Washington Insider - Friday

GOP Struggles Over Budget Strategies

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

US Lawmakers to Warn Japan That Expanding Pork Subsidy Would Cost TPP Votes

Some U.S. lawmakers are set to send Japan a letter opposing a planned expansion of a Japanese pork subsidy program. The letter will be sent to the Japanese ambassador arguing that the plan will cost votes for the Trans-Pacific Partnership (TPP) in the US Congress if it is not modified.

“Programs that artificially stimulate pork production in Japan such as the one under consideration, will increase opposition to TPP here in Congress,” according to the draft letter being circulated by Reps. Pat Tiberi, R-Ohio, and Brad Ashford, D-Neb.

“We request you to decouple the government assistance from production. We sincerely hope that your government and ours will be able to find a mutually acceptable solution that will prevent the loss of crucial votes for TPP when its fate is decided by Congress,” the letter concludes.

Tiberi sits on the House Ways and Means Committee and Ashford is one of the 28 House Democrats who voted for fast track last year.


Former USDA Official Sees Possible WTO Issue on Cottonseed Safety Net Matter

Should the U.S. opt to declare cottonseed as an “other oilseed” under the 2014 Farm Bill provisions, the decision would increase U.S. subsidy payments and likely prompt a World Trade Organization challenge by Brazil, according to former USDA Chief Economist Joe Glauber.

Glauber, now a senior research fellow at the International Food Policy Research Institute (IFPRI), noted the estimated $1 billion annually that could be paid out by making cottonseed eligible for the safety net programs – Ag Risk Coverage and Price Loss Coverage – would be put into the category of being an “amber box” payment and that could prompt Brazil to pursue a challenge at the WTO. In remarks at the American Enterprise Institute in a session to review 2014 Farm Bill, Glauber said, “I don’t know how a WTO panel would rule on it, but that would be the vulnerability.”

The $1 billion figure is based on estimates by University of Illinois economists, Glauber noted, and echo those signaled by USDA recently when USDA Secretary Tom Vilsack told reporters USDA lawyers have indicated he does not have the legal authority to declare cottonseed an “other oilseed.”

Meanwhile, Iowa State University’s Bruce Babcock offered his views on the 2014 subsidy programs, saying the changes to the farmer safety net programs were more about getting dollars to farmers than managing risk.

“Congress designed the programs to allow farmers to maximize the payments they would get,” Babcock noted, adding that cost estimates for the ARC and PLC programs were based on prices that were forecast to be higher than they have been since the implementation of the farm bill.


Washington Insider: GOP Struggles Over Budget Strategies

The only single thing the Congress absolutely must do every year is pass a budget. Even if nothing is changed from the previous year, the budget must be passed or the government cannot legally operate. However simple that may seem, budget fights have been the key stumbling block in recent years and caused the downfall of House Speaker John Boehner, R-Ohio, as recently as last year.

The new Speaker, Paul Ryan, R-Wisc., was promoted in an effort to control those confrontations that fight and still hopes to do so, but The Hill reported on Wednesday that the Republican leadership is stepping up talks with rank-and-file members in the face of “growing tensions within the GOP about how much to spend,” The Hill says but the bitterest fights are often about so called “policy riders” that sometimes are attached to these bills.

The recent budget news includes increasing reports of Congressional discord amid outreach by House leaders as they an attempt to unite its increasingly disjointed members around budget figures negotiated last fall by the White House and then-Speaker Boehner, The Hill said. That deal agreed to a specific cap on government spending while eliminating the across-the-board cuts known as “the sequester” in the upcoming year. However, some fiscal hawks, particularly those in the House Freedom Caucus, say they want to cut as much as $30 billion from that figure.

House Majority Whip Steve Scalise, R-La., is planning several listening sessions for members as the party attempts to define its fiscal blueprint for the upcoming year. Speaker Ryan, a former Budget Committee chairman, plans to attend some of the meetings. In addition, the budget will be the main topic of discussion at a conference meeting today.

Any breach of the Obama-Boehner agreement would force the President and GOP leaders back to the drawing board. It also would be widely seen as a major threat to Ryan (who is just four months into his leadership post) and to Senate Majority Leader Mitch McConnell, R-Ky., who has vowed to oversee a smooth budget process this year.

When asked about the budget discord on Wednesday, Ryan twice declined to say whether he would stick to the Obama-Boehner numbers. “I’m not going to get into all the details of how the budget comes down,” Ryan told The Hill.

One day earlier, House Appropriations Committee Chairman Hal Rogers, R-Ky., said he plans to stick to the budget caps. But a GOP leadership aide said shortly after Rogers’s comments that negotiations were still incomplete. House Budget Committee Chairman Tom Price, R-Ga., declined to comment on Tuesday.

Ryan dismissed any trouble with the GOP’s budget plans in his press conference Wednesday.

“This is a familiar conversation. I was chair of the Budget Committee for a number of years. We’re having the same kinds of conversations with our colleagues that we have every year. The only difference is we’re having it in February instead of April because we want to get ahead of schedule,” he said. “I’m confident that members will sort this thing out.”

The outcome of the budget fight is important to all parties involved, observers note. Approving a joint budget resolution in Congress would also give Republicans the power to pass certain bills without the threat of a filibuster in the Senate and send the legislation to the president’s desk. That tactic, known as budget reconciliation, was used to pass a repeal of ObamaCare last year, which the president vetoed.

It is assumed in some quarters that the current budget struggles constitute a serious challenge to Speaker Ryan as he struggles to build the majority’s credibility with a smooth legislative operation this year. And, while it is too early to tell what will happen this year, Ryan is demonstrating skill and experience in the face of powerful political pressure. Still, the current budget fights likely will be important for producers and should be watched closely as they proceed, Washington Insider believes.

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