Washington Insider -- Friday

By DTN's Washington Insider

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

Federal Renewable Energy Loan Program Expected to Turn a Profit

The Obama administration received some harsh criticism following the 2011 default on a $528-million renewable energy loan by solar panel producer Solyndra. However, the Department of Energy this week reported that despite Solyndra default, the federal government expects to earn between $5 and $6 billion from the renewable energy loan program. Those figures were calculated based on the average rates and expected returns of funds dispersed so far, paid back over 20 to 25 years.

So far, the Department of Energy states it has disbursed about half of the $32.4 billion authorized to spur renewable energy innovation. It says the earning results contradict the view that the United States has wasted taxpayer money funding failures like Solyndra. In fact, one hedge fund analyst told the press that a $5 billion return to taxpayers exceeds the returns from many venture capital and private equity investments in clean energy.

In spite of the earnings from the loan program, congressional critics continue to urge a switch away from government loans and grants to tax credits. However, tax credits are a notoriously imprecise tool for achieving national goals and are more likely to produce unintended consequences than loans or grants. Those arguments notwithstanding, Republican majorities in both chambers of Congress are likely to promote tax credits for the renewable energy industry over the next two years.

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Both Parties Agree that Nailing Down Fiscal 2015 Spending is a Top Priority

House and Senate leaders in both parties say they want to reach an agreement about the current fiscal year's spending as soon as possible, thereby avoiding any talk of a government shutdown that could begin Dec. 12.

Both current Senate Majority Leader Harry Reid, D-Nev., and soon-to-be Majority Leader Mitch McConnell, R-Ky., said a government-funding bill remains a top priority and that a bipartisan agreement to fund the government is achievable in the lame duck session.

McConnell stopped short of saying whether he would prefer another continuing resolution to provide funding into next year or an omnibus spending package that would finalize federal spending until next Sept. 30. Appropriators in both chambers are continuing to lay the groundwork for an omnibus bill.

Senate Appropriations Committee Chairwoman Barbara Mikulski, D-Md., said she is hopeful that whennthe current CR expires Dec. 11, "we will not be voting on a CR but voting on an omnibus." Mikulski and House Appropriations Committee Chairman Hal Rogers, R-Ky., are both urging their leaders to allow them to bring up the 12-bill omnibus and schedule it for passage in December. However, Mikulski and Rogers first resolve allocations for the individual 12 bills that would be contained in a $1.014 trillion omnibus package.

The expectation is that the two chairmen will be able to accomplish their goal of drafting an omnibus bill. The question is whether they can convince their leaders to bring it to a vote and their colleagues to approve it.

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Washington Insider: Watching the Foodie Agenda

Well, this promises to be an interesting year for agriculture. Sen. Pat Roberts, R-Kan., has been returned to Washington for another term and is expected to take over as chair of the Senate Ag Committee, after a very tough election victory in red, red state Kansas. Even so, he is sounding a little defensive, observers note. His agenda seems to be mostly about holding onto the current farm bill.

Roberts has something of an image problem since he actually voted against the latest farm bill. Some suspect he might support reopening that debate to seek larger cuts in food stamp spending. He also is on record as being critical of the commodity support prices the Act set that he thinks are "too high for some crops."

Roberts also notes that his "... first priority in the new Republican Senate is to repeal and replace Obamacare," On election night, he announced that he heard a message from voters: "I will be bold, I will be conservative and I will be constructive," he emphasized.

While Roberts seems to be digging in to defend the majority and the new farm law, a new effort has emerged to define is being called the "national food policy." A group of authors recently wrote an essay that appeared in Washington Post and are now mounting a petition campaign on the Internet that calls on President Obama to issue an executive order spelling out the new policy. The Union of Concerned Scientists is hosting the web site and says it wants a national policy that "will transform our food system to ensure healthy, sustainably grown food for all."

The group says it is getting real traction, and that in the first 24 hours the petition was on line, there were 16,000 "actions," such as signing the petition, said Ricardo Salvador, director of food and environment for the Union of Concerned Scientists and a co-author of the Post essay.

Salvador is telling the press that the petition is a way for getting onto the administration agenda. "This is the time to do it," during the final two years of Obama's tenure, he said. "This is something the president can do," he added, noting that such a policy is an area of long-time interest by the White House.

The other essay writers include author Michael Pollan, New York Times columnist Mark Bittman and Prof. Olivier De Schutter, the United Nations' Special Rapporteur on the Right to Food. Together, the four envision a White House council, created by executive order, that would develop and implement a national food policy and to coordinate the activities of USDA, the Department of Health and Human Services, the Environmental Protection Agency and the Food and Drug Administration.

"By elevating food and farming to a matter of public concern rather than a parochial interest, the president can make it more difficult for the interests of agribusiness to prevail over those of public and environmental health," they claim.

Aggies' general instinct is to laugh at this "roll call of foodies," according to one old time ag policy observer. And, they also are inclined to point to the recent election results to underline the futility of the Union of Concerned Scientists effort. As a result, Chairman Roberts may well be following the main chance if he continues his focus on implementation and oversight of the new farm bill.

There is another view, however, that takes note of the foodies' remarkable hold on students, the urban press and many others — and it claims a much broader vision. These groups are arguing that their "policy" is needed because there is so little vision among current ag leaders who focus on protecting the status quo. These include, especially, the subsidy programs, the fight against EPA, the push for the Renewable Fuels Standard and corn ethanol and the fight against World Trade Organization rulings. Against that "old agenda" they will urge care for the future, the environment, fair trade rules and sustainable ways to feed world of the future, ideas likely to appeal to a lot of people.

This proposed "policy" may well be seen as a modern replacement for the agricultural agenda, and one that could occur entirely outside the industry. In addition, the proposed White House Council to coordinate FDA, USDA, HHS and other departments who have a stake in the food system and public health could also mean weakening — or, replacing — the ag committees.

It is too early to ask how Chairman Roberts will confront this challenge. No doubt the ag groups will attempt once more to circle the wagons and mount a destructive campaign — possibly leading to further erosion of the industry's public image in an effort to protect its considerable budget.

Clearly, the need is for more positive dialogue and a wider debate open to all with a stake in the food system. But, that's hard and dangerous work. Nevertheless, the threat of the potential loss of the ag agenda is real, and, at least it should be taken seriously as it emerges, Washington Insider believes.

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(GH/CZ)

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