Washington Insider -- Wednesday

Fight Avoided, Pentagon Budget Passed Senate

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

USTR Lighthizer Offers Harsh Trade Criticism of China

China represents an "unprecedented" threat to the world trading system, a threat that current world trade structures like the WTO are not equipped to handle, according to U.S. Trade Representative Robert Lighthizer.

"China is a threat to the world trading system that is unprecedented," Lighthizer told the Center for Strategic and International Studies in wide-ranging remarks on trade and the administration's views on trade policy. The U.S. needs to "make it expensive" for China and other trading partners "to engage in non-economic behavior" that hurts American companies and workers, he observed.

While admitting that macroeconomic developments are factors in the U.S. trade deficit, Lighthizer said the administration was still looking at all trade agreements the U.S. has to bring trade more into balance.

The Section 301 investigation into Chinese practices on technology could result in a formal complaint at the WTO even as Lighthizer also signaled the world trade body was not well equipped to handle China and he sought to downplay the potential for positive results out of an upcoming ministerial meeting. "If we turn up WTO violations, we'll bring them to the WTO," Lighthizer stated. "We're not precluded from doing that, by any means."

EPA's Pruitt: New WOTUS Rule to Come In First Quarter 2018

A new version of the Waters of the U.S. (WOTUS) rule will now not likely come until the first quarter of 2018, Environmental Protection Agency (EPA) Scott Pruitt.

The timeline has slipped from initial indications that it could come yet in 2016, but Pruitt said at the Concordia Annual Summit the new version will be proposed "sometime in the first quarter of next year."

EPA has also proposed rescinding the Obama-era WOTUS rule, proposing to put back in place the regulations that were replaced by the Obama-era rule.

Comments under that initial proposal are due September 27.

Washington Insider: Fight Avoided, Pentagon Budget Passed Senate

Politico is reporting that the Senate sidestepped controversy Monday and overwhelmingly passed a sweeping $692 billion defense policy bill for the new fiscal year.

It also noted that a handful of contentious proposals were scrapped without votes, which would have prevented transgender troops from being kicked out of the military, eliminated across-the-board budget cuts, barred indefinite detention of U.S. citizens and launched a new round of military base realignments and closures.

The annual National Defense Authorization Act passed 89-8. Still, this approval sets up what could be contentious negotiations with the House over a series of key policy differences on the must-pass legislation. The House passed its version of the bill in July.

Senate Armed Services Chairman John McCain, R-Ariz., who managed the bill on the Senate floor while undergoing treatment for brain cancer, had been pushing for votes on four key amendments dealing with defense spending, indefinite detention, Buy America requirements and restrictions on defense medical research. But with the chamber deadlocked on the issue, Senate leaders instead moved to finish the bill quickly.

However, in a full week of floor consideration, the Senate took just one roll call vote on an amendment — a procedural move to kill an amendment from Sen. Rand Paul, R-Ky., to repeal both the 2001 and 2002 war authorizations, he had blocked efforts to speed consideration of the bill in order to secure the vote, but those amendments were sidelined in a bipartisan move.

The amendment deadlock also blocked a vote on a proposal by Tom Cotton, R-Ark., that would have repealed sequestration, the procedural mechanism used to enforce spending caps set under the 2011 Budget Control Act. McCain and other defense hawks had sought a vote on the measure as a way of evading the caps and boosting the defense budget.

The measure also would have repealed the automatic cuts for domestic spending, making for a difficult potential vote for Democrats.

Other highly anticipated amendments scuttled included a measure from Sens. Kirsten Gillibrand, D-N.Y., and Susan Collins, R-Maine, pushing back on President Donald Trump's ban on transgender individuals serving in the military. Their amendment would have barred the Pentagon from discharging actively serving transgender service members based on their gender identity and would have mandated the review of the military's transgender policy being conducted by Defense Secretary Jim Mattis.

Instead, Gillibrand and Collins have introduced a stand-alone transgender troop bill that mirrors their amendment. And both McCain and Senate Armed Services ranking Democrat Jack Reed of Rhode Island have signed on as cosponsors.

McCain and Reed also pushed for the Senate to consider their amendment to authorize a new base realignment and closure round, but the measure drew considerable opposition from senators from both parties and key workers' unions.

The Senate did, however, adopt a package of more than 100 amendments offered by both Republicans and Democrats. The package included a proposal from Sens. Bill Nelson, D-Fla. and Cotton to prohibit the creation of a Space Corps, directly pushing back on a House Armed Services-led effort to create such a new military service in the Air Force.

The difference is likely to be a marquee issue when the House and Senate begin negotiations on a final defense bill.

Just before Monday's final vote, the Senate adopted a second package of more than 40 noncontroversial, bipartisan amendments.

The legislation authorizes approximately $632 billion in national defense spending, including the base Pentagon budget as well as nuclear weapons programs in the Energy Department — well above the $603 billion requested by the administration. The legislation also recommends $60 billion for a separate war account.

But both the Senate and House versions of the legislation recommend spending well in excess of caps set by the Budget Control Act.

For the new 2018 fiscal year beginning Oct. 1, the law authorizes $549 billion in base defense spending, not including war funding. For a major military buildup to become a reality, lawmakers will need to strike a deal to either raise or eliminate the caps on the defense budget, though a deal doesn't appear imminent.

"Sequestration would be triggered and ... this would be a very complicated situation," Reed said. "We would be giving money on one hand and taking it back with the other literally."

So, the Congress appears on track to complete work on at least one appropriations bill—with considerable bipartisan support. How far that agreement will extend to the other dozen bills remains to be seen, but should be watched closely as these debates develop, Washington Insider believes.

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