Washington Insider-- Thursday
Biden Administration Policy Shifts
Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
Only One USDA Reg On Biden Review List
The incoming Biden administration plans a review of scores of regulations put forth by the Trump administration, many of them dealing with energy and climate issues.
USDA only had one regulation show up on the lengthy list – a rule on “Special Areas; Roadless Area Conservation; National Forest System Lands in Alaska.”
However, the biggest list of regulations that will be reviewed were from EPA with 48. One that ag interests will be watching closely is the definition of the definition of Waters of the United States that was issued in April as part of the Trump administration's actions to get rid of the WOTUS rule propagated by the Obama administration.
A total of 31 rules issued by the Interior Department will be covered by the review.
CFAP 2 Payments Move Up To $13.2 Billion
Payments under the Coronavirus Food Assistance Program 2 (CFAP 2) totaled $13.23 billion as of January 18, according to Farm Service Agency data, with 891,719 applications approved.
The total includes $6.2 billion in acreage-based payments, $3.42 billion for livestock, $2.36 billion for sales commodities, $1.2 billion for dairy and $56.1 million for eggs/broilers.
The total for CFAP 1 is put at $10.55 billion, including $5.05 billion for livestock, $2.66 billion for non-specialty crops, $1.8 billion for dairy, $930.1 million for specialty crops, and $119.7 million for aqua nursery flora.
The latest totals for the two programs do not appear to include any of the top-up payments to hog producers under CFAP 1 and producers were able to start amending their prior CFAP applications January 19 for additional assistance announced by USDA January 15.
Bloomberg, and others, are reporting this week that Janet Yellen could be in place as Treasury Secretary as soon as Thursday, even after her attempts to sell President Joe Biden's $1.9 trillion stimulus plan “faced early Republican opposition during her confirmation hearing.
The report said that Biden's pandemic relief plan — announced last week — would provide funding for states and schools, increase unemployment benefits, provide more generous economic impact payments, and increase the federal minimum wage. The breadth of the package was criticized by outgoing Senate Finance chair Chuck Grassley, R-Iowa, who called the plan a “laundry list of liberal structural economic reforms,” arguing that it isn't well targeted.
Yellen, former chair of the Federal Reserve, urged Congress to “act big” on stimulus and cautioned against economic “scarring” if it takes too long for more relief to pass. Additional aid, focused on small businesses and the unemployed, would provide “the biggest bang for the buck” to get the country's pandemic-hit economy back up and running again, Yellen said on Tuesday before the committee.
Investments in infrastructure and tax hikes on corporations and the wealthy could come later, Yellen also said.
Sen. Ron Wyden, D-Ore., who is poised to lead the panel, pushed for the Thursday timeline for confirming Yellen. She would be the first woman to assume the Treasury Secretary role.
“As we continue to deal with the worst economic crisis in a century, it's critically important that she be leading the Treasury Department as soon as possible,” Wyden said.
Three new senators — Jon Ossoff, D-Ga., Raphael Warnock, D-Ga., and Alex Padilla, D-Calif., — were sworn in on Wednesday. Padilla was chosen to replace Vice President-elect Kamala Harris, who recently resigned from the Senate. The newest senators will give Democrats control of the evenly split Senate — with Harris as the tie-breaking vote — and the power to move Biden's agenda forward.
Incoming Senate Majority Leader Chuck Schumer, D-N.Y., will be looking to Senate members who cross party lines from time to time to help him break through on expected stalemates. That group of Senators could include Democrats Joe Manchin of West Virginia and Chris Coons of Delaware, and Republicans Susan Collins of Maine, Lisa Murkowski of Alaska and Mitt Romney Utah, who had a hand in pushing forward the recent $900 billion virus relief package.
Morgan Stanley analysts, in a note on Tuesday, said they expect lawmakers to reach consensus on only “select provisions” of Biden's proposals, specifically, an increase in the corporate tax rate to 25% and a return of the top individual rate to 39.6%. They also expect a “modest increase in capital gains and qualified dividend tax rates” for people with incomes above $1 million. None of these changes are likely to happen immediately and the tax increases aren't expected to be retroactive, the analysts' note said.
The Trump administration recently released a recent barrage of moves against Beijing in its waning days, claiming that they are necessary to stand up to China's authoritarian leadership.
The last-minute policy moves mean the new administration is facing political pressures from a declaration that Beijing was committing genocide against Uyghurs and other Muslims in Xinjiang in far-western China. While some of the final decisions by the Trump administration were said to have been in the making for months, the timing of their rollout makes them easy to dismiss, the Times said.
However, Biden's pick to lead the State Department, Alex Blinken, told lawmakers at his Tuesday confirmation hearing he agreed with the designation of genocide relative to the situation in Xinjiang.
In the short term, the recent moves by the Trump administration may force the issues to the front of Biden's China agenda, regardless of his own priorities. This complicates the new administration's plans to maintain a combative stance on China over human rights and other issues while finding areas to cooperate and stabilize Washington's spiraling relationship with Beijing.
But the new administration also has said that it will first focus on domestic priorities and may not have the “bandwidth to maintain the confrontation with China that the Trump administration set in motion.”
Faced with the last-minute barrage from Washington, Beijing has so far demonstrated relative restraint. In recent weeks, the Chinese state media dismissed Pompeo as “crazy” and the “worst secretary of state in history.” However, it remains to be seen whether Beijing will take a confrontational or cooperative approach toward the Biden administration in its first days.
Beijing has made overtures to Biden, calling for a reset and greater cooperation between the two countries. But it has also spread new conspiracy theories connecting an American military lab to the coronavirus and pushed a nationalistic message that in the face of global challenges, “time and momentum are on China's side.”
Secretary Pompeo's move to shift key U.S. policies at the end of the administration looked more like efforts to challenge Biden to defy China regardless of the potential risks to Taiwan, the Times said. The shift “is designed to antagonize China,” said Drew Thompson, who was the Pentagon's director for China from 2011 to 2018 and is now a research fellow at the Lee Kuan Yew School of Public Policy in Singapore. It's not based on the mutually beneficial interests of Taiwan and the U.S.”
So, we will see. The new administration says it is determined to change the economic outlook and to provide effective support to the economy. These changes will affect most economic sectors and likely will be controversial — changes producers should watch closely as these debates emerge, Washington Insider believes.
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