Washington Insider -- Tuesday

Simmering Budget Fights

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

US Begins Antidumping Probe on Argentina, Indonesia Biodiesel

The U.S. Commerce Department said in a statement that it has initiated an investigation into imports of biodiesel from Argentina and Indonesia. On March 23, the National Biodiesel Board Fair Trade Coalition filed petition with the Commerce Department and the U.S. International Trade Commission (ITC).

The ITC in a separate statement said that the commission “is scheduled to make its preliminary injury determinations on or before May 8.” If the investigation finds the claims are valid, it will announce preliminary countervailing duties in June and an antidumping ruling in August. In 2016, biodiesel imports totaled $1.2 billion from Argentina and $268.2 million from Indonesia, according to the ITC.

Indonesia is also facing pressure in Europe, with its government filing a WTO complaint against European Union anti-dumping duties on Indonesian biodiesel.

Meanwhile, the European parliament voted last week to call on the EU to phase out use of palm oil in biodiesel by 2020. Indonesia, along with Malaysia, plans to send a joint mission to Europe next month to prevent the adoption of that resolution.

Dairy Groups Keep Focus On Canada

U.S. dairy industry groups, including the International Dairy Foods Association, National Milk Producers Federation and the U.S. Dairy Export Council, and the National Association of the State Departments of Agriculture are appealing to President Trump to use his influence with Canadian Prime Minister Justin Trudeau to stop a new national pricing policy that blocks exports of ultra-filtered milk.

In a letter, the groups ask Trump to direct U.S. agencies to examine the full range of tools "that could be used immediately" to force Canada to change its policy, if it does not do so voluntarily, and make opening the Canadian dairy market a "key and early stage priority in NAFTA discussions."

Washington Insider: Simmering Budget Fights

It seems that budget fights are never far below the surface in Washington these days, and Politico is reporting that it sees major landmines ahead as Congress faces a tight timeline to avoid a government shutdown later this month.

The April 28 funding deadline is approaching rapidly Politico says, and lawmakers are locked in negotiations over a funding bill that would last only until the end of September. Still, Republican leaders want to use the issue to “show they can govern,” and are pledging they’ll meet the deadline. Politico focuses on a list of what it calls “last-minute hurdles” ahead in the process.

Senate Minority Leader Charles Schumer, D-N.Y., is warning that Democrats will oppose any bill that includes “poison pill” riders. But Trump’s budget chief, Mick Mulvaney, says lawmakers need to include Trump’s priorities. Politico says at least five important hurdles could cause real trouble and possibly stand in the way of keeping the government open.

First on the list, says Politico, is President Trump’s threat to withhold federal health care insurance payments, an idea the president floated during an interview with the Wall Street Journal on Wednesday.

The payments, known as cost-sharing reductions, reimburse insurers for giving discounted deductibles to low-income health care enrollees. Insurers are warning that uncertainty about the future of the payments could force them to increase premiums or withdraw from the health care market altogether.

Democrats, of course, have pushed back against the president’s threat, arguing he is trying to hold healthcare hostage. And, Democratic leaders are now demanding that Trump promise to make the payments before they support a government funding bill.

Another key fight concerns immigration, Politico thinks. Administration budget chief Mulvaney told the Wall Street Journal last week that Trump wants a provision included in the funding bill allowing states to restrict federal grant money for cities that don’t follow immigration laws. Earlier, the president signed an executive order defunding so-called “sanctuary cities,” but that order is now tied up in court.

Still, Mulvaney argues that allowing cities to withhold cooperation with the feds is “just not an option. That just doesn’t make sense to ordinary people, and it certainly doesn’t make sense to this administration.” However, using the funding bill punish sanctuary cities would be expected to could cause a big fight in the Senate, where Democrats blocked similar legislation last year, politico says.

A third hurdle concerns the border wall—an item GOP leaders had signaled they were preparing to leave out of the bill in order to avoid a shutdown. “My guess is that comes together better without the supplemental,” Sen. Roy Blunt, R-Mo., said late last month. However, Mulvaney has said during interviews last week that the president wants to see additional border security funding included in the bill, warning that “elections have consequences.”

“The president has to sign off on this stuff, so the president gets to have his say,” he said. The Trump administration has requested a $30 billion supplemental that includes $1.5 billion for the wall, and Mulvaney told The Wall Street Journal that roughly $1.5 billion for the wall is one the administration’s top priorities. However, GOP leadership has sidestepped when pressed if Congress will ultimately pay for Trump’s proposal.

Senate Majority Leader Mitch McConnell, R-Ky., told reporters in Kentucky last week that he backs including border security but “exactly how that’s defined will be subject to negotiation with our Democratic colleagues.” However, Democrats have pledged to oppose any bill that includes the border wall funding, warning in a letter to McConnell that Republicans “will be shutting down the government and delivering a severe blow to our economy.”

Rust-belt lawmakers also are pushing hard for a “permanent” fix on the healthcare and pensions for miners and their families. A spokesman for Sen. Joe Manchin, D-W.Va., said that currently only healthcare was likely to be included in the government funding bill but that the senator would “fight” for the pension provision. He told the press that lawmakers were “pushing for a full fix as we speak.” However, some Republicans have been loath to include the pension fix in a government funding bill, arguing the miners’ pensions was an agreement between a union and miners but not the federal government.

And, then there is the defense spending bill that could lead to a long fight. Sen. John McCain, R-Ariz., and Lindsey Graham, R-S.C., two of Congress’ most vocal defense hawks, are warning they may vote against any short-term deal because of its impact on the Pentagon.

Graham separately added that he would also oppose a continuing resolution “because it destroys the Pentagon” unless it’s a one-week stopgap to let lawmakers finalize a yearlong deal. The Pentagon has warned lawmakers against passing a continuing resolution for funding because it would limit their ability to launch new programs, including new military equipment, and could hamstring their ability to move around war funding.

While Republicans and the administration want to boost military spending, Politico thinks the move likely run into a wall in the Senate, where Democrats are demanding an equal increase in non-defense spending.

So, we will see. Clearly, there are dark budget storm clouds ahead and the administration has numerous political objectives, as does the minority. How powerful the need to demonstrate commitment to any “regular order” remains to be seen and Politico clearly thinks the coming fights likely will be bitter and possibly disruptive and should be watched closely as they emerge, Washington Insider believes.

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