Washington Insider -- Monday

By DTN's Washington Insider

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

Congress Returns this Week with FY 2015 Spending Still Unresolved

The 15-day (maximum) lame duck session of Congress will get underway officially on Wednesday, with one of the major remaining issues being the appropriation of federal spending for the 2015 fiscal year that began Oct. 1. The government currently is operating under a continuing resolution that maintains spending at more-or-less the same levels that applied to FY 2014, but the resolution expires Dec. 11, meaning both chambers will need to act in the next five weeks.

Senate Appropriations Committee Chairwoman Barbara Mikulski, D-Md., and House Appropriations Committee Chairman Hal Rogers, R-Ky., both have said they don't want another CR, but they are likely to be disappointed.

Their idea is to approve an omnibus appropriations bill encompassing spending for most departments through next Sept. 30. However, with the Senate set to switch to Republican control next year and House Republicans to gain an even larger majority in 2015, the expectation is that Congress will approve another CR and leave it to those new majorities to deal with the details.

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Congress Will Consider Tax Incentive Extenders in Lame-Duck Session

The Republican takeover of the Senate is not expected to affect the prospects renewal of the nearly 60 expired tax breaks, known as "extenders," a top Democratic aide for the Finance Committee said at last week's National Tax Conference sponsored by the American Institute of CPAs.

Todd Metcalf, chief majority tax counsel, said the switch of the committee's top leaders from Democrats to Republicans would not alter their goal of passing extenders in 2014. The Finance Committee already has agreed to a two-year deal and is waiting on House action, probably through a broader year-end measure to keep the government operating, whether that is through an omnibus appropriations bill or a continuing resolution.

If the two-year extension is retroactive one year, as lawmakers have envisioned, the extenders would expire again well in advance of any comprehensive tax reform. There are indications that House Republicans will choose instead to extend at least some of the tax breaks indefinitely, rather than for two years. Whichever route Congress takes, it needs to do so soon, says the Internal Revenue Service, warning that failure to do so will delay its processing of 2014 tax returns.

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Washington Insider: New Day for Fast Track?

As members of Congress return to Capitol Hill for a lame-duck session and the GOP looks toward taking control of the Senate next year, business groups are renewing calls for congressional action on fast-track trade authority for the president. Still, significant labor and environmental interests are reported to be drumming up opposition to the authority.

Business Roundtable President John Engler told the press last week that Congress has an "immediate opportunity" in the lame-duck session to give U.S. negotiators essential tools to seal trade deals. The National Association of Manufacturers and U.S. Chamber of Commerce also called for action on fast-track, formally called trade promotion authority.

Still, Mike Dolan, Teamsters' legislative representative, told the press that fast track "won't go anywhere during lame duck or the new session." He argues that policymakers and the public alike "rightly view it as an abdication of Congress' authority and responsibility when it comes to shaping trade policy for the benefit of working families." He noted that a broad coalition of labor, environmental and consumer groups sent over half a million petition signatures to congressional leaders opposing TPA.

So, the issue is still mired in politics but many observers say they are more optimistic about TPA renewal in the next session of Congress. For example, Senate Minority Leader Mitch McConnell, R-Ky., who is expected to become Senate majority leader next year says he is a strong proponent of TPA and has frequently said that Republicans' strong election gains will give them a solid majority to, among other matters, promote trade deals. Current Majority Leader Harry Reid, D-Nev., opposed the authority although the administration nominally supported it.

In the Senate Finance Committee (which has jurisdiction over the issue), ranking member Orrin Hatch, R-Utah, who is expected to be committee chair in the 114th Congress says that "whether TPA is addressed during the lame-duck session is ultimately up to Democratic leadership," but he seems to think it might. He argues that the pending "bicameral bill to renew TPA would gain strong support in the Congress if it were to be taken up today." Hatch had earlier introduced the Bipartisan Congressional Trade Priorities Act to renew TPA with then-Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Committee Chairman Dave Camp, R-Mich.

Still, the politics of fast-track are deeply complicated. Sen. Ron Wyden, D-Ore., the current Finance chairman, argues that the authority must reflect 21st century challenges, such as the digital economy. Public Citizen, a dedicated opponent of fast track, argues that outgoing Chairman Wyden's efforts to rewrite the authority could have broken the impasse in the House where fast track faces a "significant bloc" of Republican opposition and "virtually no House Democratic support." The group says it thinks that "not having Wyden as Senate Finance Committee chairman actually decreases the chances that Obama will ever get a delegation of trade authority" after this session of Congress.

At this time, McConnell, who frequently claims that Republicans' sweep of Senate races reflects voters' rejection of Obama's policies, also says that he still will try to strike agreements with the White House where possible –– and, he has indicated that this could include efforts to enact comprehensive tax reform and promote trade. Current Majority Leader Reid even agrees, to an extent. He says "The message from voters is clear: they want us to work together. I look forward to working with Senator McConnell to get things done for the middle class."

Whether that includes the lame-duck session remains to be seen, although McConnell is saying that he will be working with Reid on which items the Senate can clear during the November and December session. "Reid is still the majority leader," he told the press last week. "The immediate discussion is what we should try to wrap up." Both sides appear intent on moving some type of spending bill to cover the remainder of fiscal year 2015 appropriations spending when a current continuing resolution expires Dec. 11.

However, it would be a surprise if fast track does not come up quickly in the next Congress.

In spite of the Public Citizen rhetoric, most trade experts believe that fast-track is an essential negotiating tool that allows Congress to set negotiating objectives while the executive branch manages the tough negotiations. This gives the executive confidence that anti-trade forces will not be able to derail any deal without an up-or-down Congressional vote. Even with that authority, the current free trade agreement talks will be hard slogs, especially with Japan and the European Union.

Still, both are potentially important to support the development of better access to growing ag markets and should be watched closely as they proceed, Washington Insider believes.

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(GH/CZ)

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