FarmPolicy

November 17, 2019

Tuesday Morning Update: Policy- Budget Issues; Regulations; Trade; and, Bird Flu

Policy, Budget Issues

Seung Min Kim and Jake Sherman reported yesterday at Politico that, “As budget season kicks off in earnest this week, defense hawks are clashing with fiscal hard-liners over military spending, Republicans are scaling back their deficit reduction targets, and Democrats are waiting in the wings to hammer GOP lawmakers with politically tough votes on education, infrastructure and health care.

“In the House, Speaker John Boehner of Ohio, Majority Leader Kevin McCarthy of California and Majority Whip Steve Scalise of Louisiana are stuck between the budget-cutting demands of conservatives and the desire of defense hawks to provide the military with more robust funding. In the Senate, Republicans are already getting hit by Democrats after indicating they’ll target Medicaid and food stamps.

The blueprints due out this week in each chamber will provide the first hard evidence of how aggressively the GOP intends to pursue its top stated priority of fiscal discipline. Though the budgets are partisan documents that won’t be signed into law, failing to marshal enough GOP support to pass one would be a debilitating setback for a party trying to prove it can govern after taking full control of Congress.”

The article noted that, “As some details of the Senate budget became clear last week, Democrats began their attack — pointing to savings that Republicans would like to extract from Medicaid and food stamps for the poor.

“‘Balancing the budget on the backs of working families who have borne the brunt of the recession makes no economic sense,’ said Sen. Bob Casey (D-Pa.).

If the two chambers ultimately can’t come together on a budget, Republicans won’t be able to wield a powerful budget maneuver known as reconciliation, which would allow them to enact policy changes with 51 rather than 60 votes.”

Jonathan Weisman reported in today’s New York Times that, “Congressional budgets do not have the force of law and are largely advisory documents, but they represent the broadest statement of governing philosophy each year and set overall spending levels for the coming fiscal year. And in coming months, this one may contain language easing passage of taxation and entitlement legislation.

Under congressional rules, a budget cannot be filibustered in the Senate, so Republicans would bear most of the responsibility if they failed to pass one.

“House Budget Committee members previewed their plans in an unusual, campaign-style video on Monday. The plan envisions a remaking of the federal government. Future recipients of Medicare would be offered voucherlike ‘premium support’ to pay for private insurance rather than government-provided health care.”

Meanwhile, Bernie Becker reported yesterday at The Hill Online that, “Rolling back federal spending on food stamps would hit those at the very bottom of the income ladder the hardest, according to a new study from the Congressional Budget Office.

“The CBO examined three separate options for cutting food stamp spending by 15 percent in 2016 — or slicing roughly $11.5 billion from the $77 billion currently projected to be spent on food stamps that year.

The budget scorekeeper found that families making under $15,000 would receive $600 less a year in food stamps if the maximum benefit was capped. More targeted options — reducing the income threshold needed to qualify for food stamps, or how quickly benefits decline for higher income — would have less of an impact on the poorest recipients.”

The Hill update added that, “House Minority Whip Steny Hoyer (D-Md.) and Rep. Barbara Lee (D-Calif.), who had asked the CBO to examine the issue, said the report showed just how harmful food stamp cuts would be. Congressional Republicans are expected to roll out budgets this week that would reduce food stamp spending.”

Also, CBO indicated in a report from Friday on spending for means-tested programs that, “SNAP spending increased markedly during the most recent recession—roughly doubling between 2008 and 2011—as more people became eligible for those benefits. In addition, the American Recovery and Reinvestment Act of 2009 (ARRA) raised the maximum benefit under that program; subsequent legislation eliminated that increase as of October 31, 2013. The program’s caseload peaked in 2014, and CBO expects that it will fall in each year of the projection period as the economy continues to improve. As a result, spending for SNAP is projected to decline slightly over the next several years, after growing by an average of 9 percent per year over the 2006–2015 period.”

