Washington Insider -- Friday

Lagging Infrastructure Push

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

House Farm Bill May Be Marked Up April 18

The House Agriculture Committee is slated to mark up the 2018 farm bill on April 18. The draft of the bill could come early next week. Committee rules call for three days’ notice prior to a business meeting and 24 hours for bill text. The current farm bill expires on September 30. Negotiations have been halted over Supplemental Nutrition Assistance Program (SNAP/food stamp) provisions proposed by committee Chairman Mike Conaway, R-Texas.

House Ag Ranking Member Collin Peterson, D-Minn., said SNAP is the only major hurdle on farm bill talks thus far. “Everything else is pretty well worked out.” The full House farm bill debate is expected to take place by mid-May.

India Eyeing China Market For Cotton In Wake Of Potential China Duties On US Cotton

India is monitoring the US-China trade situation and is seeing potential for India to boost cotton shipments to China in the event the situation devolves into a trade war between the two countries, an official with the Cotton Association of India told Reuters.

"China's move to impose duty on U.S. cotton shipments will help us," Atul Ganatra, president of the Cotton Association of India, told Reuters. India is hoping sales of the fiber will total 2.5 million to 3 million 170-kilogram bales to China for 2018/19, up from around 800,000 tonnes for 2017/18, he said.

Washington Insider: Lagging Infrastructure Push

Well, the question of whether or not there is a trade war underway and what that could mean along with immigration policies are the key issues across the country these days—but another fight may be near the surface, and that concerns the administration’s infrastructure proposal, the Washington Post says this week. It also argues that the impending departure of the President’s top White House adviser on infrastructure, DJ Gribbin, is being cast by critics as further proof the administration’s much-touted initiative is headed for failure.

At an Ohio rally last week, the president touted the importance of the lack of Democratic support for what he had promised would be a bipartisan effort. However, he concluded that his proposal would “probably have to wait until after the election” in November.

The Post is skeptical, however. It says that many Republicans on Capitol Hill have also been unenthusiastic about the 10-year, $200 billion proposal, which the Trump administration says would prompt $1.5 trillion in overall spending--an idea dismissed by outside economists. Last year’s business-oriented GOP tax cuts left little fiscal room for what candidate Trump said would be a signature project to rebuild America.

Gribbin was a key architect and vocal defender of the plan but now Democrats want to reverse some corporate tax cuts to allow federal spending to begin meeting what some officials say is $4 trillion in infrastructure needs. But administration officials reject that idea.

The Post cites skeptics who say Gribbin’s departure is an example of discord and ineffectiveness within the Trump administration.

A White House official denied that the initiative is doomed. The president stands behind the plan, which was shaped by his appointees across the federal government, the official said. The White House official also said, “DJ’s departure was entirely his decision.”

At a speech last month to the American Association of State Highway and Transportation Officials, Gribbin, a former executive at Macquarie Capital who has worked for Koch Industries and the Transportation Department, defended the administration effort.

“One of the most amazing parts about this job is you put these ideas out there and it’s unbelievable how far people can get” from those actual proposals to their interpretations of them, Gribbin said. “It’s amazing. Where did you get that from? There’s a Wharton study. . . . Did you read what we put out? Like, I have no idea how you got to where you got.”

Economists at the Penn Wharton Budget Model said the Trump plan would, under their most generous interpretation, lead states and others to spend just $30 billion more on infrastructure overall, beyond the $200 billion from Washington. That is in contrast with the more than $1 trillion predicted by Gribbin and other administration officials.

The Wharton economists said states and localities would spend less of their own money on projects, a well-established phenomenon known as substitution. The administration points to its proposed incentive grants, which require $4 in state or local spending for every $1 in federal money, as well as other programs.

But the Wharton economists, citing decades of academic research, said numerous administrations have tried to mandate that local spending continue at the same pace, despite federal infusions — and failed.

Beyond Trump’s stalled $200 billion proposal, the $1.3 trillion bipartisan spending bill Congress passed last month includes billions more for roads, bridges, airports and transit and water projects. Some congressional Democrats described the increases as a repudiation of the Trump approach.

Trump’s budget proposals, for instance, called for eliminating an Obama-era Transportation Department grant program known as Transportation Investment Generating Economic Recovery, or TIGER, which has funded projects ranging from a highway in Lincoln, Neb., to a main-street improvement project in Akron, Ohio.

Instead, Congress tripled the TIGER program to $1.5 billion from $500 million.

“It’s not the exact way we would have done it, but it accomplishes many of the goals we had,” said Deputy Transportation Secretary Jeffrey A. Rosen. He said there were wins for the administration, including blocking what he said was an effort to give undo advantage to major tunnel and bridge projects connecting New Jersey and New York, known as the Gateway Program.

So, we will see. The administration’s infrastructure investment, in response to its recognition of the huge infrastructure need across the United States, is very important to producers since it affects their ability to compete in key overseas markets. However, the administration’s vision of building $200 billion in federal funds into $1.3 trillion in infrastructure investment has been widely questioned by the industry, as well as by economists. The infrastructure plan has always had at least some seeds of bipartisan support which could be crucial to its survival in the current debate, which producers should watch closely as it proceeds, Washington Insider believes.

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