Senior government officials, including some in the White House, privately expressed concerns that a nearly $30 billion bailout for farmers needed stronger legal backing, according to multiple people who participated in the planning.
The bailout was created by President Donald Trump's administration to try to calm farmers who complained they were being hurt by the trade war with China.
As part of the program, the U.S. Department of Agriculture authorized $12 billion in bailout funds last year and another $16 billion this year, and Trump has said more money could be on the way.
But two USDA officials involved in the program told The Washington Post that they were worried the funding could surpass the original intent of the New Deal-era Commodity Credit Corp., which is being used to distribute the money. The Commodity Credit Corp. had previously been used only to create substantially more limited programs. The officials spoke on the condition of anonymity to avoid professional repercussions.
Separately, some officials in the White House's Office of Management and Budget also raised questions about the $16 billion in the second round of bailout funds. They pushed the USDA to provide more legal reasoning for the effort, officials said.
In a statement, a USDA spokesman said the concerns raised by the officials were already resolved.
USDA attorneys have signed off on the bailout package, and the government has already issued more than $11 billion in payments to farmers. More will be spent soon.
Independent legal experts agree that Agriculture Secretary Sonny Perdue has broad authority to unilaterally help farmers, including through the administration's bailout program.
The funds are part of the White House's effort to contain an outcry from farmers who say that China and other countries have cut back on U.S. purchases in retaliation for the higher tariffs Trump has imposed on a variety of imports.
Trump has tried to assuage farmers' concerns by approving the two rounds of bailout funds, and he repeatedly has told farm groups that his adversarial approach on trade will prove a huge win for them in the future.
White House aides for the first time are pressing Congress to increase how much the administration can distribute through the farm bailout before hitting the program's legal spending limit this fall -- even though farmers have already been promised billions in additional funding.
Trump has said the bailouts are necessary to protect American farmers targeted by China for economic retaliation in the widening trade war, as China has responded to Trump's trade moves with high tariffs on U.S. agricultural exports.
Trump has promised funding in two different tranches. The first, announced in July 2018, included $12 billion, most of which has already been distributed. The administration announced this May that it would award an additional $16 billion in payments to farmers in a second round of bailouts.
More than $2 billion of that second bailout has been disbursed, the USDA said.
The bulk of both bailouts consists of direct checks sent to farmers to compensate their losses from the trade war. There is little precedent for an open-ended farmer bailout of this nature.
"It was obvious they were stretching their legal authority," said one official in the USDA.
Even some officials who believe the bailout is legally sound have expressed concerns about its scope and the speed with which it is being implemented.
"They're doing it really fast and shorthanded," said a former USDA official who spent several decades involved in reviewing new department regulations but who left the government earlier this year. "The agencies implementing it are stretched thin, and there's immense political pressure to get the money out quick."
In a statement to The Washington Post, the Agriculture Department acknowledged that the Office of Management and Budget had raised concerns as part of its "normal clearance process." The USDA said the office cleared the funding package before it was published in the Federal Register.
The USDA said multiple agencies within the department helped develop and implement the bailout program.
"Both programs were approved by the USDA Office of the General Counsel for legal sufficiency, as well as our federal counterparts through the interagency review process," the USDA statement said of the two rounds of bailout payments.
The trade war with China shows no signs of ebbing after a summer in which the world's biggest economic superpowers continued trading blows that spooked markets and risked sparking a global economic slowdown.
Close to three in 10 farmers feel the bailout payments will "not at all" make up for 2019 losses related to the tariff battle, according to an index calculated by Purdue University and released this month. But about 70% said the bailout would either "completely or somewhat relieve" their concerns about the tariffs, according to the index.
"The [USDA] Secretary really does have very broad authority to step in and address situations that come up, without having to send it back to Congress," said Susan Schneider, an agricultural law professor at the University of Arkansas School of Law. "But it's designed to deal with something that comes up quickly, that Congress does not have time to address. Its use becomes more questionable when it becomes standard policy."
The Commodity Credit Corp. was occasionally used to fund smaller programs to help farmers, including by the Barack Obama administration, but it has never been utilized in the fashion the White House has operated it, said Joe Glauber, senior research fellow at the International Food Policy Research Institute, a think tank, and former chief economist of the USDA under Presidents Obama and George W. Bush.
Business on 09/10/2019
Print Headline: Farm payments said to raise concerns