Washington Insider -- Thursday

Focusing Proposed Tax Cuts

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

Democratic Lawmakers Press on Labor Enforcement in Trade Pacts

Enforcement of labor obligations in trade pacts should be part of any broader effort to ensure that U.S. workers are not hurt by increased imports, Democratic trade leaders in Congress told administration officials in a September 19 letter.

Three key labor enforcement decisions are due in the next 30 days, according to the letter to U.S. Trade Representative (USTR) Robert Lighthizer, Secretary of State Rex Tillerson and Labor Secretary Alexander Acosta. How the administration approaches those decisions will whether it is committed to helping U.S. workers or "whether it is content to stand by and allow U.S. wages and working conditions to be eroded by foreign labor practices," the lawmakers wrote.

First, the letter noted how the Office of Management and Budget (OMB) has asked agencies to submit plans this month for long-term workforce reductions. If submissions do not ensure sufficient resources for enforcing international labor obligations or failure to fill vacant enforcement positions it “would suggest that the Administration is not committed to effective labor enforcement.” Agency budget submissions “will provide a clear indication of the extent to which the Administration is serious about labor enforcement,” the lawmakers argued.

Second, the lawmakers said they expected the administration to finalize labor proposals for North American Free Trade Agreement (NAFTA) renegotiations in September. The administration's labor proposals should include fully enforceable commitments backed by dedicated funds for workers’ rights in Mexico, they noted.

Finally, the letter called for decisive enforcement action against countries that do not comply with labor obligations in trade agreements. The Labor Department, in consultation with USTR and the State Department, is due to identify next steps on long-standing labor rights concerns with Colombia, the Dominican Republic, Peru and Honduras, they wrote.

Senate Finance Committee ranking member Ron Wyden, D-Ore., Finance Subcommittee on Trade ranking member Robert Casey Jr., D-Pa., House Ways and Means ranking member Richard Neal, D-Mass., and House Ways and Means Subcommittee on Trade ranking member Bill Pascrell Jr., D-N.J., sent the letter.

Top Indian Trade Official Presses US for Talks before Policy Forum

India's newly appointed Minister of Commerce and Industry Suresh Prabhu hopes to speak with U.S. Trade Representative (USTR) Robert Lighthizer via video-conference next week to "informally" discuss the agenda for the upcoming India-U.S. Trade Policy Forum (TPF), a senior trade official told Bloomberg BNA.

During the forum, India will raise issues such as the H1-B visa program for highly skilled workers and various export restrictions that Indian shipments are facing in the U.S., according to the official. The ministry requested the video conference after USTR said it plans to hold the TPF next month.

The countries were discussing the H1-B visa issue even before Indian Prime Minister Narendra Modi met with U.S. President Donald Trump in June, but the main negotiations were expected later. India wants U.S. to liberalize the H1-B visa regime, which provides a means for information-technology companies to send skilled workers from India to the U.S.

Washington Insider: Focusing Proposed Tax Cuts

Well, the proposed tax reform package is on everyone’s mind these days and the Washington Pose is reporting that the White House and GOP leaders are considering major changes in approaches, including scaling back plans for large-scale tax cuts for the wealthy. This is an effort by Republicans to win support from Democrats in Congress, three people briefed on the discussions told the Post.

The White House is considering, among other things, keeping the top tax rate for individuals at 39.6% thus reducing benefits top earners would see in the tax package. This appears to scrap an earlier proposal that would have cut that rate to 35%, the Post said.

White House negotiators are also considering giving up on a push to repeal the estate tax, which is levied on individuals who die with more than $5.49 million in their estates. Republicans have long called for repealing the tax, but Democrats have raised objections, saying repeal would benefit only the wealthy and would add to the federal debt.

The White House and GOP leaders are debating how to proceed and they could end up proposing changes to both the top tax rate and the estate tax, according to “three people” who also said that the White House and GOP leaders remain committed to reducing the corporate tax rate and delivering tax cuts for the middle class.

In addition, Senate Finance Committee Chairman Orrin Hatch, R-Utah, a key negotiator in the talks, said Tuesday that the plan as of now is “basically not cutting taxes very much for the wealthy. I think they want to do a middle-class tax cut — at least that's what everybody has said so far,” he said.

The President has sought to reframe the tax discussions as a way to help businesses and the middle class rather than just the wealthiest Americans. He faced criticism after details of an earlier version of the tax effort suggested that the majority of the benefits would go to the wealthy.”

At the same time, the Post said, “the reconsideration of major points of the proposal, just a week before GOP leaders have said they'll unveil a plan, also suggests there could be a flurry of late changes and reversals.”

The President has been consistent in his push to lower tax rates but has said he is flexible on the details, willing to accept whatever can get the most political support.

He met with numerous Democrats last week as he tried to lure centrists on board. A big sticking point for some Democrats was that any tax cut plan should be focused on helping the middle class over the wealthy. Trump’s advisers, many of whom are playing central roles in helping write the House and Senate tax bills, have been more sympathetic to calls for cutting taxes on the wealthiest Americans and it remains to be seen how and whether they will change their approach.

In Congress, Senate GOP leaders are taking steps that would allow them to eventually pass a sweeping tax cut plan with just 51 votes, nine fewer than normally needed to pass legislation.

Senate Republicans on Tuesday reached an agreement on a budget resolution that they could vote on as soon as next week. Details were not immediately released, but it is expected to allow Republicans to cut taxes by $1.5 trillion over 10 years, people familiar with it said. Senate Majority Leader Mitch McConnell, R-Ky., had previously said the tax cut plan probably would not add to the government's debt, but the new agreement would appear to allow for such a debt increase because of all of the lost revenue comes from lower tax rates, the Post said.

This marks a dramatic shift from past years, when Republicans blasted the Obama administration for not doing more to cut the deficit. Many Republicans say that large tax cuts will spur economic growth and that these benefits are more important than adding to the government's $20 trillion debt.

In April, the White House put out a one-page blueprint of its tax plan and the Tax Policy Center estimated that roughly half of all the tax changes would benefit the top 1% of all earners, with each person in that group receiving an average tax cut of $175,000.

Recently, the President said that the tax plan would not, on net, reduce the taxes for wealthy Americans, and he predicted that some could even pay more.

The White House and GOP leaders are planning to provide more information next week about their tax push, though they could leave out key details as they continue to negotiate with members of Congress. The White House is hoping a tax cut plan can be completed by the end of the year, and support from even a few Democrats could help to reach an agreement sooner, Washington Insider believes.

Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN’s Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the US Ag Policy, US Farm Bill and DTN Ag News sections on their News Homepage.

If you have questions for DTN Washington Insider, please email edit@dtn.com