With respect to the idea of block granting federal SNAP funding to states, DTN Ag Policy Editor Chris Clayton tweeted yesterday that, “Vilsack rails on GOP idea to block-grant SNAP to states. When he got into office some states had 50% of eligible people not enrolled.”

Recall that Kevin Concannon, USDA Under Secretary for Food and Nutrition, will be testifying this morning at the House Appropriations Ag Subcommittee.

Also yesterday, the “Washington Insider” section of DTN (link requires subscription) indicated that, “For some time, there has been a growing buzz about how the coming budget wars would affect the implementation of the 2014 farm bill. Senate Budget Committee Chair Mike Enzi, R-Wyo., recently drew press attention with the comment that his committee’s upcoming budget resolution likely will include instructions for reconciliation — along with follow-on legislation for spending cuts designed to be immune from a Democratic filibuster.

The reconciliation process lets Congress set an overall goal for cuts, and then require the authorizing committees to do the work — that is, choose where actual cuts are to be made through legislation. The process identifies the committee tasked with reporting legislation, the spending, revenue or deficit targets and the deadline for reporting a bill. Such resolutions do not require the president’s signature.

“A key focus of the rumors is the effect the expected proposals are likely to have on social programs, especially Medicaid and food stamps. But, there also is talk about the need for attention to commodity programs, coming from both bureaucrats and budget hawks. For example, the Government Accountability Office recently released a report that noted some ‘crop insurance savings’ that GAO thought ‘could be timely.’”

The DTN update also noted that, “While it seems likely that the current majority in Congress will dig deeply into the management and effectiveness of the food stamp program, it is not clear whether the budget hawks will be able to impose budget trims on the commodity programs, as well. However, the cost comparison between the new insurance programs and the unpopular direct payments could gain traction in the coming debate.

“The fights over social programs are well known by now and those in the offing likely won’t be much different. Any significant cuts proposed by the majority will be bitterly opposed by Democrats. And, if discord erupts over panel recommendations, most expect a contentious floor fight with dueling amendments when the FY 2016 Ag appropriations bill that includes food stamps reaches the floor in both chambers.

Whether the budget hawks will choose to focus on the new farm programs’ substantial costs remains to be seen. However, the fact that they could be even more expensive than the direct payments that were too unpopular to even consider reauthorizing could attract attention as the budget fight intensifies over the coming months, Washington Insider believes.”

Former House Ag Committee Chairman Larry Combest (R-Texas) indicated in a column yesterday at The Hill Online that, “One banker from a farming state that made better yields than most in 2014 paints a bleak picture. He told me that but for crop insurance, sharply pared back capital investments and the potential for help under the farm bill, most producers would negatively cash flow for 2014 and 2015. Machinery sales are minimal and land sales often end with no sales. About 10 percent of producers are in serious financial trouble and that number will grow unless prices recover.

“Now, imagine what bankers are saying in states making substandard yields, some experiencing severe drought over multiple years where there has been no opportunity for producers to build up reserves. Despite their best efforts to restructure producer debt, liquidations are beginning. Producers are going under, and the first to go are young producers in debt with no equity.

“Yet despite the shaky financial ground producers find themselves on, the administration last month unveiled a budget that proposes to shake it up even more with a plan that targets a key element of crop insurance, threatening the ability of many farmers to manage risk through forward contracting. And this month, congressional budget committees may put forward plans to further disorient producers and lenders already reeling from plunging markets and complex farm bill decisions.”

The column noted that, “If this latest round of messing with the farm bill and crop insurance somehow succeeds, we could see a very serious deterioration of the farm economy, something most policymakers today have not witnessed while in office. But even if the efforts fail, the mere talk of it adds confusion and anxiety for producers and casts further doubt in the minds of lenders.”

