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.

Congress Set for Votes on Water Infrastructure Improvements

The House plans to vote today on a conference report that would authorize $12 billion for harbor and port dredging and flood control projects. Once that measure clears the House, Senate Majority Leader Harry Reid, D-Nev., says that chamber also would also consider the Water Resources Reform Development Act.

Users of inland waterways are praising the House-Senate conference report, and it has been getting a big push by various lawmakers and panels, including a document from the House Transportation and Infrastructure Committee.

Another provision of the bill would shift 85% of the cost of work on the Olmsted dam and locks project on the Ohio River to Treasury general revenues, thus freeing more than $100 million a year for spending on other priority projects, according to some estimates. Those priority projects include the restoration of outdated locks on the Upper Mississippi and Illinois rivers, key waterways in the movement of agricultural shipments.

Both houses of Congress appear ready to approve the legislation.

***

Senate to Take Another Run at Reviving Lapsed Tax Incentives

Senators reportedly met over the weekend in an effort to write a "tax extenders" bill that both parties could support. If sponsors can develop and pass such a package, it would extend over 50 lapsed tax incentives, including one for biodiesel production.

Earlier this month, a disagreement over the number and nature of amendments that could be offered on the proposal led to it being blocked from floor consideration. Sen. Orrin Hatch, R-Utah, the ranking member on the tax-writing Finance Committee, said earlier that any compromise with Democrats would need to apportion amendment votes equally between the parties and encompass "enough amendments" to satisfy Republicans.

Finance Chairman Ron Wyden, D-Ore., last week indicated that he would continue working with Republicans with the goal of bringing the measure to the floor perhaps as early as today.

***

Washington Insider: The Fight for Ag Policy Principles

If you thought the passage of the 2014 farm bill would put an end to that debate, you would have been way wrong. In fact, a new and extremely bitter fight has broken out — or, been amplified — between a group that calls itself Farm Policy Facts and the Heritage Foundation. Both groups are quite conservative and the Heritage Foundation recently published a report including Ten Guiding Principles for Agriculture — and thereby both set Farm Policy Facts on its ear and unleashed a storm of invective.

FPF says it is a coalition of farmers and groups that has education in mind. It lists on its web site several policy powerhouse groups that espouse heavy-duty government interventions, especially subsidies. The group includes the American Sugar Alliance, the National Crop Insurers and the National Cotton Council and several others.

The FPF group's rage is clear from its assertion that the Heritage Foundation's report departs from the "respected analysis Heritage was once known for" in favor of the "talking points of donors." Then, it really gets warmed up and charges that "over the years, Heritage increasingly starts with the answer to any policy question they want and then cherry picks information in order to arrive at their desired conclusion." So, as it turns out, Heritage was suspect all along, at least by FPF.

So, what has Heritage done now that warranted the white-hot FPF scorn? It included in its broadside of "principles" criticism of government intervention and support for free market reliance, including Principle Number Three: Subsidies are not necessary for Farmers to Succeed. Imagine that!

It also noted that "subsidized crop insurance can distort decisions by farmers because of their reduced risk and potentially encourage them to use land in ways that might be environmentally unfriendly.

In addition, Heritage asserts in Number Eight that: Free Trade in Agriculture Benefits Farmers and Consumers. It notes that trade opportunities are lost when Congress subsidizes domestic agriculture industries, thereby inviting other countries to respond in kind or even to retaliate if the United States is in violation of WTO rules. "While other countries will inevitably create protectionist schemes, taking comparable action only hurts American consumers by restricting competition and making it far more difficult to have free trade," says Heritage.

These seem to have hit FPF where it lives, since it has been easy to see FPF footprints in the recent debate. An example is the nearly constant assertion by the Sugar Alliance that there is no such thing as a free market. The Alliance inelegantly calls international sugar markets the "dump" market and it seems to have succeeded in pushing this view on members of Congress who frequently report with scorn cases in which other countries have boosted subsidies — even those whose interventions actually are quite small, far below ours. Certainly, the Heritage Principle #8 blasts that view and those policies.

In fact, this seems not to be a new battle, although the players may be different. As long ago as October 2002, the G.W. Bush administration opposed the $171 billion House version of a farm bill on the grounds that it would give too much money to commodity subsidies and not enough to other efforts. The administration's position set up what the New York Times called "a battle within the Republican Party over who would determine future farm policy."

The administration then urged the House to rewrite the bill and make it "better for rural America, better for the environment and better for expanding markets" and drew a bitter retort from Rep. Larry Combest, a Texas Republican who was then chair of the Ag Committee and the bill's chief sponsor. Combest called the administration's statement a personal insult, and asked "How could you dare do this to us?"

In fact, the Times reported, an open war had been building for several weeks and had included a preliminary round when Ag Secretary Ann Veneman told the Senate that there might not be enough money in the budget to pay for the House version. Eventually, that bill became law, passed over two presidential vetoes.

Larry Combest is no longer House Ag Chairman, but he and many from that group continue to actively support strong government interventions and high subsidies. Now, however, in addition to well-funded opposition from the Heritage foundation, FPF likely will run into strong criticism in terms of Brazil's evaluation of how well U.S. programs comply with its commitment to World Trade Organization rules and from Mexico as it responds to the sugar-led effort to enhance government supports for U.S. sugar producers.

Observers note that this FPF effort has so little interest in U.S. leaders' work to open foreign markets for U.S. products that it is pushing U.S. agriculture toward its most protectionist policies since the 1930s. However, unless those powerful commodity groups with rapidly growing markets overseas take more prominent pro-trade positions, any potential U.S. leadership in the trade area seems to be rapidly becoming a thing of the past, Washington Insider believes.

---

Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products, on the News Menu on Farm Dayta, and on the News and Analysis Menu of DTN's newest Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com.

If you have questions for DTN Washington Insider, please email edit@telventdtn.com

(CC)

Copyright 2014 DTN/The Progressive Farmer. All rights reserved.