FarmPolicy

August 21, 2019

Executive and Legislative Branch Transitions: Trade, Agriculture and Energy Issues

Executive Branch Transition

Peter Baker and Jeff Zeleny reported in today’s New York Times that, “A day after becoming the first African-American to capture the presidency, [President-elect Barack Obama] announced a transition team and prepared to name an ally as his White House chief of staff in his first steps toward assuming power… Representative Rahm Emanuel of Illinois, the fourth-ranking House Democrat and a close friend of Mr. Obama’s from Chicago, has been offered the job of chief of staff, and although he was said to be concerned about the effects on his family and giving up his influential role on Capitol Hill, many Democrats said they expected him to accept it.”


Jonathan Weisman and Deborah Solomon
indicated in today’s Wall Street Journal that, “Obama aides said hiring a chief of staff would be followed by critical economic appointments, especially that of Treasury secretary.

“They said contenders include Lawrence Summers, a Harvard University economist who served in the same position in the Clinton administration; New York Federal Reserve Bank President Timothy Geithner; former Federal Reserve Chairman Paul Volcker; and Robert Rubin, another former Clinton Treasury secretary and director and senior counselor of Citigroup Inc.”

A New York Times summary article from today reported that, “The dismal state of the economy helped decide Tuesday’s presidential election. And it almost certainly will dominate the early days of the Obama administration.

“Few presidents have entered office with an economy in such turmoil. Reflecting worries that the worst may not be over, the stock market continues to languish, with a 5 percent decline on Wednesday, leaving it 35 percent below its peak last fall.

“The reasons are myriad: the financial system, though back from the brink, remains deeply troubled. Housing may no longer be in free fall, but plummeting values and rising defaults have impoverished many homeowners and burdened states with widening budget deficits. The once-mighty auto industry is on the verge of implosion.”

As part of the Times summary, Mark Landler reported that, “What consensus there was on international trade seemed to evaporate with the failure of world trade talks this summer. Indeed, with the world on the brink of a global recession, led by the United States and Europe, the fear of a rise in protectionism grows.

“The first test of sustaining international cooperation will come on Nov. 14 and 15, long before Mr. Obama takes office. Leaders from 20 major countries will gather in Washington with President Bush to embark on an effort to rewrite international financial regulations [related articles here and here] — an undertaking some liken to a latter-day Bretton Woods conference.

“Whether or not he attends, Mr. Obama will cast a long shadow.

In short order, the recession and a likely spike in unemployment are sure to put him under pressure from union supporters, as well as Congressional Democrats, to take a tougher line on trade.”

Also on the trade issue, Gregg Hitt reported in today’s Wall Street Journal Online that, “Stronger Democratic majorities on Capitol Hill and a Democratic president will likely mean the free-trade agenda the U.S. has pursued for the past 20 years will slow… [A]nother important trade issue is whether Democrats will give the president-elect new trade-negotiating authority, a move that will be essential to reviving the stagnant Doha Round of global trade talks. Democrats also are likely seek expansion of programs for workers who lose their jobs as a result of foreign competition.”

James Politi reported yesterday at the Financial Times Online that, “Trade experts say Mr Obama could commit early on to concluding the Doha round of trade talks, in the knowledge that the important discussions will take place at the end of next year – after elections in India and turnover in the European Commission.”

In a side note on trade developments, an update posted yesterday at the WTO Online stated that, “Weakening demand in developed countries, realignments in exchange rates and fluctuations in the prices for commodities, such as oil and gas, introduced uncertainties into the global markets in 2007. As a result, growth in world merchandise trade slipped to 6 per cent in real terms, down from 8.5 per cent in 2006, according to statistics published by the WTO on 5 November.”

In other executive branch transition news, the U.S. Department of Agriculture stated in a news release from yesterday that, “U.S. Agriculture Secretary Ed Schafer today announced the resignation, effective December 1, 2008, of Agriculture Under Secretary for Rural Development Thomas C. Dorr.

“‘Tom Dorr has been a transformational leader for USDA Rural Development,’ Schafer said. ‘As the transition to a new Administration continues in the months ahead, senior leaders will be moving on, but Under Secretary Dorr’s contributions to USDA and rural America will be felt for many years to come.’”

And in more specific news on what the change in executive branch administration may mean for the agricultural sector, Reuters writer Carey Gillam reported today that, “America’s farm sector on Wednesday cautiously welcomed Democrat Barack Obama’s historic White House win as good news for a raft of industry priorities like crop subsidies, ethanol expansion and agricultural trade.”

The article explained that, “Such economic woes, including tight credit, sliding crop prices and high costs for fertilizer, fuel and other production inputs, are key concerns of U.S. crop and livestock producers. Related industries such as food manufacturers, seed and equipment dealers, ethanol producers and others are similarly effected.”

“Farm policy did not get much attention in the lead-up to Tuesday’s election as both tickets focused on finding a fix for the U.S. economy,” the article said.