The Washington Post editorial board opined on Monday that, “Yes, the old system of direct payments to growers of corn, soybeans and a few other crops have been replaced by two heavily subsidized ‘insurance’ programs that ostensibly protect only against price swings and natural disasters beyond the farmers’ control. In fact, though, the programs insure against such relatively common risks that they are tantamount to direct payments, and nearly as lucrative — sometimes more so.”

In other policy news, an update yesterday from the Senate Ag Committee stated that, “A key, bipartisan group of four senators today requested a 30-day extension of the public comment period for the 2015 Dietary Guidelines Advisory Committee’s (DGAC) Scientific Report. Chairmen Pat Roberts, R-Kan., and Lamar Alexander, R-Tenn., joined Ranking Members Debbie Stabenow, D-Mich., and Patty Murray, D-Wash., in sending a letter requesting the extension to U.S. Secretary of Agriculture Tom Vilsack and to U.S. Secretary of Health & Human Services (HHS) Sylvia Burwell.”

And news release yesterday from USDA noted in part that, “Agriculture Secretary Tom Vilsack today released the following statement after the successful conclusion of the Stakeholder Workshop on Coexistence hosted by North Carolina State University March 12 and 13, and proposed USDA actions discussed by conference participants:

“‘USDA recognizes that we need diversity in agriculture and supports the successful coexistence of the different forms of production. Each one contributes to the overall health of farming and rural communities throughout the United States.’”

Recall that Sec. Vilsack will be testifying this morning at the Senate Appropriations Ag Subcommittee.

Ron Nixon reported yesterday at The New York Times Online that, “The Obama administration has announced a plan to crack down on the multibillion-dollar global black market in seafood, an effort that would try to trace a fish’s story from where it was caught to how it was shipped.

“Officials said that the unregulated part of the fishing industry, which could be worth up to $20 billion annually, contributes to consumer unease about food safety.”

 

Regulations

The House Ag Conservation and Forestry Subcommittee will hold a hearing this afternoon, “To review the definition of ‘waters of the United States’ proposed rule and its impact on rural America.”

The Senate Ag Committee is scheduled to look at this issue next week.

A news release yesterday from Sen. Deb Fischer (R., Neb.) stated that, “In Lincoln, [Neb.] this morning, [Sen. Fischer] chaired a hearing of the Senate Environment and Public Works (EPW) Committee. The hearing was focused on the impact of the proposed Waters of the United States (WOTUS) rule, which would expand federal regulation of water across Nebraska. Fischer examined the views of a diverse group of stakeholders, including representatives from the agriculture community, homebuilders, natural resource districts, and state and local governments.”

Lydia Wheeler and Tim Devaney reported yesterday at The Hill Online that, “In a speech to the National Farmers Union on Monday, EPA Administrator Gina McCarthy said she wished the agency had done a better job of rolling out the Waters of the U.S. rule and instead named it the Clean Water Rule.

“McCarthy said EPA is getting ready to send the final rule to the Office of Management and Budget for review and as a result of more than a million comments the agency received, she said some changes are being considered.

“‘First, let me point out a few things this rule will not do,’ she said, according to prepared remarks. ‘We’re not going to regulate puddles. We’re not extending the Clean Water Act to apply to land. And the rule will not cancel 4th of July fireworks displays. Remember those criticisms? We’ve come a long way.’”

The Hill update added that, “She went on to say that EPA only plans to regulate the ditches that could carry pollutants downstream, the ones the agency doesn’t want to ‘pollute or destroy,’ but farm advocates say that wording is too broad.

“‘What do they call pollute?’ Don Parrish, American Farm Bureau Federation’s senior director of congressional relations, asked.

“Virtually anything a farmer does, he said could be considered pollution, including spreading manure, using fertilizer, and controlling weeds and insects with pesticides.”

Chris Clayton reported yesterday at DTN (link requires subscription) that, “McCarthy acknowledged the Clean Water rule didn’t work the way it was proposed. The rule is meant to define which bodies of water are jurisdictional for EPA or the Army Corps of Engineers, or in other words, which rivers, streams or wetlands are considered ‘waters of the United States.’

