Trump’s “Trade Aid” Takes Road to Serfdom Paved by Congress

In early 2018, President Trump imposed duties on steel and aluminum imports under patently false pretenses. Despite overwhelming evidence to the contrary, Trump declared that the tariffs were required to ensure commodity supplies "necessary for critical industries and national defense." In fact, military demand for steel and aluminum represents only a small fraction of U.S. production. Furthermore, our top source for these imports—by a significant margin—is Canada, a country whose industrial base is legally incorporated into U.S. defense planning.

Predictably, our trade partners retaliated with tariffs on almost 800 agricultural goods exported by the U.S., worth roughly $26 billion. To assist agricultural producers harmed by the president's trade war, the Trump administration last week announced that it would distribute up to $14.5 billion in direct payments to “great patriot” farmers. Last week's announcement occasioned the second round of so-called "Market Facilitation Program" payments—in 2018, the administration made available $10 billion for the same purpose.

Trump, therefore, regulated domestic agricultural producers out of $26 billion, and then he gave them $24.5 billion in direct payments as compensation (among other announced measures). Big Brother’s right hand gives what his left hand takes.

In achieving this gross inefficiency, Trump’s policymaking tools were the phone and pen, which he wielded with obvious insincerity. Indeed, this is the sort of untruthful central planning typically associated with authoritarian leaders in banana republics, albeit on a far lesser scale. Yet it is occurring here in America, renowned the world over as a beacon of freedom and economic liberty.

How did this happen?

Though the Constitution accords the legislative branch plenary power to impose tariffs and spend public money, Congress possesses wide latititude to delegate these functions to the president and his subordinates. Regarding President Trump’s "national security" tariffs, I previously observed in The Hill:

Although Article I of the Constitution grants the legislature the exclusive authority “to lay and collect” tariffs, Section 232 of the Trade Expansion Act of 1962 gives this power to the president to protect “national security.”

Congress failed to define the term “national security,” however, leaving that determination to the president. Nor did Congress confine the available remedies, merely calling for such decisions to be made “in the judgment of the President.”

Why would Congress give away the farm? The 1962 law was passed at the height of the Cold War, when national security issues were paramount in national politics. Relative to now, lawmakers also harbored greater faith in presidential self-restraint.

In line with these expectations, previous presidents rarely tapped their Section 232 powers to impose import restrictions and never for a product other than petroleum.

Well, the Cold War ended, but the law remained on the books. Then Trump came along…

All Trump had to do was dust off the 1962 statute and, ultimately, issue a proclamation announcing the tariffs.

Federal law, moreover, long has given the Secretary of Agriculture unfettered discretion to support virtually any farm commodity by tapping the Commodity Credit Corporation’s permanent, indefinite authority to borrow up to $30 billion from the U.S. Treasury. It’s essentially a revolving credit line: Congress annually replenishes this borrowing authority by appropriating funding to cover the Corporation’s net realized losses. While a portion of the $30 billion is dedicated by the Farm Bill, the remainder is available for discretionary use. During the Trump administration, the availability of these discretionary funds has averaged about $15 billion annually. All Trump had to do was order the Agriculture Secretary to start distributing money to “great patriot” farmers.

At the time it relinquished these powers, many decades ago, Congress was an entirely different institution. Back then, Congress tempered its delegations by competing with the president over how laws were implemented. That is, lawmakers from yesteryear jealously guarded the legislature’s institutional prerogatives. Over the last forty years, however, Congress has changed, such that party loyalty now trumps institutional pride. So long as “their guy” occupies the White House, one political party—roughly half the legislature—loses interest in oversight. Neither party caucus in Congress seeks to claw back power from the presidency, because each wants its side to exercise executive authority.

Thus, Trump was free to break the mold. Prior administrations had exercised these statutory powers intermittently, but on a drastically reduced scope and scale. As noted above, past presidents imposed “national security” tariffs six times since 1962, and only for petroleum imports. Historically, discretionary farm aid addressed natural disasters; here, it’s being used as a palliative for a Trump-made disaster.

You’d imagine that Congress would be outraged, right? Lawmakers are the clear losers. The president is issuing sweeping economic policies that, in practice, are indistinguishable from laws passed by Congress pursuant to the legislature's core constitutional powers. And Trump is doing so in a manner that clearly conflicts with Congress’s intent. After all, if there’s no “national security” threat, then the president’s tariffs are beyond the law, and the “trade aid” is superfluous. Countenanced with so many affronts, Congress should be steamed. In prior posts, I explained how Congresses from the mid-Twentieth Century never would have stood for these sorts of shenanigans.

And yet, powerbrokers in the contemporary Congress have responded by … joining in!

For example, Senate Finance Committee Chair Chuck Grassley told reporters he would apply for “trade aid” to help his Iowa farm. And Rep. Jim Costa, Chair of the House Agriculture Livestock and Foreign Agriculture Subcommittee, issued a press release bemoaning “the troubling possibility that … the fruit and vegetable crops produced in Central California will receive a different and possibly reduced level of aid.” From the looks of this release, Rep. Costa’s primary concern seems to be whether his constituents would get enough room at the trough.

If lawmakers bothered to care, there would be plenty for Congress to oversee. The tariffs, for example, are a mess, apart from their false justification. Trump reserved for his administration the power to exempt businesses from the import duties, but the process is shrouded in secrecy. The program was simply announced, and then the Commerce Department started accepting petitions. No one knows if these variances have been used to reward political allies and punish foes.

The farmer bailout is no less opaque, which is troubling given the results of the Commodity Credit Corporation’s most recent audit. Just before the Trump administration announced the first round of trade aid, government contractors found that the Corporation’s accounting for budgetary transactions suffered from a “material weakness,” or “a deficiency ... in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Notwithstanding this bright red flag, President Trump effectively doubled the Corporation’s fiscal responsibilities in each of the past two years.

Instead of focusing on these disconcerting regimes, the current Congress has bigger fish to fry—such as inspecting Trump’s tax returns, or investigating Hilary Clinton’s server (still!). You know, the really important stuff.

To be sure, Trump is faithlessly executing the law, in violation of his constitutional oath. At the same time, he is acting ambitiously, just as the Framers would have expected. Today’s passive Congress, by contrast, would be unrecognizable to the Founders, who had feared that “[t]he legislative department is everywhere extending the sphere of its activity, and drawing all power into its impetuous vortex.” Far from accreting power as expected by constitutional drafters, the contemporary Congress delegates away its authority and then loses interest. Rather than compete with the president, Congress abets the president’s ambition. Therein rests the root of our present problem.