The Reuters article added that, “Obama has made it clear that he believes U.S. farms need a safety net. He supported the 2008 Farm Bill, which continues direct federal payments to farmers that totaled about $5 billion in 2007, though he has said he wants a subsidy ceiling of $250,000 a year per farm.

“And Obama favors federal support for ethanol, which U.S. biofuel producers make mostly from corn, another issue near and dear to many farm families.”

One of the farm sector’s biggest fears is that Obama may not be friendly to trade policies it favors. Obama has stated he is for open markets but believes trade agreements should include certain requirements for labor and environmental standards,” the article said.

Reuters writer Charles Abbott provided additional analysis with respect to the new administration and biofuels: “U.S. biofuel makers, struggling to make a profit at a time of tumbling oil and gasoline prices, look upon President-elect Barack Obama as a staunch ally for growth.

“Obama has expressed support for the federal requirement to use ethanol, made mostly from corn, as a motor fuel and says he will accelerate the development of new feedstocks. That is a great contrast from foodmakers and livestock producers who tried last summer to scale back the ethanol mandate.”

Mr. Abbott noted that, “Ethanol makers believe Obama’s victory will give them a more assured path into the future. The 2007 energy law sets a target of using 36 billion gallons of renewable fuels by 2022, including 15 billion gallons of grain-based ethanol by 2015.”

Legislative Branch Transition

David M. Herszenhorn reported in today’s New York Times that, “It will probably be weeks before Democrats learn the scope of their collective triumph in the Senate races on Tuesday, with doubts remaining about the outcome in four states. But it was clear on Wednesday that the party had picked up at least five seats in the chamber, building a commanding advantage where they held only a razor-thin 51-49 margin before the election.

“Republican incumbents clung to the barest of leads in Minnesota, Oregon and Alaska, and will probably face a runoff election in Georgia on Dec. 2. A recount loomed in the Minnesota race, where Senator Norm Coleman led his Democratic challenger, the comedian-turned-politician Al Franken, by fewer than 600 votes out of nearly 3 million cast.

“But there was no doubt that Democrats had ousted Republican incumbents in New Hampshire and North Carolina and had captured seats in Virginia, Colorado and New Mexico that were being vacated by Republicans.”

The Times article stated that, “[S]enator Saxby Chambliss of Georgia [the Ranking Member of the Senate Agriculture Committee] appeared to pull ahead in his race against Jim Martin, a former Democratic state legislator, and a minor-party candidate, the Libertarian Allen Buckley. But it appeared that Mr. Chambliss would fall just short of winning the 50 percent of the vote required for election under Georgia law, necessitating a runoff against Mr. Martin on Dec. 2.

“Mr. Chambliss could have an advantage in such a runoff, since Mr. Martin probably benefited from a coattail effect with Mr. Obama on the top of the ticket on Tuesday. On the other hand, President-elect Obama and his political advisers could use their influence against Mr. Chambliss, who unseated the Democrat Max Cleland in a bitter contest six years ago.”

DTN Ag Policy Editor Chris Clayton provided a comprehensive assessment of legislative branch races in an article from yesterday entitled, “Key Races Affect House, Senate Agriculture Committees” (link requires subscription).

Mr. Clayton explained that, “While it was a big election night for Democrats, there were still losses in the blue column, including losses in the House Agriculture Committee.

“Freshmen Democrats on the House Agriculture Committee in Kansas, Florida and Texas lost bids to keep their seats. Each had won congressional districts in 2006 that are traditionally Republican districts.

“Republicans on the Agriculture Committee from Colorado Michigan, New York and North Carolina lost their re-election bids as well.”

The DTN article stated that, “In the House, Democrats controlled the chamber 236 to 199 heading into Tuesday’s election. Democrats picked up at least 15 seats to hit 251, but there are still 12 races nationally still considered undecided.”

After a detailed look at election outcomes in the House of Representatives, Mr. Clayton summarized changes in the Senate, noting in part that, “In the Senate, Democrats didn’t reach the coveted 60-vote threshold to cut off filibusters, but they still picked up at least five Senate seats with at least two races still hanging in the balance. Democrats now hold 56 seats compared to 42 held by Republicans. The Oregon and Alaska races have not declared winners.”

However, with respect to the 60-vote Senate threshold and energy issues, an update posted yesterday at the Environmental Capital Blog (The Wall Street Journal) by Keith Johnson, stated that, “Democrats didn’t reach the magic number of a filibuster-proof 60 in the U.S. Senate—or did they, as far as energy policy is concerned?

“With a few races still undecided, Democrats picked up seven seats in the Senate, giving them 56 (including the two independents). The undecided Oregon race will produce a clean-energy proponent no matter who wins. And there are several moderate Republicans who could cross the aisle and give Democrats more than 60 votes on key energy issues.”

The update noted that, “Clean-energy analysts New Energy Finance calls that a ‘rotating Clean Energy 60.’ It wouldn’t necessarily hold up for all Democratic energy issues, such as a cap-and-trade scheme to curb emissions. But where a drive for energy independence dovetails with environmental concerns, it seems there are at least a half dozen Republicans who could help push through clean-energy legislation.