“‘I really wish we had done a better job rolling out the Clean Water rules,’ McCarthy said. ‘Why call it WOTUS? It was not crystal clear out of the gate. We could’ve done better.’

“EPA had created an interpretive rule to help spell out for farmers and ranchers some exempted conservation practices on farmers. That attempt caused more confusion among farmers and caused groups to fight the interpretive rule. After congressional efforts to block funding for the interpretive rule, EPA eventually withdrew it.”

An audio replay of Administrator McCarthy’s speech and news conference from yesterday has been posted at Brownfield.

Former House Ag Committee Chairman Frank Lucas (R., Okla.) indicated in a column yesterday at The Hill Online that, “The Science Advisory Board (SAB) is a panel of independent experts that reviews the science behind EPA rules which potentially impact the lives of millions of Americans. The heavy costs of these regulations should warrant some degree of public oversight and an assurance that this board’s findings are free from bias – not provided by a set of handpicked advisers.

“Shortcomings with the process have come up recently, including limited public participation, interference with expert advice and possible conflicts of interest. These are alarming signs for an organization whose reputation stems from impartiality.

This week the House will vote on a bill I introduced to address these issues and ensure the science guiding EPA’s regulatory policy is objective, open and balanced.”

 

Trade

An article in today’s Washington Post stated that, “Cuba and the United States renewed talks on restoring diplomatic relations on Monday, this time amid secrecy and with the longtime adversaries differing sharply over Venezuela, Cuba’s closest ally.

Roberta S. Jacobson, the U.S. assistant secretary of state for Western Hemisphere affairs. met in Havana with Josefina Vidal, the Cuban Foreign Ministry’s chief of U.S. affairs, for the first day of open-ended talks.”

Bloomberg writer Aya Takada reported yesterday that, “Japan, which imports about 60 percent of its food, cut its self-sufficiency target as the government expands free-trade agreements for economic growth, lowering tariffs on meat and dairy.

“The largest Asian buyer of corn, beef and pork lowered the rate to 45 percent by March 2026, the Agriculture Ministry said in an e-mailed report Tuesday. The target, which is reviewed by the government every five years, was reduced from 50 percent set in 2010.

“The country reached a free-trade agreement last year with Australia and began cutting tariffs on the third-biggest beef exporter in January in line with the bilateral accord to halve duties on frozen meat by 2032. Japan is negotiating the Trans-Pacific Partnership with the U.S. and 10 other nations as Prime Minister Shinzo Abe expands trade-promotion deals.”

 

Bird Flu

Bloomberg writers Alan Bjerga and Megan Durisin reported yesterday that, “The biggest U.S. outbreak of avian influenza has poultry producers tightening security procedures to avoid trade disruptions.

China halted U.S. poultry imports in January, while Mexico, the European Union and other trade partners have stopped buying the meat from Minnesota, Missouri and Arkansas, where outbreaks of the disease have been reported. Tyson Foods Inc. and Sanderson Farms Inc. are reinforcing precautions.”

Reuters writer Tom Polansek reported yesterday that, “U.S. authorities are considering imposing tougher restrictions in Arkansas to contain a virulent strain of avian flu in the heart of America’s poultry region in a bid to minimize international trade disruptions and contain the virus.”

***

Lastly today, James Hohmann reported yesterday at Politico that, “Scott Walker freely admits that he has shifted to the right on immigration over the past two years, aligning himself with the GOP base, but the Wisconsin governor was adamant Monday night that he has not also flip-flopped on ethanol.

“On a telephone town hall meeting sponsored by the Tea Party Patriots, the all-but-declared Republican presidential candidate insisted that, when he spoke out against ethanol mandates during his 2006 run for governor, he was specifically referring to state-level standards, not federal ones.”

Keith Good

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