Washington Insider - Monday

By DTN's Washington Insider

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

Major Impacts to US Economy, US Agriculture from NAFTA Exit

A big group (86) of U.S. agriculture and commodity groups warn the U.S. economy could take a major hit if the U.S. were to exit NAFTA, citing analysis from ImpactECON which said the higher tariffs that would result from the exit would cost the U.S. 256,000 jobs, including at least 50,000 in food and agriculture, and the farm sector would lose $13 billion in GDP alone.

The letter was sent to Commerce Secretary Wilbur Ross to counter his statements that "there is “not a world oversupply of agricultural products” and that harm to American food and agriculture interests from a potential NAFTA withdrawal is an “empty threat.”

They also reminded that one of the assurances the sector received as the process started was to "do no harm" to agriculture. The groups detailed in the letter that U.S. food and agricultural exports to NAFTA partners "grew by 450%." The U.S. held a 65% market share for agricultural products in the NAFTA region in 2015, the groups said, adding, "in 2016, we exported nearly $43 billion worth of food and agriculture goods to Canada and Mexico, making our NAFTA partners the largest export consumers of U.S. agriculture."

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Russia Bans Live Pig Imports from the US, Canada and European Union

Russia's government has extended its list of banned food from western countries and has banned live pig imports from the U.S., Canada and European Union, according to a RIA news report cited by Reuters.

The action would appear to have little impact on the U.S. or EU since imports have been barred from those countries out of animal disease concerns since 2014 – African Swine Fever in the EU and Porcine Epidemic Diarrhea virus (PEDv) from the U.S. and Canada. However, Canada did regain access to the Russian market in 2015 but numbers have been relatively small – around 1,000 head or so.

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Washington Insider: Tax Reform Bill Full of Secrets

The chatter in Washington at October’s end seems focused on the tax reform proposal and the new head of the Federal Reserve—and both are deeply secret. For example, Politico is reporting this week that even rank-and-file House Republicans are “increasingly alarmed by the secrecy shrouding the massive tax bill their party leaders plan to ram through Congress next month.”

Just days ahead of the legislation’s release, GOP members of the House Ways and Means Committee are still in the dark on numerous details being ironed out by the powerful tax-writing committee’s chairman, Kevin Brady, R-Texas, and his staff. And they’re blaming the panel’s top-down approach for the uncertainty.

“There are a lot of open issues,” said Rep. Jim Renacci, R-Ohio, echoing comments made by several of his colleagues on the committee.

Apparently, question marks remain on at least two high-profile proposals to offset the cost of slashing individual and business tax rates: curbing federal deductions for state and local taxes and business interest as well as potential changes to taxing retirement savings.

The uneasy feeling among members extends to their tax aides, Politico says, since they have been excluded from a recent series of hours-long member meetings with Brady and his tax counsels. Several personal office tax staffers to committee Republicans told Politico that they are grappling with “how to brace their bosses for the coming lobbyist wave.” Well-funded special interests are ready to pounce on the tax bill when Brady brings it out; aides are worried about the onslaught, particularly over any surprises in the legislation.

Part of the logic behind restricting access to the text stems from an eagerness to keep lobbyists at bay for as long as possible. There’s also precedent; former Ways and Means Chairman Dave Camp, R-Mich., introduced tax reform legislation in 2014 after keeping final language under tight wraps until soon before the now-retired Michigan Republican released it. And when he did, the bill bombed, Politico said.

But lawmakers, even those on the tax-writing committee, simply don’t always have the same level of understanding of the issues in play as their professional staff, the same aide said. Aides aren’t expected to join the next series of Ways and Means Republican meetings either, which are scheduled for this afternoon and all day Tuesday. Brady has said he plans to introduce the tax bill on Wednesday, and begin considering it in committee the following week.

“Chairman Brady and Ways and Means members will meet next week to discuss final details before they introduce the text,” said a spokeswoman. Aides have been told to expect a briefing before the bill emerges, but that huddle could come as late as Tuesday night, another Ways and Means staffer said.

Even President Trump’s chief tax negotiators haven’t been fully briefed, though Treasury Department officials were supposed to get looped in a bit more over the weekend, a Ways and Means aide told Politico.

The approach by House Republicans stands in stark contrast to the other end of the Capitol, where top Senate Republicans want to ensure all GOP senators feel they have buy-in from the start — a desire to avoid retracing the steps that led to their failed Obamacare repeal attempt.

Senate Majority Leader Mitch McConnell, R-Ky., has convened meetings with Finance Committee Chairman Orrin Hatch, R-Utah, and a handful of key Republicans on the Senate’s tax-writing panel, as well as GOP senators not on the committee, to gauge their needs, aides said.

“It’s so complex and there are so many moving parts,” said Senate Majority Whip John Cornyn, R-Texas, “We’ve tried to learn our experience on health care and do better on taxes.”

Senate GOP leaders will also ensure their tax proposal, expected to be released sometime after House Republicans unveil their legislation next week, gets considered by the Senate Finance Committee — another marked difference from the botched health care process.

Cornyn, the second-ranking Senate Republican, sketched out an goal of passing its tax legislation by Thanksgiving — giving GOP senators just under four weeks to move legislation overhauling the tax code even though the actual bill has not been released.

“We can be up and running in a day. We know where we want to go,” insisted Hatch, the chairman of the Finance Committee. Still, Hatch added of the GOP conference-wide lobbying effort: “Everybody wants something. They’re all over us on what they want.”

House and Senate Democrats, meanwhile, have been almost completely shut out of the discussions, since Republicans plan to use powerful budget reconciliation procedures that circumvent Democratic filibusters, so broad bipartisan support won’t be required.

Well, perhaps the only thing that is sure is that the coming tax reform fight will be controversial and bitter, and the outcome appears to be uncertain, especially since the complex proposal has numerous winners and losers. So, we will see what happens. This is one more fight producers should watch closely as it unfolds, Washington Insider believes.

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(GH/BAS)

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