Washington Insider -- Monday

Offsetting Disaster Aid

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

Ag and Food Lobbyists Urge FFAR Renewal in Farm Bill

Add another topic that farm and food industry lobbyists want full funding for in the new farm bill. A coalition of more than 100 groups wrote House Agriculture Committee leaders to urge them to reauthorize and fund the Foundation for Food and Agriculture Research (FFAR). The National Coalition for Food and Agricultural Research said the foundation, created by the 2014 Farm Bill, has been instrumental in coordinating and funding research on important agricultural questions. FFAR has leveraged the $200 million it was allocated by Congress in the 2014 Farm Bill to fund more than $400 million in grants, the coalition said, noting the group deserves funding in the next farm bill.

Some sources report a possible decline to $100 million for FFAR funding in the new omnibus farm bill, with some sources saying the amount could be $150 million, still down from the prior level. "FFAR matches every one of its public dollars with non-federal funding, meaning it delivers huge value for American taxpayers," the letter said. The foundation's efforts complement the research USDA conducts to promote "the long-term competitiveness" of U.S. agricultural producers," it continued. "The need for advanced solutions remains imperative if we are to continue to lead the world in food and agricultural innovation."

Canada and Mexico Leaders Push "Fair" NAFTA 2.0

Mexico and Canada will work toward a NAFTA 2.0 agreement that is fair and beneficial to all, Canadian Prime Minister Justin Trudeau said in Mexico City in remarks alongside Mexico President Enrique Peña Nieto. Trudeau said his country would continue to engage in a thoughtful way in the talks and that Canada is committed to the negotiations. Trudeau revealed that Canada will counter the U.S. proposal on a NAFTA sunset clause.

U.S. negotiators last week presented a proposal for a "sunset clause" that would see the NAFTA expire after five years unless the parties agree to extend it. Mexico's Ambassador in Washington Geronimo Gutierrez has said a termination clause would erode business confidence in the region, while his Canadian counterpart has said the Trump administration probably would not find much domestic support for the proposal.

Washington Insider: Offsetting Disaster Aid

One of the most persistent debates over budgets and budgeting is how, and whether, to offset the cost of disaster relief. Congress and most administrations want to be seen as pulling out all the stops when crises happen. Still, even the cost of disaster aid is somewhat suspect to true budget hawks, and Politico says this week that the White House is urging Congress to trim several billion dollars from the federal budget in the wake of pricey hurricane disaster relief — a move that could reignite yet another contentious debate.

In a Friday letter to House Appropriations Chairman Rodney Frelinghuysen, R., N.J., Mick Mulvaney, director of the White House Office of Management and Budget, identified $5.6 billion in cuts that "are prudent as the discussion around emergency funding of all types continue."

Mulvaney felt it necessary to emphasize that the reductions "are not intended to offset" any recently passed emergency funding for Texas, Florida and Puerto Rico. Still, the cuts to conservation programs at the Agriculture Department, loan programs for advanced-technology vehicles at the Energy Department and training and employment services at the Labor Department could be used in future talks, he wrote.

The letter lays down a marker for future relief discussions and suggests the Trump administration could push for offsets. So far, disaster-related relief has tallied about $51 billion.

Many moderate Republicans and virtually all Democrats reject on principle any attempt to pay for emergency situations, Politico says. But some House conservatives — including Republican Study Committee Chairman Rep. Mark Walker, R., N.C., — have pushed GOP leaders to avoid adding to the deficit.

The debate is likely only to grow when the next relief package passes — particularly since it will be larger than the first two. Politico thinks "Mulvaney is likely trying to get ahead of that debate by offering some offsets that could be part of the conversation going forward."

Bloomberg also noted that budget hawks are increasingly sensitive to increasing disaster spending, and opined that future disaster aid faces more obstacles in Congress with lawmakers complaining the first two rounds sidestepped major issues dealing with flood insurance, wildfire management and long-term relief efforts.

The group is reporting that conservatives are frustrated the House assistance bill passed late last week didn't include any spending cuts to offset its cost and failed to address the risk of flood insurance helping rebuild homes in flood-prone areas.

The Senate plans to take up the current $36.5 billion relief package next week and is under pressure to pass it quickly rather than alter it and send it back to the House. The National Flood Insurance Program is set to run out of funds Oct. 23, and the House isn't in session next week.

The legislation includes $18.7 billion for the Federal Emergency Management Agency, $16 billion for the National Flood Insurance Program and a $576.5 million reimbursement for wildfire response. It would give Puerto Rico access to a $4.9 billion low-interest Treasury loan so it can cover its expenses after Oct. 31.

In addition, spending offsets and National Flood Insurance Program policy changes will be key in future packages, House Freedom Caucus Chairman Mark Meadows, R., N.C., told the press last week. Meadows voted against yesterday's relief measure after supporting the first round in September.

"They get exponentially tougher," Meadows said. "Emergency relief is one thing. Rebuilding and what we do beyond that, you go from humanitarian [efforts] to reconstruction to rebuilding. Offsets become much more critical."

Rep. Dave Brat, R., Va., another Freedom Caucus member who opposed the package, said passing a second disaster-relief package sends a bad message. "It just appears that we're eating debt in some ways, too, without any discipline whatsoever."

Despite conservatives' insistence on a more restrained approach, some lawmakers in both parties are hoping for more funds in the future. For example, Del. Stacey Plaskett, a Democrat who represents the U.S. Virgin Islands, said her constituents have not gotten enough attention from federal officials.

Texas lawmakers failed to add extra money for their state in this aid package, leading Gov. Greg Abbott, R., Texas, to criticize the delegation for not getting more funds. He was reported as complaining that the delegation "let themselves be rolled by the House of Representatives."

All 69 "no" votes on the disaster-relief bill came from Republicans, Bloomberg says, while 164 Republicans supported the package. President Donald Trump won all of their districts, and won at least 60 percent of the vote in 31 of the districts. However, six Texans opposed the aid package: Reps. Joe Barton, Louie Gohmert, Jeb Hensarling, Kenny Marchant, John Ratcliffe, and Roger Williams. No Floridians opposed it.

So, the struggle to provide help to victims of natural disasters continues to worsen already bitter divisions in the Congress and between the White House and the Congress—and the real fights over the budget and the tax reform proposals loom even closer. Each of these fights concern wide swaths of the economy and should be watched closely as they emerge, Washington Insider believes.

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