington, but she had a hand in five decades of the nation's economic policy,” NPR noted. “At the peak of her power, she was one of the most influential and respected nonelected officials in the country.” Rivlin was 88. You can — and should — read more about her here, here, here or here.

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Fly Me to the Moon: Trump Wants to Shift $1.6 Billion from Pell Grants to NASA

As President Trump tweeted that he wants the U.S. to “return to Space in a BIG WAY!,” the White House updated its 2020 budget request Monday to include more money for a 21st century trip to the moon.

The administration is asking for an additional $1.6 billion for NASA as part of an effort to move up the target date for landing astronauts on the lunar surface to 2024, four years earlier than Vice President Mike Pence proposed two months ago.

NASA will receive $21.5 billion in 2019 and Trump’s original 2020 budget request in March called for cutting that to $21 billion, but the administration is now seeking $22.6 billion, a difference of $1.6 billion. NASA chief Jim Bridenstine said the money would be just a “a down payment” on the moon project, which will require additional funds in the coming years.

The White House said that the extra money for the project in 2020 would come from a $1.9 billion pool of surplus Pell Grant funds, which are used to help low-income students pay for higher education. Administration officials claimed that reprogramming the money would not harm existing Pell Grant participants. Enrollment in the Pell Grant program has declined since 2009, the Associated Press reported, and system has had a budgetary surplus since 2012.

One eye on the election? Trump’s original budget request was widely seen as dead on arrival and there’s little reason to think this week’s amendment will be any different. Roll Call’s John T. Bennet said that politics are likely playing a role in the White House’s latest move given NASA’s substantial presence in Florida and Texas, states Trump needs to win in 2020. The amended budget request also includes additional funds for an Army Corps of Engineers project in the Everglades and the Great Lakes Restoration Initiative, which could play well in key swing states including Ohio, Michigan and Pennsylvania.

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