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.

Congressional Leaders Zero in on Details of Omnibus Spending Bill

House and Senate leaders have begun lobbying their colleagues to vote for a massive omnibus spending package even before they have assembled all the details of the bill. Time is of the essence since current legislation that is keeping money flowing to the federal government expires at midnight Thursday.

House Speaker John Boehner, R-Ohio, has been meeting with House Republicans to brief them on the details of the roughly $1 trillion spending plan hammered out during a final round of talks between House and Senate appropriators. Just as importantly, Boehner is seeking to gauge support for the measure that is expected to go to the House floor later today. While some conservatives are likely to withhold their support for the package, Boehner's leadership team is said to be working hard to ensure that there will adequate Republican votes to go along with the expected votes of Democrats.

Both parties in both chambers want to avoid any threat of a government funding lapse that would result in at least a partial government shutdown. However, there are enough policy riders that have been added to the omnibus to raise concerns among some members. If Congress fails to approve the omnibus by the Thursday deadline, the expectation is that leaders will have a short-term continuing resolution that would allow funding to continue while negotiations go forward.

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Business Community Looking Forward to Republican-Controlled Congress

The new, Republican-controlled Congress that will be seated in January will offer a great opportunity for the U.S. Chamber of Commerce to move legislation providing regulatory relief for its members, according to chamber President Thomas Donohue.

With the chamber's leadership, many regulatory relief bills were passed out of the House and there was a great deal of interest by some in the Senate, said Donohue. "And the new Senate will be more interested, in my opinion, in this opportunity," he added during a recent speech to chamber members.

According to Donohue, federal regulatory agencies have grown so powerful over the last two decades that they can resist oversight by Congress and the courts. And he claimed that agencies are writing new rules and imposing billions of dollars in new costs with little or no scrutiny or meaningful input by stakeholders and the public, he said.

Donohue's expectations are in concert with the predictions of many Capitol Hill observers who believe that 2015 will include many congressional efforts to repeal or roll back federal regulations across a wide swath of the U.S. economy. How successful these efforts will be remain to be seen, given Senate Democrats' ability to filibuster GOP legislation and the president's ability to veto it.

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Washington Insider: Farm Bill Fixes and Costs

It is not surprising that a bill as extensive as the 2014 farm bill would turn out to have features that nobody intended, and which may need fixing later on. This is somewhat dangerous because there are many opponents who also are eager for change, but disagree with the advocates of the legislation — and, may invoke rules to complicate otherwise easy corrections.

In general, committees do not re-do bills that simply cost more than expected unless the cost overruns become excessive. Still, the recent Act has so many critics that almost any overrun will attract not only criticism, but also actual proposals to cut back on programs.

Now, analysts are reporting that livestock program payouts under several new programs are running far beyond budget expectations. It turns out that costs of the Livestock Forage Disaster Program and the Livestock Indemnity Program are exceeding budget estimates made during the debate. In fact, it seems that the forage program could cost more in its first year than Congressional Budget Office analysts expected for the entire five-year life of the program.

In addition, it turns out there is an unexpected aspect of the new cotton program causing concern. With cotton prices below the crop's price support loan rate, producers are worrying that the cotton payments may be large enough to completely fill their payment cap without leaving room for other crops they may produce. This is because loan deficiency payments now count against the caps, a new feature of the 2014 Act.

Producers say this means they are left without a safety net for crops other than cotton, and they would like to change that provision. Critics, of course, point out that payment limits are intended to provide effective caps on farm payments, and, they may not be eager to boost a limit many see as already generous.

There also is expected to be challenges to provisions of the crop insurance program from the administration which likely will once again recommend cuts in crop insurance subsidies. Last year, the administration proposed cutting the rate of return to cooperating insurance companies from 14 percent to 12 percent, and also to impose a cap on administrative and operating reimbursements at $900 million per year.

The White House also has proposed cutting crop insurance premium subsidies for some policies in the past, with potential savings of significant amounts. In fact, most analysts cite administration sources in suggestions that the administration has already decided once again to recommend crop insurance program cuts when it makes its fiscal 2016 budget requests early next year.

Most presidential budgets are dead on arrival at the Congress, even if Congress agrees generally on the direction of any particular proposal, so new proposals to reduce support for cooperating insurance companies likely will face strong headwinds.

What may well be more important in the short run is the attitude of the rank and file of the new Republican majority toward the budget. In spite of the fact that these members seem dedicated to budget cuts large and small, somewhat similar groups in the past have given a pass to farm programs — even though they have repeatedly taken shots at the farm bill nutrition programs.

Nevertheless, farm program advocates are busy pointing out that some of the budget cutting frenzy has passed, now that the economy has a little better tone — and that future farm bills are likely to bloom regularly once again, as they did in the past. Well, maybe.

Still, there were a lot of bruised egos after the last debate over the allocation of benefits among crops, the rhetorical hammering of the nutrition programs and the embarrassing failure to really identify meaningful nutrition program cuts as well as the very short shrift given to trade. Now, if the new Act turns out to be far more expensive than expected at the same time some of the bigger winners want to press for even more costly "fixes," the budget hawks may take greater notice.

The bill was passed earlier this year largely because it claimed, believe it or not, a savings, in CBO terms. The more that those "savings" turns out to have been an illusion, the more intense the budget focus on future cuts may well become, Washington Insider believes.

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(GH/CZ)

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