Washington Insider -- Tuesday

By DTN's Washington Insider

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

Trump Warns Canada and The U.S. Congress On NAFTA 2.0

President Donald Trump on Saturday said Canada would be left out of a new NAFTA if a “fair deal for the US” isn’t reached — and warned Congress he would terminate the deal entirely if the lawmakers interfere in the negotiations. “There is no political necessity to keep Canada in the new NAFTA deal,” Trump wrote on Twitter. “If we don’t make a fair deal for the US after decade of abuse, Canada will be out. Congress should not interfere with these negotiations or I will simply terminate NAFTA entirely & we will be far better off.”

The president has the power to terminate the pact, with six months’ notice, but it is unclear if such a decision could withstand expected legal challenges.

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USDA's Perdue Signals Announcement Coming This Week on E15

Perdue at the Farm Progress Show in Boone, Iowa, indicated some legal issues and regulatory “hiccups” remain in implementing year-round sales. But he said, “this is what (President Trump) wants to do and he doesn’t give executive suggestions, he gives executive orders so we’re going to get it done.”

Monte Shaw of the Iowa Renewable Fuels Association said the Trump administration has an immediate opportunity to help farmers by implementing the E15 ethanol directive and closing exemptions to the Renewable Fuel Standard that would bump up the price of corn.

Kevin Skunes, president of the National Corn Growers Assn., said 2.5 billion gallons of ethanol demand have been waived over the last six to seven months, and the group believes refiners have already received delivery of their package. “It’s time for the administration to deliver to us and allow E15 to be sold all year-round,” Skunes said. Skunes noted that if the Environmental Protection Agency would stop issuing waivers to small refineries and instead provide a Reid vapor pressure waiver to allow for the year-round E15 use, it would go a long way in the corn marketplace.

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Washington Insider: Congress Faces September Budget Scramble

The Hill is reporting this week that Congress faces a September scramble ahead of an end-of-the-month deadline to avoid a government shutdown.

Lawmakers are scheduled to return to the Capitol today, giving them just a matter of weeks to clear spending legislation while juggling other high-profile fights like the confirmation of Supreme Court nominee Brett Kavanaugh.

Senators, who stayed in Washington instead of taking their usual August recess, have made quick work of their funding packages, passing nine out of the 12 individual appropriations bills. But, lawmakers still need to clear the remaining “political landmines” from several House bills, The Hill says.

GOP Sen. Richard Shelby of Alabama, chair of the Senate Appropriations Committee, acknowledged that “We’ve got a month. If the House cooperates, we can work together,” he said.

In the Senate, an agreement between Shelby and appropriations Vice Chairman Patrick Leahy, D-Vt., was used to keep partisan “poison pills” out of the appropriations process. House Republicans, on the other hand, used their bills to take aim at ObamaCare and abortion with measures that are non-starters in the Senate where Democratic support is needed to fund the government.

For example, Senators pigeonholed an amendment from GOP Sen. Ted Cruz of Texas that would have prevented D.C. from establishing its own individual mandate for health insurance. The House included a similar provision in their Financial Services bill, which funds the District.

The upper chamber also rejected an amendment from Sen. Rand Paul, R-Ky., that would have stripped Planned Parenthood of federal funding in legislation funding the Department of Health and Human Services. The House included such a provision in its committee-passed HHS bill.

GOP leaders in the two chambers have agreed on one issue, The Hill said. Both Senate Majority Leader Mitch McConnell, R-Ky., and retiring House Speaker Paul Ryan R-Wis., have indicated they want to wait to approve funding the Department of Homeland Security until after the midterm elections to avoid a potentially explosive fight over funding for the President’s border wall.

But that contentious issue looms over the broader funding bill. The President has threatened to veto spending legislation that doesn’t fund his proposal. Democrats have held out the prospect of wall funding as part of a broader immigration deal and are unlikely to lend their support without getting significant concessions in return.

Beyond policy riders, disagreements remain over key questions such as whether to bypass agreed-upon spending caps in funding a veteran’s health program.

And, even if Congress sends the nine bills to Trump’s desk, lawmakers will need a continuing resolution to fund those parts of the government addressed in the remaining bills past the end of September. The stopgap is likely to go into December but leadership hasn’t yet worked out the details of a short-term bill to fund part of the government until late December.

Senators are hoping to limit the short-term bill to the three bills that the chamber has not yet taken up: Department of Homeland Security, Commerce, Science and Justice and a bill for State and Foreign Operations but that package could swell if they are unable to get an agreement with the House on already passed legislation.

Shelby said that senators were trying to avoid a larger Continuing Resolution and that it boiled down to what sort of agreement they could get from the House.

Ryan, who is retiring at the end of the year, faces additional pressure from within his own ranks. Passing large spending bills with the support of Democrats is sure to rile House conservatives, who are already jockeying over who will lead their caucus in the next Congress.

Finally, the President has created another roadblock for Republicans. Earlier this year, amid backlash from his base, the president threatened to veto the omnibus legislation that combined spending bills for FY 2018 into one, and said he wouldn’t sign a similar piece of legislation again.

So, the Senate has put a premium on passing “minibus” packages, which roll a few bills into one and devoting weeks of Senate floor time to getting the funding measures cleared in the chamber where Republicans are eager to show they can govern.

“This is about omnibus prevention…” McConnell told the press. He added that the Senate has now passed legislation funding roughly 90 percent of the government and if they are able to conference their bills with the House before the end of September that could resonate with voters before the midterms.

So, we will see. Debates on many issues are enormously toxic this year, including trade policy, as well as the budget and spending. These all are high stakes fights for producers and should be watched closely as they continue, Washington Insider believes.

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