Washington Insider - Wednesday

By DTN's Washington Insider

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

Section 199A Fix Still Sought

Lawmakers continue to search for a solution to the Section 199A provision in the tax reform plan that would provide a potential major benefit to agricultural cooperatives. As for whether it will be included in the short-term spending plan, House Ways and Means Chairman Kevin Brady, R-Texas, said Monday it's "too soon to tell.” The latest continuing resolution to fund the government through March 23 does not contain 199A tax-related language.

Staffers and others are working on language that would include changes to a new deduction in the tax code that gives farmers incentives to sell their crops and products to cooperatives rather than other types of companies. "It’s really important that co-ops and the private sector stay at the table to work out the issue sooner rather than later. Clearly the language in the final conference has a serious flaw, so it needs to be corrected soon... I think the House version was the right approach, but we are trying to find a solution," Brady added.

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House Farm Bill Timeline

House Agriculture Chairman Mike Conaway, R-Texas, is planning on a farm bill markup in March, and hopes for House passage by the end of the month. That timeline is largely contingent on lawmakers agreeing on an overall, final budget agreement.

This timeline would leave plenty of time to work out differences with the Senate version of the bill and ensure new legislation is finalized before the farm bill expires at the end of September. Conaway said the bill leaving his committee will include a strong crop insurance component and pledged to fight off attempts to weaken the program.

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Washington Insider: Majority Divisions CloudLegislative Prospects

Republicans seem divided sharply over transportation, immigration and spending coming out of a retreat in West Virginia, The Hill is reporting. This lack of unity clouds the prospect of legislative progress in 2018.

The group reports that GOP leaders at the retreat focused on the accomplishments of last year more than the divisive issues in front of them as they hope to rally the rank-and-file members ahead of primary season and the November general election.

As a result, “nothing’s going to get done this year,” acknowledged a senior Republican aide, noting divisions over President Trump’s proposed $1.5 trillion infrastructure package and immigration. And, internal divisions are a major reason why Senate Majority Leader Mitch McConnell, R-Ky., is stressing the need to move bipartisan legislation this year.

He knows the party is divided on key issues and also needs to overcome the 60-vote filibuster threshold in the upper chamber.

The looming question, however, is whether McConnell and other GOP leaders are willing to risk a backlash from the conservative base by cutting deals with Democrats— especially with primary elections quickly approaching. Some suggest the answer is to let senators legislate on the floor, something McConnell has vowed to do on immigration.

“There’s a very simple way to deal with all these differences of opinions. You can let the legislative process work and they will be adjudicated along the way,” said James Wallner, a GOP policy expert and former Senate aide.

Divisions on immigration surfaced again on Monday when Trump blasted a proposal co-sponsored by Sen. John McCain, R-Ariz., who spearheaded Senate passage of a comprehensive immigration bill in 2013, as a “total waste of time.” Now, some Republicans are voicing support for a pared-down immigration bill that would trade a deal to protect certain immigrants known as “Dreamers” from deportation in exchange for beefed up border security.

On infrastructure, fiscal hawks led by Rep. Mark Meadows, R-N.C., chairman of the House Freedom Caucus, want to limit the taxpayer contribution for Trump’s $1.5 trillion infrastructure to $200 billion.

But other Republicans, such as Sen. Shelley Moore Capito, R-W.V., a member of the Senate Environment and Public Works Committee, say the federal government will have to kick in more than $200 billion to leverage enough private investment to reach Trump’s goal.

Another point of contention among Republicans is how broadly to define what counts as infrastructure.

Senator Murkowski, R-Alaska, who hails from an energy-rich state, says the infrastructure package must include investment for energy infrastructure, while Senate Commerce, Science and Transportation Committee Chairman John Thune, R-S.D., says expanding broadband access should also be a goal of infrastructure investment.

Sen. James Inhofe, R-Okla., a senior member of the Senate Environment and Public Works Committee, wants to keep the focus on traditional infrastructure projects such as roads and bridges.

Then there’s the question of what to do about the debt ceiling, which the Congressional Budget Office warns the federal government will hit in early March.

Meadows and other fiscal hawks in the Freedom Caucus are pushing the Trump administration and GOP leaders to attach serious spending reforms to the debt ceiling.

Senate GOP leaders, however, warn that Democrats will likely balk at sticking spending cuts onto a debt-ceiling bill and don’t want to gamble with something that could shake up the economy, especially after the Dow Jones industrial average lost more than 1,100 points recently.

Speaker Paul Ryan, R-Wis., revived his push for welfare reform during the party’s three-day retreat in White Sulfur Springs, W.V., by urging colleagues to work on workforce development.

However, Senate Majority leader Mitch McConnell, R-Ky., has waved off entitlement reform as something that would have a slim chance of passing the narrowly divided Senate, where Republicans control 51 seats.

The divisions are deep enough that GOP leaders are mulling the possibility of not passing a budget this year, something that Senate Republicans promised to do every year when they captured the chamber from Democrats in 2014.

Instead, they are hoping to strike a deal with Democrats that would set the defense and nondefense spending caps for fiscal years 2018 and 2019, something they argue would make it unnecessary to pass another budget before Election Day.

That strategy has the ancillary benefit of avoiding an internal fight over the size of the infrastructure package, welfare reform or whether to set up a special budgetary process known as reconciliation to replace the central pillars of ObamaCare.

But conservatives nevertheless hope they can put in place budget reconciliation instructions for health-care reform that would allow them to take another crack at repealing ObamaCare after the election, perhaps spurred on by a pickup of Senate seats.

After all, they note, Democrats have to defend 26 seats, including 10 seats in states that Trump carried in 2016.

So, more and tougher fights seem to loom for the new year on almost every imaginable issue This almost certainly means an increasingly toxic debate that could very well involve the farm bill issues, and which should be watched closely by producers as it emerges, Washington Insider believes.

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(GH/BAS)

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