Washington Insider-- Friday
Biden Policy to Focus on Middle Class
Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
Senate Adopts Organizing Resolution Allowing Committee Roles Set
The Senate unanimously adopted an organizing resolution that sets the ground rules for a chamber evenly divided between the two parties and officially gives Democrats control of committees after two weeks of talks.
The chamber is split 50-50, and Democrats hold the majority because Vice President Kamala Harris can break any tie votes. Senate Minority Leader Mitch McConnell, R-Ky., said the deal is almost identical to a 2001 agreement and “will allow the Senate to be fairly run as an evenly split body.”
McConnell announced the Senate Republican committee assignments for the 117th Congress. He said newly elected Sens. Roger Marshall, R-Kan., and Tommy Tuberville, R-Ala., would join the returning members of the Senate Agriculture Committee, making a total of 11 Republican members.
December DMC Payments Triggered By Price Margins
Dairy Margin Coverage (DMC) payments for December 2020 are triggered for some coverage levels as the national average margin for December was at $8.78 per hundredweight.
That will trigger payments for Tier 1 margin trigger coverage levels of $9 of 22 cents per hundredweight and $9.50 margin trigger coverage levels of 72 cents per hundredweight.
DMC payments are triggered when the difference between the National all milk price and the National average feed cost (the margin) falls below the producer selected margin trigger, ranging from Tier 1 from $4 to $9.50, and Tier 2 from $4 to $8, calculated monthly.
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President Joe Biden's “foreign policy for the middle class” is less pithy than Donald Trump's “America First.” But for a world trying to gauge the new U.S. leadership, and an electorate with an uneasy relationship with globalization and other disruptive economic forces, it may be just as consequential.
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Bloomberg reports this week that Biden's “promise to the world” is reengagement, whether on issues from which the U.S. has been absent, such as climate change, or in multilateral institutions his predecessor sought to blow up, such as the World Health Organization.
But National Security Adviser Jake Sullivan and other senior aides are also making it clear that it doesn't portend a return to a pre-Trump model.
The big idea is that Washington had gradually shifted toward the interests of “corporations and investors,” the same economic grievance that Trump harnessed: “the elites sold us out.” The consequences of that perceived betrayal are seen as rising inequality, stagnant median household incomes, and employment shocks caused by the rise of China and technological change.
In the wake of Trump's victory, some graduates of the Obama administration including Sullivan embraced the idea that U.S. policymakers had failed for too long to acknowledge the fallout from globalization. Thus, Obama team members joined some centrist Republican policy veterans to devise alternatives.
Among the efforts was the establishment of a bipartisan task force under the auspices of the Carnegie Endowment for International Peace, a Washington, D.C., think tank where Obama's former commerce secretary, Penny Pritzker, chairs the board of trustees with a goal of creating a foreign policy that works better for the middle class.
The group involved officials now in senior roles in the Biden administration: Salman Ahmed, a member of Obama's National Security Council and Sullivan, who advised Biden on national security matters when he was vice president. Among other things, the group called for the drafting of a “national competitiveness strategy” to coordinate public and private investment.
One overarching theme was the need for greater coordination between foreign and domestic policy to support a better job of equipping U.S. workers with the skills they need to adapt to shifts in the labor markets. In some cases that means international priorities taking a back seat to domestic ones, an idea the Biden administration has endorsed early on.
“We have to put ourselves in a position to deal with the challenges around the world,” from the “great power” battle with China to nuclear proliferation, Sullivan told a Jan. 29 U.S. Institute for Peace forum in which he repeatedly emphasized the need for a focus on domestic problems. “I don't think you are going to see this administration trade off the bread-and-butter economic issues for strategic priorities,” he said.
What a foreign policy for the middle class will mean in practice remains an open question, and spokespeople like Sullivan and Ahmed are still declining requests for interviews, Bloomberg said. But other members of the Carnegie task force insist that what the Biden administration is pursuing is more than just a reframing of past internationalist policies or a relabeling of Trump's “America First.”
In a recent “listening session,” researchers traveled to Colorado, Nebraska, and Ohio to sound out middle-class Americans on topics ranging from defense spending and foreign aid to trade and tariffs.
What they heard was neither great enthusiasm for Trump's brand of protectionism nor the slavish devotion to free markets that came before, says task-force member Tom Wyler, who served as Pritzker's top international economic adviser at the Commerce Department and now works for her investment firm, PSP Partners LLC.
That means the world ought to be ready for a U.S. that has a sharper view of its own economic interests, Wyler says.
Also emerging from the task force's work was a recognition of past missteps. In hindsight the proper U.S. response 30 years ago to globalization fueled by China's rise, the growth of the internet, and the rapid decline in transportation costs would have been a congressionally mandated flood of public investment in education, infrastructure, and R&D, says task force member Christopher Smart, an alumnus of the Obama National Security Council who's now chief global strategist at investment bank Barings. “Is that a realistic scenario of what could have happened? Probably not,” he says. “But it's probably what should have happened.” So why not make it happen now, as Biden has proposed?
A preview of Biden's approach could be found in the documents accompanying a “Buy American” executive order the president signed on Jan. 25. The decree itself did little more than close loopholes that allow exemptions from rules requiring federal departments to buy U.S.-made products. But the press release also noted the administration was “committed to working with partners and allies to modernize international trade rules.”
That also could be read as a preamble to a broader discussion about subsidies, an issue that's sure to come to the fore as governments search for ways to boost domestic production of strategic materials.
Some progressives seeking a broader remake of U.S. policy and institutions, such as the WTO, worry Biden will focus too much on wooing allies. “I hope it won't just be that—four years of soothing people's ruffled feathers,” says Thea Lee, head of the progressive Economic Policy Institute. Then again, Lee adds, the crises Biden inherited offer opportunities. “It certainly creates the space for building something new.”
So, we will see. These are high-stakes policy decisions that producers should watch closely as the new Trade Regime is debated and begins to be implemented Washington Insider believes.
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