Washington Insider-- Tuesday

By DTN's Washington Insider

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

Agriculture Could Benefit from GOP Plans to Reform E-Verify Program

Rep. Lamar Smith, R-Texas, a member of the House Judiciary Immigration and Border Security Subcommittee, says he expects to reintroduce the Legal Workforce Act, a bill that would require employers to use the federal E-Verify program to ensure that their employees are authorized to work in the United States. Democrats on the subcommittee are calling for a broader reforms in the program.

The E-Verify program allows employers to electronically check an employee's I-9 form against government records to confirm that the person is eligible to work in the United States. (Form I-9 is used for verifying the identity and employment authorization of all individuals hired for employment in the United States, including both citizens and noncitizens.) E-Verify currently is voluntary at the federal level, but some states already have laws in place requiring employers to use it.

Panel member John Conyers, D-Mich., estimated that "somewhere between 50% to 70%" of the nation's roughly 1.4 million farm laborers currently are not authorized to work in the country. He said those workers would lose their jobs under a mandatory E-Verify regime, unless Congress also enacts an adequate guest worker program and comes up with a way to deal with undocumented workers already employed on U.S. farms. Smith's proposal places more emphasis on enforcement than Democrats prefer.

There continues to be a significant lobbying effort by agricultural employers and their trade associations to convince Republican members of Congress to reform immigrations laws in a way that will provide a more predictable supply of farmworkers. Whether Republicans can agree among themselves to separate farm from non-farm workers in an immigration reform bill remains to be seen.

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House Bill Would Require Agencies to Determine 'Indirect' Costs of Regulations

The House last week overwhelmingly (260-163) approved a bill that would require federal agencies to examine how their regulations would impose indirect economic consequences on small businesses. Current law requires agencies to assess only how proposed rules would impose direct economic costs on businesses.

The measure calls for agencies to calculate "any indirect economic effect (including compliance costs and effects on revenue) on small entities which is reasonably foreseeable and results from such rule (without regard to whether small entities will be directly regulated by the rule)."

There are predictions that if the bill becomes law, there will be quite a bit of disagreement in the future over whether a federal agency actually did take into account all economic effects that are "reasonably foreseeable" since "reasonably" can be such a subjective term.

Consequently, one indirect economic effect that is "reasonably foreseeable" under the bill is the anticipated cost of hiring attorneys to litigate whether agencies adequately foresaw all indirect costs.

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Washington Insider: The Ag Argument

There is a full-throated debate about to get underway now concerning the one-year old farm bill, and the most effective arguments needed to prevent the bill's benefits from being cut. The perceived threats come from both the left and the right. Although both Agriculture Committee chairs say President Obama's 2016 budget request for a $16 billion cut over 10 years in the federal crop insurance program is dead on arrival, there may be other threats to the programs as well.

For example, there is still deep anxiety about how the House and Senate Budget committees might react if the GOP-controlled Congress really gets aggressive on deficit reduction. As early as this week, the committees are scheduled to start reviewing elements of the overall request. The ag leaders hope, of course, that the Budget committees will write directions that leave actual amounts to be cut up to the committees if the House does pursue budget reconciliation.

One of program advocates' key concerns is the possibility that the Budget committees might target the subsidies now available for crop insurance. And crop insurance groups, farm organizations, bankers and others have been emphasizing their concerns to both Budget panels.

This is because the subsidies have grown larger since about the turn of the century. Congress then sharply increased premium support for comprehensive policies to persuade farmers to buy coverage — and allow Congress to escape the contentious business of providing ad hoc disaster aid. The 2014 farm bill expanded subsidies for some programs, and advocates fear these could be targeted for cutbacks.

They argue that farm bill is already aiding deficit reduction — by replacing the direct payment program — and that further cuts would weaken the programs. Critics question that assertion, and argue that the subsidies are unnecessarily high.

Rep. Paul Ryan, R-Wis., now chair of the powerful House Ways and Means Committee, has occasionally questioned the need for some of the subsidies and called for their reduction as one way to trim the deficit. That proposal did not succeed earlier, in part, observers say, because farm-state lawmakers argued that the House and Senate Agriculture committees would produce a large, 10-year savings in the 2014 bill. But early experience suggests the savings could fall below expectations.

For example, the Congressional Budget Office projected $16.6 billion in savings over 10 years for the 2014 farm bill, but the administration now is arguing that its own proposal for subsidy cuts is necessary to achieve the projected budget saving.

The coming debate likely will be bitter and contentious, if not especially long on facts. The bill has only been in force for a year, and is not fully implemented, so advocates can argue that it could still achieve the projected savings over time (although that argument likely will encounter tough going).

The sharp decline in market prices farmers now face for major commodity crops such as corn and soybeans likely will be more important in the political calculations. Still, this is probably the most challenging year for crop insurance in a very long time as Mary Kay Thatcher of the American Farm Bureau Federation recently told the Crop Insurance and Reinsurance Bureau's annual meeting in Florida.

"What makes this year so tough? Politics and money. There's a new set of legislators in Congress, and they want to cut costs…. [C]ompromise and bipartisanship –– which has always been critical to the passage of farm bills in the past — continues to erode. That's worrisome because lawmakers in the new Congress have already started making noise about saving money by breaking apart the various pieces of the farm bill…. How in the world would we ever pass another farm bill through the House of Representatives if that happened?"

Agriculture Secretary Tom Vilsack seems to agree with Thatcher and told the publication Politico "I don't think the idea of separating the [farm and nutrition programs] is going to be particularly effective. I think, frankly, it will make it much more difficult in the future for farm bills to be passed if, in fact, there is a separation.… The reality is we did get a farm bill through the process, and one of the few major legislative accomplishments of the last Congress, so I'm confident that in the future we'll continue to see farm bills passed."

So, the agendas that emerge from the congressional Budget committees could define key aspects of the debate. If those focus on the crop insurance subsidies, then there could turn out to be significant pressure for some cuts there, although it seems certain that very significant federal support for the crop insurance programs will remain.

The question of separating the bill into its main parts may turn out to be quite another matter. Congress went far down that road in the last bill, and more than a little of that sentiment seems to linger. At the same time, however, the American Farm Bureau Federation represents a powerful force in ag policy and its support as articulated by policy veteran Mary Kay Thatcher will be significant in the coming debate, Washington Insider believes.

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(GH/CZ)

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