Washington Insider-- Thursday

Budget Bill in Limbo as Deadline Looms

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

Tax Incentives’ Extension Package Being Discussed

Congressional leaders and senior White House officials are discussing a major tax incentive extension deal. Negotiations accelerated on a deal that could balloon to $800 billion. Senate Majority Leader Mitch McConnell, R-Ky., said Congress would finish work on “either a couple-a-year tax package or a more robust tax package.” McConnell added, “I lean toward the latter and I hope we can achieve that.”

Importantly, Senate Democratic Leader Harry Reid, D-Nev., wants a big deal as well, hoping to achieve several policy goals that eluded him last year when the White House blew up a tentative deal. Reid said Tuesday the talks have gained new momentum. Reid said, “These tax extenders, many of them are good for business, but those that are good for business are also good for everyday Americans, and each year we do that, they’re not paid for with rare exception. So I don’t know what people are talking about,” he said.

Key to a bigger deal would indefinitely extend the research and development tax credit and the Section 179 deduction for small-business expensing, two Republican priorities also supported by pro-business Democrats. The package would also make open-ended expansions of the child tax credit, the earned income tax credit and the American opportunity tax credit, central pieces of President Obama’s 2009 stimulus package.

Sen. Reid revealed that House Minority Leader Nancy Pelosi, D-Calif., did not raise any objections about the cost during a conversation he had with her Monday evening. On the tax legislation, Pelosi wants to index the $1,000 child tax credit to inflation, though it is unclear if she will prevail. Pelosi also supports other who want to ensure that GOP efforts to make some business tax breaks permanent are matched by permanent extensions of tax credits for low-income families.

Some House Democrats said on Dec. 8 that if those demands are not met, they will be willing to walk away from efforts to make a slew of temporary tax breaks permanent and instead end up simply extending them through the end of 2016.


Conferees Still Ironing Out Differences on Customs Bill

Provisions related to climate change, currency manipulation and temporary duty reduction protocols are among the remaining disagreements in a broad customs enforcement bill currently being negotiated between House and Senate conferees.

The bill, known as The Trade Facilitation and Trade Enforcement Act of 2015 (HR 644), intends to modernize customs procedures and enforcement, modify existing dumping and countervailing duty statutes, give U.S. enforcement agencies broader power to go after customs evasion and initiate other changes which will benefit trade.

“We are not there yet. That’s why we’re here today. If all goes well, the final package will include a number of provisions that improve the enforcement of U.S. trade laws, including strong tools to prevent evasion of antidumping and countervailing duties,” Senate Finance Committee Chairman Orrin Hatch, R-Utah, and a conferee said of the state of negotiations.

Measures to strengthen Trade Promotion Authority (TPA) and encourage greater U.S.-Israel ties, as well as trade preferences which would favor Nepal are also topics of discussion among the conferees. Democrats are keen to include provisions to combat currency manipulation by classifying it as a type of countervailing subsidy, while Republicans would like measures which would clarify TPA while preventing changes to immigration law or imposition of greenhouse gas emissions limits.

For their part, Democratic conferees are concerned that the proposed climate change provisions could “prevent us from negotiating provisions like common fuel efficiency standards – a very real possibility in our ongoing negotiations with Europe right now,” according to Rep. Sander Levin, D-Mich.

Another point of contention are provisions in the bill related to the miscellaneous tariff bill (MTB) process, included in the Senate version of the bill but not in the House version and opposed by House Speaker Paul Ryan, R-Wis. The MTB temporarily suspends duties on a variety of products, such as chemicals used in US manufacturing but not produced domestically. Republicans who oppose the MTB process accuse it of being similar to earmarking.

Other disagreements include those over changes to human trafficking in TPA which Democrats say are too weak in the House-passed bill, as well as differences over the process the US Customs and Border Protection uses to investigate accusations of evasion of antidumping and countervailing duties along the border.


Washington Insider: Budget Bill in Limbo as Deadline Looms

You might think that deal concerning next year’s federal budget is largely taken care of, because there have been so many pledges not to force another government shutdown. Still, as the current deadline continues to approach, Politico is reporting growing concern that no deal has been struck. House leaders are bracing for a long week, a potential weekend session and more negotiations next week. Still, all the groups involved are chafing at the delays.

By midweek, the House is seen as likely to vote Friday on a short-term government funding measure to avoid a shutdown, giving Speaker Paul Ryan and House Minority Leader Nancy Pelosi more time to negotiate.

It is clear that the two sides are far from any final agreement, and Ryan’s top aides say they will keep talking until they find one, although Politico emphasizes that it is getting late in the year, and lawmakers are getting anxious to get out of town for the holiday recess. Pelosi says she will skip a congressional trip to Paris to accommodate the ongoing talks.

In addition, the press is beginning to pick up on what it calls internal GOP rifts. While Speaker Ryan and House Majority Leader Kevin McCarthy, R-Calif., say they are determined to wrap up a yearlong spending bill now, the conservative House Freedom Caucus is floating the possibility of pushing the spending fight into next year. The group argues that the holiday-season time crunch is hurting the GOP’s leverage in negotiations with Democrats.

The federal government officially runs out of spending authority on Dec. 11. However, the House Freedom Caucus is digging in on concerns about security screening for Iraqi and Syrian refugees and wants to include that language in the spending bill over White House opposition.

House Republicans also say they want to add language to tighten controls on visa-free travel in the US, a proposal that the House adopted by bipartisan vote on Tuesday and which the GOP also wants to include in the spending bill.

These and a few other dust-ups are causing the majority to defend its push for controversial riders as the clock ticks down. “We know that we’re going to get it right, instead of getting it done fast,” Ryan said Tuesday. “We are not going to waive the three-day rule [for considering legislation]. We’re going to make sure that members of Congress, and therefore the public, have the time to read what is agreed to. But we’re not going to let the arbitrary Dec. 11 deadline stop us from getting this right. We’re going to get the best agreement we can possibly get, and those negotiations are ongoing.”

Ryan and McCarthy now are saying they may attempt to pass a short-term spending bill that keeps the government open for a “handful of days,” Politico says, and they will reassess as the week goes along. “We don’t expect to do this for a long term,” Ryan said. “We need to get it right. I don’t want us to go home until we get this done.”

Right now, the leadership is facing some push-back on Speaker Ryan’s position. For example, Rep. Matt Salmon, R-Ariz., said he would like Congress to approve a six-week, stopgap spending bill to give more time to try to force Democrats to accept the language to tighten restrictions on refugees, and thinks that several members of the Freedom Caucus would vote for the omnibus if it included this language. However, senior Republican leadership aides doubt that is true, Politico says.

“A lot of us aren’t completely understanding why in the world, given the fact that we had a veto-proof majority on the vote on the individual bill [regarding refugees], why in the world we wouldn’t include it in the [larger spending] bill,” Salmon said.

Democrats say they’re waiting for Ryan to move. “It’s up to them. We were moving along, but now it’s totally up to them,” said Rep. Nita Lowey of New York, the top Democratic appropriator.

It is clear that Ryan does not want to see the government shut down at this early point in his leadership. Neither do the Democrats, but both sides have a number of high priority policy positions that they feel they must have before they agree to compromise. So, the negotiations continue to be bitter and tough and the stakes high and growing. Certainly, the fight is far from over, and should be watched carefully by producers as it evolves, Washington Insider believes.

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