“New Energy Finance says that could include both Republican senators from Maine, Olympia Snowe and Susan Collins. Ms. Snowe worked with California Democrat Diane Feinstein on energy-efficiency and solar-power incentives. Ms. Collins is a true ‘all of the above’ energy advocate, supporting biofuels, tougher fuel-economy standards, and a national renewable-energy standard.

“Longtime Republican senators Chuck Grassley of Iowa and John Thune of South Dakota are both big-time ethanol supporters. And as prairie-state senators, they have both become vocal advocates of federal support for renewable energy, especially wind power. In Nevada, Republican Sen. John Ensign worked with Washington Democrat Maria Cantwell to bolster federal support for alternative energy.”

Energy issues on the House side of Capitol Hill are also percolating.

Steven Mufson reported in today’s Washington Post that, “In the first sign of Democratic intraparty strife since the election, Rep. Henry A. Waxman (D-Calif.) has told colleagues that he plans to challenge the House’s most senior member, Rep. John D. Dingell (D-Mich.), for the chairmanship of the Energy and Commerce Committee.

“Waxman, who is chairman of the House Committee on Oversight and Government Reform, is the No. 2 ranking member of Energy and Commerce and one of the most liberal members of the House. In three decades as a lawmaker, Waxman, 69, has been a leading supporter of universal health care, tobacco regulation and environmental protections.”

Mr. Mufson explained that, “Dingell is an institution within an institution. He has served as a member of the House since 1955 when, at age 29, he filled the seat left vacant when his father died. He also supports national health insurance and environmental measures, but he may be best known as a defender of the nation’s ailing automobile industry.

If Waxman replaces Dingell, he will almost certainly augur in a change in substance as well as style at a critical time for the committee. Health-care legislation, which President-elect Barack Obama has said will be a priority, would go through the committee. In addition, Obama has promised to make energy policy a priority, and he has discussed pushing to promote renewable energy, funneling money into carbon capture and storage projects for coal plants, and drawing up cap-and-trade legislation that would aim to reduce the nation’s greenhouse gas emissions.

“Waxman differs with Dingell on issues such as stricter tailpipe-emissions standards for automobiles and tighter controls on carbon emissions from fuels. He is also a vigorous foe of expanding offshore drilling to the Atlantic and Pacific coasts.”

In other House related energy news, Reuters reported yesterday (via DTN, link requires subscription) that, “The U.S. Congress should consider lifting the required ethanol-to-gasoline blend to 15 percent from 10 percent to avert an ethanol surplus, the House of Representatives Agriculture Committee chairman said on Wednesday.

“Rep. Collin Peterson, Minnesota Democrat elected to his 10th term on Tuesday, said during an interview with Reuters that he was concerned about the ‘blend wall’ when ethanol output equals the legal requirement to use the alternative motor fuel.

“‘I’d like to see us do nationwide a 15 percent blend,’ said Peterson. He said President-elect Barack Obama ‘will be supportive of whatever we (Congress) come up with.’”

The Reuters article stated that, “Peterson also said:

“–He will discuss with Obama officials his idea to begin work in 2009 on reorganizing the Agriculture Department. Reshaping USDA could take a year or two. The last reorganization was in the mid-1990s.

“–The House Agriculture Committee will hold a hearing this month on credit default swaps. It also plans a trip to Europe to discuss harmonization of futures regulations.

“–Obama should nominate for agriculture secretary ‘somebody who understands agriculture, who has knowledge of agriculture.

“‘I’m not big on governors and so forth,’ said Peterson.”

And with respect to Chairman Peterson and the Farm Bill, Janet Kubat Willette reported on Tuesday at AgriNews Online that, “There have been a couple blowups since the bill passed, including Country of Origin Labeling and the 10-acre rule, and [Peterson’s] watching to see how Average Crop Revenue Election is implemented. It looks like the administration is going to use 2007-2008 numbers for ACRE, he said.

“He’ll continue to monitor how the bill is implemented, which will likely stretch to the new administration.

He also wants to turn his attention to re-organizing the U.S. Department of Agriculture. He said former agriculture secretary Bob Bergland told him ‘good luck.’ An audience member asked Peterson about the National Animal Identification System. Peterson said he’s not sure it’s the No. 1 fight he wants to take on at this time.

“The United States will probably have to have NAIS if it wants to be in export markets, he said, and if a terrorist introduces Foot and Mouth Disease in this country, the U.S. will wish it had NAIS.

Peterson also talked about his band, the Second Amendments, which is actually the second band comprised of House members that he’s belonged to. Their career highlight was performing for troops in 2005, he said.

He’s hoping a drummer from Idaho and a musician from New York are re-elected so they can form a new band because two current members are leaving the House. One is retiring and another is running for governor in Missouri. They’ll need a new name and he’s thinking Fifth Amendments.”

Keith Good

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