Washington Insider -- Friday

Infrastructure Bill to Wait

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

Trump Sets up Infrastructure Council

President Donald Trump issued an executive order setting up an infrastructure "advisory council" under the Commerce Department that will have a maximum of 15 members covering areas like labor, finance and construction.

Agriculture is not included as of yet. Their charge: "study the scope and effectiveness of, and make findings and recommendations to the president regarding, federal government funding, support, and delivery of infrastructure projects in several sectors, including surface transportation, aviation, ports and waterways, water resources, renewable energy generation, electricity transmission, broadband, pipelines, and other such sectors as determined by the council."

The panel would be dissolved at the end of 2018 unless Trump extends it. Or it will disappear no more than 60 days after it offers a report on its conclusions to Trump.

US-China Agree on Rice Trade Protocol

The U.S. and China have reached agreement on a trade protocol that will facilitate sales of U.S. rice to China, USDA announced July 20

U.S. rice exports will be able to start once an audit of U.S. rice facilities is completed by China's General Administration of Quality Supervision, Inspection and Quarantine, USDA said, but gave no indication of how long that audit will take.

China imports over 5 million metric tons of rice annually and is the world's largest producer and consumer of the food grain. Even though they are still expected to import most of its rice from countries in Southeast Asia, U.S. industry officials indicated that there is potential for milled rice shipments to coastal areas of China where there are higher-income consumers and a brisk restaurant and hotel trade.

The new "protocol" is the most complex rice phytosanitary agreement the U.S. has negotiated with another country, according to the U.S. Rice Federation. The agreement contains an operational work plan that spells out the responsibilities of companies wishing to export in order to protect against the introduction of certain pests into China

"This is another great day for U.S. agriculture and, in particular, for our rice growers and millers, who can now look forward to gaining access to the Chinese market," USDA Secretary Sonny Perdue said in a statement. "This market represents an exceptional opportunity today, with enormous potential for growth in the future."

Washington Insider: Infrastructure Bill to Wait

There is lots of talk now about the agenda, since the Senate has cut its summer “home work period" short and the outlook for health care has clouded. For example, The Hill is reporting that the timing and fate of the President’s infrastructure plan may be held back and wait on whether, and when, the GOP enacts major tax reform, a task that could prove challenging amid the struggle to pass a healthcare bill.

As a result, Republicans seem to be signaling that the massive rebuilding package, which has long been one of their top priorities, will most likely have to wait on the sidelines until lawmakers overhaul the tax code.

But with that process likely to be just as time-consuming and daunting as healthcare, that could push infrastructure to a back burner, The Hill says. This is causing some anxiety in Republican ranks.

“I’d like to see infrastructure get done,” Sen. John Thune, R-S.D., the Senate’s No. 3 Republican and chairman of the Commerce, Science and Transportation Committee. “But I’ve always said, that in terms of how things are sequenced, it’s more likely that they would do tax reform first. And that might push infrastructure into sometime next year.”

Congressional Republicans are weighing their next legislative steps now after an effort to repeal and replace the Affordable Care Act stalled in the Senate. Majority Leader Mitch McConnell. R-Ky., said this week that the GOP would now be moving on “to comprehensive tax reform and to infrastructure,” though he is still pushing toward a healthcare vote next week.

But if the GOP does decide to pivot to tax reform or infrastructure, they face a big obstacle: not having a legislative vehicle for either. The President released a one-page outline on tax reform earlier this year, while House Republicans released a blueprint in June 2016 as part of Speaker Paul Ryan’s, R-Wis., “Better Way” agenda.

However, the White House seems to be further along on a $1 trillion infrastructure proposal, which it is expected to be released this fall. The administration laid out some details about its vision for the plan in his budget request and dropped more clues about the bill during an “Infrastructure Week” initiative at the White House. And, its push to upgrade U.S. roads, bridges and other public works has also been viewed as one potential area that could attract Democratic support.

But even with bipartisan interest and steady progress on the infrastructure proposal, there seems to be growing consensus, even among transportation advocates in Congress, that tax reform will come first, The Hill says. “You know I love infrastructure … but I think we have to do tax reform,” Sen. Deb Fischer, R-Neb., chairwoman of the Commerce subcommittee on surface transportation, told The Hill. “I hear that from Nebraskans as something that has to be done. We’ve talked forever about regulations and tax reform.”

Other Republicans have argued that they have to put infrastructure on hold because tax reform could provide offsets that could pay for the massive rebuilding program. But tax reform will be a heavy lift since GOP lawmakers and the White House are divided on some of the tools proposed.

Another hurdle is that Republicans want to pass tax legislation through a process known as reconciliation so that the bill doesn’t need any support from Democrats. But to use reconciliation, Congress first has to agree on a budget resolution, and some conservative lawmakers have already expressed reservations about the measure the House Budget Committee released Tuesday.

There is no guarantee that a fractured GOP conference can muscle tax reform over the finish line in Congress, and that raises questions about where that leaves infrastructure.

Putting off work on an infrastructure proposal until next year could move it into dangerous territory, as it can be trickier to enact major legislation in an election year. That’s why some Republican lawmakers would prefer to turn to a bipartisan rebuilding package next, which they believe would give the GOP their best shot at a desperately needed legislative victory before the midterm elections.

“I have a preference for infrastructure,” said Sen. James Inhofe, R-Okla., “It’s more bipartisan, and it’s something that the public wants more. I’m sure they want the tax stuff to be addressed, but not as much.”

Informa Economics observed this week that there is potentially one other very important issue that could be dealt with in the two-week period in August, and that is raising the debt limit. While that is not as flashy as repealing and replacing the ACA, it is probably the most necessary piece of legislation on the schedule. While the House will be out, leaders have indicated that if the Senate were to come up with a debt-limit plan, the House would call members back to act on it.

Removing this from the agenda ahead would show that the Congress can do something--and if done yet during August, would show they can actually do something before they absolutely have to, a very important signal.

So, this is a very important period for policies of many kinds, and one producers should watch very closely as all these competing proposals are defined and debates, Washington Insider believes.

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