Washington Insider -- Wednesday

The Growing List of Budget Issues

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

US, Mexico Finalize Sugar Suspension Agreement

Signing of a final sugar deal between the U.S. and Mexico took place earlier this week as both sides approved final amendments to the agreement, according to July 3 announcement from the Commerce Department.

The signed amendment to the Countervailing Duty Suspension Agreement on Sugar from Mexico updates the ratio of quantities of refined and other sugar that Mexico can export to the U.S. and the polarity content of the two types of sugar.

Secretary of Commerce Wilbur Ross and Mexico’s Undersecretary of Foreign Trade Juan Carlos Baker Pineda signed the finalized agreement on sugar, following the announcement of a preliminary agreement June 6.

"All major stakeholders have endorsed this deal brokered by Secretary Ross and Secretary Ildefonso Guajardo. The amendments will ensure that the sugar suspension agreements continue to promote stability in the U.S. sugar market, in coordination with USDA’s sugar program," the announcement said.

Brazilian, US Officials to Meet July 13 to Discuss Resuming Beef Exports

Talks between Brazilian and U.S. agriculture officials will take place July 13 in Washington on how to resume beef exports to the U.S., an official from Brazil’s Agriculture Ministry told Bloomberg BNA.

Following those initial discussions, Agriculture Minister Blairo Maggi and USDA Secretary Sonny Perdue will meet in Washington by the end of July — perhaps as soon as July 20 — to further discuss lifting the suspension USDA slapped on Brazilian beef imports in June, Luis Rangel, the Brazil's Secretary of Animal and Plant Health and Inspections, said.

"I believe that these bilateral meetings, along with ministerial changes in slaughterhouse meat cutting procedures and also in the ministry’s command and control over meat plant operations will improve product quality and allow Brazil to resume exporting fresh beef to the U.S. as soon as possible, perhaps within 45 days," Rangel told Bloomberg BNA.

The U.S. on June 16 suspended all imports of fresh beef from Brazil because of “recurring concerns about the safety of the products.” The suspension was triggered by abscesses found by U.S. inspectors. The abscesses were a reaction to front-end-region vaccinations against foot-and-mouth disease.

The talks had originally been scheduled for the first week in July but was pushed back to July 13 because of the July 4 holiday.

Washington Insider: The Growing List of Budget Issues

Bloomberg is reporting this week that Senate Budget Chairman Mike Enzi, R-Wyo., has no timeline for budget markup, and says he is waiting for health care to be resolved. At the same time, Republican leaders are making the “happy talk” about progress. House Budget Committee Chairwoman Diane Black, R-Tenn., said progress was being made in intra-party talks on a 2018 budget resolution as lawmakers headed into their July 4 break. “We are getting there," she told Bloomberg.

Black told the press that, “It's listening to each member, trying to decide where it is that we can find that sweet spot, and I believe that we are getting there.” She said her committee plans writing a budget resolution “that finds at least $200 billion over 10 years in net deficit reduction, a prospect that has raised alarms among moderate House Republicans,”

However, twenty members of the Tuesday Group, comprised of moderate House Republicans, wrote last week to Speaker Paul Ryan, R-Wis., warning “they may not support a GOP budget resolution until an agreement is reached with congressional Democrats on annual appropriations levels for fiscal 2018.”

“We believe that it is incumbent on the White House and Congressional leaders, both Republicans and Democrats, to reach an agreement that sets spending levels for, at least, FY 2018. This agreement could be immediately negotiated and paired with the vote to increase the debt limit that Congress faces late this summer or early fall,” the group continued. “In fact, absent such a bipartisan, bicameral agreement, we are reticent to support any budget resolution on the House floor,” the letter said.

In addition, requiring that cuts in mandatory spending programs be paired with a tax overhaul could “imperil” the latter, they wrote. Requiring savings of hundreds of billions of dollars was “not practical and will make enacting tax reform even more difficult than it already will be,” they wrote.

The group members also said efforts to overhaul the health care system should be resolved before proceeding to the fiscal 2018 budget. That effort is stalled in the Senate, where Republican leaders had hoped to vote on a repeal bill before the July 4 break.

Bloomberg cited the committee's communications director, William Allison, who reported on Saturday that “Chairman Black is working to complete a budget agreement that the entire conference can support.” A group of conservative and libertarian House Republicans called the Freedom Caucus has said the $200 billion target for deficit reduction is too low and they want additional cuts.

Experts say that the Budget outlook is murky on the Senate side, as well. Enzi has yet to say when he hopes to mark up a budget resolution. His committee didn't mark up the fiscal 2017 resolution in January, which was used to spin off the Affordable Care Act repeal legislation. That budget differed little from the current law baseline in its projections, including a $1.009 trillion deficit in 2026 and public debt rising to $29.126 trillion that year. “What we have to do is finish the health care bill and then we can finish up the 2018 budget,” Enzi told Bloomberg last week. “I'm trying to do a 2018 budget while I'm trying to do health care. That's enough to drive you nuts!”

Enzi said that unlike the January budget, he intends to mark up a budget resolution for 2018 in his committee and expects differences between it and a House resolution will have to be hammered out in conference.

So, the Congress faces a growing number of really tough issues on the budget, health care and the debt limit, among other things, and, some of its willingness to tackle these issues head on when it returns later in the summer could depend on what it hears most forcefully back in the home districts. The major issues are seem politically toxic just now, and seem to continually defy solution. In addition, these concerns all very significant to agriculture, and producers should watch each one carefully as it evolves, Washington Insider believes.

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