Washington Insider -- Tuesday

Tax Issue Intensifies

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

USDA Puts D-SNAP in Place in Texas

Texans recovering from Hurricane Harvey could be eligible for disaster food benefits from the USDA’s Supplemental Nutrition Assistance Program (SNAP) through the availability of Disaster SNAP (D-SNAP) announced today by the USDA and Texas Health and Human Services Commission.

Households that might not be eligible under regular SNAP rules may qualify for D-SNAP if they meet the disaster income limits and have qualifying disaster-related expenses, USDA said.

D-SNAP eligible households in the affected areas will receive two months of benefits, equivalent to the maximum amount of benefits normally issued to a SNAP household of their size, to meet their food needs as they settle back home following the disaster, USDA detailed. Texas Health and Human Services Commission will announce D-SNAP dates, and locations through the local media.

D-SNAP timing varies with the circumstances of each disaster, USDA said, but always begins after commercial channels of food distribution have been restored and families are able to purchase food to prepare at home. Before operating a D-SNAP, a state must ensure that proper public information, staffing and resources are in place.

US Chicken Industry Asks FSIS to Lift Limit on Poultry Line Speed

The U.S. chicken industry has petitioned the Food Safety and Inspection Service (FSIS) to lift the speed limit on bird processing lines for some plants. Processing lines face a 140-bird-per-minute limit, but the National Chicken Council (NCC), in a petition dated September 1 but made public Friday, asked for an exemption for plants that opt into the New Poultry Inspection System (NPIS), which is a more-rigorous food safety inspection program. NCC wants participating plants to be given "the flexibility to choose to operate at appropriate line speeds based on their ability to maintain process control," according to the petition, which was addressed to Carmen Rottenberg, acting USDA deputy undersecretary for food safety. To qualify for the exemption, the petition suggests plants also be required to take part in the Salmonella Initiative Program and establish a system for monitoring and responding to loss of process control.

Faster speeds will not endanger workers and would help maintain efficiency in light of increased inspection, the industry petition noted. It also said the change would incentivize more plants to participate in NPIS and serve to eliminate competitive barriers between the U.S. and international chicken producers. Any speed increases would primarily occur in areas of processing plants largely automated. “There are multiple safeguards in place to ensure plants continue to operate in compliance with federal worker safety requirements, regardless of the line speed at which they operate,” NCC said.

Washington Insider: Tax Issue Intensifies

Politico is reporting this week that in spite of the recent happy talk about bipartisanship in Congress, House Freedom Caucus leaders told White House officials last week that Republicans need to release a tax plan soon or the conservative group may put out one of its own.

Freedom Caucus Chairman Mark Meadows, R-N.C., and founding chairman Jim Jordan, R-Ohio, delivered that message Thursday to Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn, the top officials leading the tax effort for the White House. Mnuchin and Cohn, along with White House legislative liaison Marc Short, who was also at the meeting, do not want the group to release any text, fearful it will prevent Republicans from uniting behind one plan.

Later, Meadows downplayed the possibility that the group would actually release its own legislation, adding that the White House has assured him action is imminent. But conservatives are eager to deliver on a major campaign promise after the Obamacare repeal bill died in the Senate. And if that means forging ahead on their own, they’re not ruling it out, Politico said.

Meadows added: “Every day that goes by, there is less and less of a chance of getting it done before the end of the year. And so for us, it’s all about promoting real dialogue right away, and we’ve been assured real dialogue right away is forthcoming.”

White House officials would much prefer to not deal with Freedom Caucus dissent. But they're also concerned about keeping conservatives in the fold after Trump cut a budget deal last week with Senate Minority Leader Chuck Schumer, D-N.Y., and House Minority Leader Nancy Pelosi, D-Calif., startling his own party.

When Mnuchin met with Republicans on Friday morning and asked them to vote for the deal, he was jeered and hissed by the room.

Trump encouraged legislators to “hurry” on a tax plan in September. But debates are still ongoing between the House and the Senate on the specifics, including whether to allow immediate business expensing and deciding how much the corporate tax rate can be lowered. And Trump has repeatedly pushed for a 15% rate behind the scenes, even as some of his top advisers, including Cohn, say it is not mathematically possible.

The possibility of the Freedom Caucus going rogue on tax reform petrifies administration and Capitol Hill Republicans working on the issue, Politico says. GOP leaders believe that a single, unified tax bill backed by Trump, the House and the Senate is critical to success.

It’s the reason that Cohn and Mnuchin have been meeting weekly with House Speaker Paul Ryan, R-Wis., Senate Majority Leader Mitch McConnell, R-Ky., along with the GOP chairmen of the House and Senate tax panels, a group known as the Big Six. Conservatives also want a seat at the table and are eager to see a plan and influence the text. There’s a palpable fear that the Big Six will release a plan and try to jam conservatives — just as they did with health care.

“My conversations with the White House as well as the speaker are, ‘Let's make some decisions and start debating the merits of those rates and expensing models and everything that goes into a tax reform package,’” Meadows said. “To allow the Big Six or the Secret Six to negotiate something, then to give everyone a binary choice is not something that will necessarily represent a broad swath of the GOP conference.”

Conservatives are desperate for a win to show to constituents back home. An antsy Meadows ticked off six major tax reform questions that no one has answered, from the exact corporate tax to how business expensing will be handled. “Those are six items that you and I can’t answer, and if we can’t answer them, then we don’t have any idea what we’re doing on tax reform,” he said.

Meadows said there are several Freedom Caucus members crafting tax legislation. And Axios reported earlier this week that one such plan would lower the corporate tax rate to 16 percent — a much more aggressive cut than the Big Six believes Congress can achieve.

But the meeting appears to have persuaded conservatives to hold off—at least for now.

“The only way that a plan from the Freedom Caucus would be introduced is if there is inaction on behalf of the Big Six, and we’re still talking about principles weeks from now,” said Meadows, who argued that there was “no need” for his group to drop a plan at the moment.

“I’m not saying that I’ll never put out a bill,” he continued. “But as long as they put out a bill and negotiate in good faith over the next few weeks, there will be no Freedom Caucus bill or a need for a Freedom Caucus bill.”

So, the high pressure jockeying amount political factions seems to be intensifying very rapidly amid numerous distractions, including the NAFTA talks, the storm relief questions, the Dreamer wars and others. Most of these are important to producers and should be watched closely as they evolve, Washington Insider believes.

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