Washington Insider -- Wednesday

By DTN's Washington Insider

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

Critics Hit USDA for Slow Start to New Farm Programs

President Obama signed the 2014 farm bill last February, and critics now are wondering why USDA has not yet written and implemented rules for the new programs. After all, they say, it's been four months!

USDA officials say the initial three farm bill priorities are: (1) implementing the livestock disaster program provisions; (2) getting the new cotton STAX program up and running; and (3) implementing the beginning farmer programs. But other key features likely will not be finalized until the 2016 crops are planted, a full three years into a five-year farm bill. Talks with USDA officials say this timeline and complexity on several issues was made known to farm-state lawmakers and Ag Committee staffers during the 2014 farm bill process. But some congressional sources challenge that assessment.

Time constraints, other program priorities, data availability and technology implementation are just some of the reasons USDA officials cite as the reason for the phase-in period for some new farm program features. Remember that it took Congress more than two years to write the complex new law. Perhaps Capitol Hill critics should be more understanding of USDA's problems with implementing that law, even if it has been four months since the president signed it.

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Tax Holiday for Multinational Companies Would Cost Treasury $95 Billion: JCT

A tax holiday for income that multinational companies earn abroad and bring back to the United States would cost the U.S. Treasury some $95.8 billion over 10 years, according to a new estimate from the congressional Joint Committee on Taxation (JCT).

Republican Senator Orrin Hatch of Utah, the ranking member on the Finance Committee, said the cost of repatriating the estimated $2 trillion in foreign earnings that multinational companies are thought to be holding overseas "is not in the best interest of the American people nor for the coffers of the federal government."

Normally, U.S.-based multinational corporations must pay a 35% corporate tax rate when they bring back foreign earnings. As a result, corporations have found ways to prolong the process. House Ways and Means Chairman Dave Camp, R-Mich., is proposing to change the rules on taxation of multinationals that would include ending the deferral of corporate earnings and create a one-time lower tax on repatriated earnings. Paying for Camp's plan will prove challenging for House Republicans.

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Washington Insider: The Ag Appropriations Floor Fight

There is a somewhat strange debate brewing in the House this week. After the farm bill has passed but before USDA has had a chance to implement its very complex features, some advocates are chafing at what they see as "delays," and are generating strong worries about threats from a floor debate on ag appropriations under an open rule. Whatever the situation, world class chills are being generated throughout the farm political community.

It is hard to see exactly what led to this state of affairs, but it apparently began with an effort to waive nutrition standards for some schools and require the Women, Infants and Children nutrition program to subsidize purchases of white potatoes. The nutrition standards had become moderately unpopular but were still supported by nutrition advocates and obesity opponents who fret that the waivers could critically weaken the child nutrition programs." The farm groups have become increasingly concerned that this fight might lead to much broader attacks on the Act's new programs.

This kind of debate on an ag appropriations bill is something of a rare event since it would be the first time the House has debated an Ag spending bill on the floor since 2011.

In the meantime, more than 30 farm groups have written House members to strongly oppose attempts to use amendments to the spending bill to reopen farm programs--any farm programs.

Perhaps the most interesting aspect of the current kerfuffle is that it is pressing program advocates to firm up a case that many critics say was not really made during the debate. In response, supporters are arguing that the ag committees held dozens of hearings and a long and intense debate. Some forty hearings were held, they say, and the bill was, in one fashion or another, debated nine times on the House and Senate floors.

Still, criticisms persist over the fact that the bill was cast as a "savings" bill when it only terminated the direct payments program after it became so widely criticized that it was not even considered for renewal. And, there was criticism that CBO evaluated a nearly $1 trillion spending bill as offering significant savings so that committees could provide an expensive new safety nets without hunting for offsetting cuts. And, there were criticism that this was done for a sector with strong cash flow, very low debt and a rock solid balance sheet at a time when most sectors of the US economy faced very hard times.

These and other criticisms have led at least some critics to argue that the hearing process, extensive as it was, was more political than analytical and left many questions lightly examined, including those regarding long-term impacts of the new program choices on sector growth.

Still, advocates are pulling out most of the stops now in an effort to reassure Congress that the 2014 Act was not only carefully vetted but is essential for much of rural America. "We can deal with natural disasters--what we need is protections from the "devastations that Washington lets loose from time to time," advocates argue.

So, it is not clear what the program advocates expect just now or what they see as the source of any expected attack. In the meantime, new critics are suggesting that the groups are building on a perceived threat to push for additional objectives including a broadened sweep of regulations and environmental proposals. There also are suggestions for "relief" from "topsy-turvy" trade deals where "agreement after agreement is stalling as "trading partners in some instances try to turn reciprocal trade flows into one-way streets"--seen by trade advocates as yet another push against competitive trade and support for greater protections.

Right now, it is not clear which critics are on the other side of this debate. Clearly, the nutrition battle has its own participants and a fairly narrow focus. In a broader sense, at least some of the advocates of farm bill reform have pled farm-bill fatigue suggesting that the new Act needs at least a trial, and that it is politically dangerous to push hard for new reforms just now--so there seems to be something of a cease fire on that front. In fact, there are suggestions from some that the farm groups may find themselves geared up for a fight to which "nobody comes." Still, these are high-stakes issues and should be watched carefully as they emerge, Washington Insider believes.

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