Washington Insider -- Friday
Fixing the Aging Waterways System
Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.
OECD Trade Officials Mum on Trump Trade ApproachTop world trade officials have said little publicly on the Trump administration's approach to trade issues during the Organization for Economic Cooperation and Development (OECD) forum in Paris.
Officials from Australia, Denmark, the European Union (EU), Argentina and Canada met with U.S. Trade Representative Robert Lighthizer on the sidelines of the OECD meetings and while not pleased with the U.S. view on multilateralism, they still signaled they wanted strong trade relations with the U.S.
Lighthizer listened to their concerns, participants told Bloomberg BNA, but it was clear that the Trump administration's priority is to defend U.S. trade rights. A highly anticipated first meeting between Lighthizer and EU Trade Commissioner Cecilia Malmstroem clarified little about the future of U.S.-European trade relations, participants noted, and no clear view on the Trump administration's intentions regarding the U.S.-EU Transatlantic Trade and Investment Partnership (TTIP) were offered by Lighthizer.
Enforcement matters and World Trade Organization (WTO) disputes such as China's nonmarket economy proceeding were the main focus for Lighthizer, sources said. China has targeted both the U.S. and the EU for failing to change their antidumping rules, and if Beijing wins the cases, it could upend the Commerce Department's stiff tariffs on Chinese imports of steel and aluminum.
Speaker Ryan Keeping Options Open on Debt Ceiling
No options are being left on the table for House Speaker Paul Ryan, R-Wis., as he aims to extend the Treasury Department's borrowing authority – the debt limit – before Congress begins its August recess.
Ryan commented on the matter on the same day as the House's second-ranking Democrat, Rep. Steny Hoyer, D-Md., said Democrats are willing to support a hike in the debt ceiling, but only as long as it is not attached to objectionable “poison pill” policies. Hoyer also said he agreed with requests by Trump administration officials to deal with the issue before the August break.
The Treasury Department has been using various accounting maneuvers to avoid breaching the $19.809 trillion congressionally set limit since March, when the last suspension of the debt limit expired. Those measures, combined with the annual influx of spring tax revenue, are expected to allow the Treasury to keep selling debt and fund the government for several months.
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The process Republicans will take to again suspend the debt limit or even lift it directly is unclear, especially as Republicans in recent years have been content to allow Democratic Party leaders to bring most of the votes needed.
“I'm not foreclosing any option at this time,” Ryan said June 7 after the House Republicans’ weekly party meeting. “We're having those kinds of conversations, not with just our members, but with Democrats and with the other side of the Capitol Rotunda, over in the Senate.”
The debt limit will not be breached, Ryan said, though he declined to say when action must be taken to avoid that. “We're having long, ongoing conversations with our members about how to address this and we'll address it before we hit the debt limit,” he remarked.
Washington Insider: Fixing the Aging Waterways System
President Trump’s initial infrastructure proposal Wednesday was of keen interest to U.S. agriculture, Informa Economics is reporting this week. The President came to Cincinnati to push his new initiative and USDA Secretary Sonny Perdue introduced his speech. Informa says that although questions remain about the details of the program and how it will work, it is expected to leverage $200 billion in public funds into $1 trillion infrastructure support over 10 years through new public-private partnerships.
Perdue, in his introduction, commented that the investment would generate $88 billion in new wages for U.S. workers. "That increases the GDP by more than a percentage point, which is significant; that's 1.2 million jobs across America," Perdue stated.
The U.S. needs "safe, reliable and modern infrastructure" to help address needs to help move U.S. agricultural products to market, President Trump said, noting that 60% of U.S. grain exports move through locations in the Gulf of Mexico via US waterways. "These critical corridors of commerce now must depend on a dilapidated system of locks and dams that is more than half a century old," Trump said. "There is an $8.7 billion maintenance backlog that is only getting bigger and getting worse."
Utilizing and "forging new public-private partnerships is the key component to the plan,” the President said. He also said that the U.S. needs "the best, fastest and most reliable infrastructure anywhere in the world," and the waterways system is a central part, he noted. However, these facilities have been "allowed to fall apart, causing delays and preventing the United States from achieving its economic potential."
Reaction to Trump's appearance was broadly positive, Informa said, though some cautions also were noted. The Waterways Council clearly approved of the investment plan. “Our country has not seen this kind of leadership on infrastructure since President Franklin D. Roosevelt’s 1930s New Deal to build our locks and dams or since President Dwight Eisenhower led construction of the National Defense and Interstate Highway system. "Today, Presidential leadership was demonstrated once again by emphasizing the importance of the inland waterways transportation system and this critical national infrastructure with the backdrop of the river itself.”
However, others pointed to the lack of details that have yet to be provided by the administration on how the plan will work. In unveiling the Fiscal 2018 budget plan, Transportation Secretary Elaine Chao pledged a more-detailed plan would come in later this year.
The administration noted that the effort would be marked with four key areas, including a mixture of grants and loans to "transformative" projects; grants to rural areas to repair bridges, roads, and waterways; enhanced loan programs, with the Transportation Infrastructure Finance and Innovation Act providing an example of how federal funds can be used with state, local, and private dollars to fund projects; and incentive programs with grants to states and municipalities to create additional funding for infrastructure.
However, rural lawmakers and others often expressed concerns about the public-private partnership prospects, noting that they often do not work as well in rural areas compared to urban areas because there is less financial potential there to support investment.
Informa also raised questions about exactly how such a private-public system might work. It said that there can be “positive ways to leverage government spending,” but long-time observers stress they have to be done in the right way. In addition, it pointed out federal program “inconsistencies” including budget plans to raise fees on inland waterways users and shifting funding for other areas.
So, it will be important to see the details of the plan and how the elements are structured to meet current and anticipated future needs. There is no doubt that the waterways system has been in need of expensive repairs for some time.
It also is true that budget hawks in the administration and the Congress are attempting to utilize the system’s capacity for self-financing to an important extent, a direction the system has been reluctant to take in the past.
As a result, it is certain that the administration’s current proposal will be examined closely as its details emerge to make sure it works as intended to provide the necessary capacity for future growth and efficiency, Washington Insider believes.
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