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.

Congress to Face Major Decision on Federal Debt Ceiling Before 2016 Presidential Election

The Congressional Budget Office now says that with government spending and revenues at expected levels, Congress once again will need to increase the federal debt ceiling or face the prospect of a default by the U.S. Treasury. In fact, the latest CBO estimate concludes that the amount needed keep the government from potentially defaulting on its debt between spring 2015 and November 2016 could top $1 trillion.

Federal law requires Congress to approve any increase in the amount the Treasury is allowed to borrow to continue to fund federal programs and activities. The current federal debt limit was suspended through March 15, 2015, and will reset at a new, higher level on March 16, 2015. CBO last week said the debt subject to the federal debt limit would total $19.144 trillion on Sept. 30, 2016, the end of fiscal 2016, and only a few weeks before the November presidential election that year.

The prospect of yet another partisan congressional face-off regarding the need to increase the federal debt ceiling simply adds to the gloom and the likelihood of continued legislative inertia in the 114th Congress beginning in January 2015.

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Obama May Wait Until Lame Duck Session to Take Action on Immigration

President Obama and his aides appear to be stepping back from a firm commitment regarding the timing of any executive orders on immigration, with predictions by some that no action will be taken before this November's elections. A number of Democratic lawmaker are known to be concerned that any White House announcements concerning immigration that are made prior to Nov. 4 could cost them votes.

In remarks last week to reporters, Obama himself hinted at the possibility of a delay. "Some of these things do affect timelines, and we're just going to be working through as systematically as possible in order to get this done," the president said. "But have no doubt, in the absence of congressional action, I'm going to do what I can to make sure the system works better."

Josh Earnest, the White House press secretary, said Obama was "as determined as ever to take that kind of action on his own." But he and other White House officials declined to repeat the president's earlier pledge of an announcement by the end of this summer, or to say whether Obama was considering delaying some of his decisions until later this year. "Those who are speculating about how those recommendations might be implemented are a little ahead of themselves," Earnest said.

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Washington Insider: The Oregonian's Editorial on Trade

Trade has never been very popular in the sectors of the economy that face the most direct overseas competition, but it is generally understood that for the nation, the net benefits of trade are both positive and large.

Still, two other truths bob up from time to time. The first is that it is in the nation's best interest to help those that are facing overseas competition increase their job mobility in response to competitive pressures. Second, there are considerable numbers of observers who do not want competition and who go to great lengths to blame as many economic problems as possible on trade — even in spite of the fact that many of those problems would have emerged from purely domestic competition in the absence of trade.

Now, it seems that some believe that Senate Finance Committee Chair Ron Wyden, D-Ore., is a trade skeptic in spite of the fact that he is managing part of the U.S. debate over re-authorization of fast-track trade authority for the president and reauthorization of the Export-Import Bank that helps finance U.S. trade. The Portland Oregonian newspaper notes that these are the types of bills that once were approved routinely. However, Wyden now believes that "Trade has gotten to be more challenging in the last few years," as he told business leaders recently.

The Oregonian says it is not among the trade skeptics. It notes that "more than 20 years after Ross Perot warned that the North American Free Trade Agreement would create a "giant sucking sound" as the United States lost jobs, many Americans have decided he was right." The paper, however, in a recent editorial, pushes back. It counters that, "what trade agreements really have become is a convenient scapegoat."

The editorial continues with the assertion that "If there's a sucking sound in Oregon, it comes from the Port of Portland, which sucks jobs into Oregon that wouldn't be here without the export economy."

The paper cites a recent report for the Value of Jobs Coalition that concludes that 78,500 Oregon jobs in 2012 were directly tied to exports with more than 400,000 jobs indirectly created by international trade. It placed the value of goods exported from Oregon at $18 billion. Those numbers help Oregon consistently rank as one of the most trade-dependent state economies.

While global competition can put downward pressure on wages and outsourcing does re-route some jobs, "there's little doubt that Oregon would have fewer middle class jobs without the export economy."

Of the two high-profile trade issues pending in Congress, reauthorization of Trade Promotion Authority is the most important to Oregon, the paper continues.

For the most part, the Port is pointed in the right direction, it thinks. State and local government officials are putting the final touches on a Strategic Investment Plan agreement that should help keep the Oregon's No. 1 exporter, Intel, in Washington County for at least 30 more years. The state's second most significant export, grain, also received a recent boost when grain-handling companies and the International Longshore and Warehouse Union agreed to a new contract, the paper says.

The editorial gets into specifics by noting that most of Intel's exports, many of them components produced here and sent to other Intel facilities around the world, go by air. The state's other top exports primarily use the Port's marine facilities. "Maintaining the viability of those operations, including the container terminal currently torn by labor strife, must be a priority," it argues.

In summary, the paper says it expects that discussions about how to maintain and expand facilities to adapt to changing markets likely will be as contentious as labor talks. "But everyone on each side should at least concede that the Port is the catalyst that makes many of the Portland area's highest-paying blue-collar jobs possible. Maintaining those jobs is a lot easier than finding a way to replace them," it concludes.

So, it looks very much as if Ross Perot has struck out in Portland and Chairman Wyden may well have been handed a reminder that his skepticism about trade could face criticism at home that is better supported by facts than some of the anti-trade propaganda being bandied about.

In that connection, the administration needs to look closely at its trade record. It says it supports export growth, but is widely accused of being soft on support for fast-track authority, an essential negotiating tool if the lagging global trade talks in the Atlantic and Pacific are to be reinvigorated.

At the same time, however, Republicans have been all too happy to let Democrats struggle to build momentum toward passage of fast track renewal, which is essential as an instrument of agricultural market growth. However, its failure would erase any narrow political benefit from its defeat, Washington Insider believes.

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