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.

Comprehensive Tax Reform Will Wait Until 2017: McConnell

Senate Majority Leader Mitch McConnell, R-Ky., has made it clear that he has no plans to bring comprehensive tax reform legislation to the Senate floor before President Obama leaves office in January 2017. "We're certainly not going to be able to be doing big, comprehensive tax reform with this president," McConnell said during an interview with the publication Morning Consult. "The president is not interested in revenue neutrality, and he's not interested in treating all taxpayers the same, so I don't think we'll get there on comprehensive" tax reform.

Senate Republicans now will focus instead on a number of bipartisan bills between now and the August recess. Those include a significant rewrite of No Child Left Behind, a cybersecurity bill and a measure to reform the Toxic Substances Control Act.

Now that Democrats are in the minority in the Senate, they can be expected to make life difficult for McConnell, just as he and his Republican colleagues did when the GOP was in the minority. If that proves to be the case, it remains to be seen how much legislative work the Senate will be able to conclude before the summer recess begins on July 31.

***

TPA Supporters within 'Striking Distance' of Success

Trade Promotion Authority supporters in the House are within "striking distance" of having enough votes to pass a TPA renewal bill but are "not quite there yet," House Ways and Means Committee Chairman Paul Ryan, R-Wis., recently told reporters. "We're picking up votes every day," Ryan said, with additional undecideds "falling the right way."

TPA, a key legislative priority of President Barack Obama as well as the House and Senate Republican leadership, would allow the president to submit implementing legislation for trade agreements to Congress for a straight up or down vote. The Obama administration wants the expired authority renewed for the pending Trans-Pacific Partnership (TPP) and other trade deals. Ryan voiced confidence that enough yes votes would be secured to ensure passage this month. "This is a June project as far as we're concerned," he told reporters.

The affirmative votes of at least 217 House members will be required to pass the bill. Currently, unofficial potential vote counts in favor of granting TPA to the president range between 190 and 210 Republicans and 20 to 25 Democrats. If, during the floor vote, it becomes clear that the measure will pass, expect a number of Democrats to change their votes during the 15-minute voting period so that the measure is approved with only a few votes to spare.

***

Washington Insider: Energy Policy Tensions

Well, the dust is settling some following the administration's high-wire act over the ethanol mandates. In the meantime, Agriculture Secretary Tom Vilsack has been busy arguing that the new $100 million USDA program to build more blender pumps to distribute multiple grades of ethanol is proof of White House advocacy. The secretary notes that there now are some 17 million flexible fuel vehicles on the road that can use higher blends above the 10% "blend wall."

His argument seems something of a hard sell in farm country, especially among producers who wanted higher mandates, in addition to more support for blender pump construction. It also runs head-on into the widely-known downside to reliance on the sophisticated pumps and, that is their cost, which is more than $100,000 per pump station, experts say, depending on whether underground tanks must be replaced. Minnesota, where Vilsack was for a while last week, now has 48 blender pump stations, more than nearly every other state but advocates would like to see many more — perhaps blender pumps at every service station.

In the short term, Vilsack said he thinks the blender pump grants can relieve some of the financial pressure brought by low commodity prices and the bird flu epidemic that has killed millions of chickens and turkeys, along with the generally weak agricultural markets.

The long-term reward for publicly subsidizing construction of the pumps, Vilsack said, is a growing source of biofuels that cost consumers less than regular gasoline.

That would depend on access and supply, Vilsack noted. Currently, it remains difficult for drivers to find stations that offer E15 and especially hard to find E85. One answer the costly "blender pump" that offers any of three grades of ethanol: E10, E15 and E85.

Meanwhile, Vilsack is working hard to reduce the administration's visibility in the ethanol battle by arguing that that the fight is not between the White House and the ethanol industry. It is between the renewable fuel's advocates and oil companies that prefer to sell only conventional gasoline.

He argued that the administration has encouraged biofuel made from nonfood crops and piloted a program for a biofuel additive that can be put in jet fuel. Meanwhile, oil companies have launched "a broad-based attack" in the courts and Congress, Vilsack said.

The secretary seems especially troubled by ethanol's sharply declining support from environmentalists — which Vilsack complains is based on "outdated studies." "A gallon of ethanol competes with a gallon of oil in environmental impact," he said, adding that the export market for American-made biofuels is growing.

As for concerns expressed by some consumers that higher percentages of ethanol will hurt vehicle engines, Vilsack said consumers continue to buy the product for flexible fuel vehicles.

In fact, national energy policies are highly confused now. Grain producers continue to support strong mandates, but livestock and dairy producers have ramped up their opposition. Basic U.S. energy economics have changed sharply as reliance on imports from the Middle East has declined sharply at the same time the once-persistent upward trend in gasoline consumption has weakened.

In addition, the promised technology to produce ethanol from cellulosics has proven costly and elusive, undercutting the former assumption of a long-term shift to renewables that would not affect food supplies. These changes and others have diminished the former bipartisan support for higher ethanol blends to the point that the administration felt compelled to "adjust" the mandates.

The result for the industry is increasingly complex political positions, and a nearly constant struggle to justify what formerly was a "no brainer" for political support. The eventual outcome of all these shifts is far from certain.

There seems to be no real appetite in Congress for a full-scale re-evaluation of renewable fuel policies yet, but the stresses and strains surrounding every aspect of the policies and programs are evident, and make the jobs of Secretary Vilsack and most of the state agriculture secretaries around the country increasingly difficult.

This is a debate that is just beginning and which should be watched carefully as it proceeds, Washington insider believes.

---

Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN's Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the U.S. Ag Policy, U.S. Farm Bill and DTN Ag News sections on their News Homepage.

If you have questions for DTN Washington Insider, please email edit@telventdtn.com

(GH/CZ)

Copyright 2015 DTN/The Progressive Farmer. All rights reserved.