Washington Insider - Tuesday

Increasingly Complex Spending Politics

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

Cruz Pushes For 10-Cent Cap On RINs

Sen. Ted Cruz, R., Texas, wants to cap the price of biofuel credits (Renewable Identification Numbers – RINs) at 10 cents each, much less than they currently go for.

Cruz has put a hold on Bill Northey, a nominee to a key USDA post, in an effort to bring Renewable Fuel Standard (RFS) proponents to the negotiating a table. Cruz has said he would present a solution to update the RFS that would benefit all sides, but ethanol backers have already said the plan will not fly. The biofuel industry notes its opposition to Cruz's proposed cap on RIN prices, saying the best way to lower biofuel credits is to blend more ethanol into the fuel supply. "The ready solution to Senator Cruz’s stated concerns is to blend more ethanol and send clear regulatory signals about the future growth of biofuels under the RFS," said Emily Skor, president of the pro-ethanol group Growth Energy. "RVP relief would immediately add another three months’ worth of E15 sales to the market. That’s how RFS is meant to work.” Cruz also wants to create a working group of administration officials, lawmakers, and stakeholders to devise a longer-term solution.

Meanwhile, renewable energy backers from Rural America sent a letter to the White House Friday on RINs and the RFS. The letter to the president, signed by over 85 businesses and organizations, offers suggestions on how to maintain growth under the program while minimizing any potential for undue financial stress in certain parts of the refining industry.

EPA Looks to Loosen Pesticide Applicators Rule Age Requirements

A notice that the Environmental Protection Agency (EPA) is considering revisions to minimum age requirements in recently promulgated rules for pesticide applicators was submitted for publication in the Federal Register.

The notice came in response to President Donald Trump's executive order, issued earlier this year, which directed federal agencies to reexamine regulatory activity. EPA previously delayed the original effective date for the rule so it could further examine the rule relative to the agency's statutory authority, before determining new rulemaking may be warranted.

EPA declined to further delay the effective date for the rule, stating that the compliance deadline for the current rule will remain March, 4, 2022 – unless a modified regulatory scheme is approved or rejected by EPA on or before that date.

Washington Insider: Increasingly Complex Spending Politics

POLITICO, a publishing company that specializes in Washington politics, is reporting this week that Republican leaders in both houses of Congress face a sticky situation this week as they try to avert a government shutdown: “Each side has promised its members things that will not fly in the other chamber.”

The details are fairly mind-boggling. Senate Majority Leader Mitch McConnell, R-Ky., told moderate Sen. Susan Collins, R-Maine he'd support passage of legislation by the end of the year to prop up Obamacare insurance markets — so long as she votes for tax reform. That wrinkle seems to put Speaker Paul Ryan, R-Wis., in a pickle because his “members are loath to be seen as bailing out a health care law they hate.”

Ryan, meanwhile, green-lighted a short-term spending strategy that funds the Pentagon but does nothing for Democratic priorities and suggested House members could leave town to try to "jam the Senate" into accepting their bill. But McConnell needs eight Democrats to pass anything, so the House plan is sure to fail in his chamber.

"Right now, they're just headed straight off a cliff," one person familiar with the negotiations said of the House. "[The] Senate's not likely to jump with them."

Instead of addressing the obvious inconsistencies, GOP leaders have tried to put off the issue and focus on tax reform for now, POLITICO says. They're eager to delay internal spending fights until the tax package, which Republicans view as critical to maintaining their congressional majorities in the 2018 midterm elections, reaches the Oval Office for the President’s signature.

"It's going to be a bipartisan [spending] deal; [some House Republicans] are going to be unhappy with that, and you don't want to have the tax issues as the place they decide to retaliate," said Rep. Tom Cole, R., Okla., a member of the House appropriations panel, hinting at House GOP fears that conservatives could hijack tax reform to make a stand on spending issues.

But time is running out, and the GOP's tax-reform proposal has left Republican leaders without a clear strategy for the spending legislation. All this is quietly raising concerns that the government could shut down after Friday, when, short of congressional action, federal coffers are set to dry up, POLITICO says.

While Democrats have at times struggled to fend off GOP legislative efforts, this time they have leverage. Democratic leaders Nancy Pelosi of California and Chuck Schumer of New York appear to have backed off immigration demands they initially wanted addressed by the new year, but they're still adamant that any boosts in defense money be matched by increases in domestic spending.

Leaders in both chambers hoped to strike a deal to raise strict spending caps for both by Friday. But the so-called Big Four have yet to agree on those numbers. The most likely outcome, some Republicans now say, is kicking everything into 2018 by using another short-term funding bill, leaving a broader spending and immigration agreement until January.

There has been some progress on the immigration front, aides say. A bipartisan group of seven senators met several times last week to try and hammer out an immigration deal that combines legislation for Dreamers.

The group includes Democratic Sens. Dick Durbin of Illinois and Michael Bennet of Colorado, and GOP Sens. Jeff Flake of Arizona, Lindsey Graham of South Carolina, James Lankford of Oklahoma, Cory Gardner of Colorado and Thom Tillis of North Carolina. They want to be able to strike a deal on immigration they can subsequently present to their leadership.

It's unclear, however, whether Democrats will go along with pushing major issues into next year, upping the pressure on Republicans to come up with a funding proposal that can avert a shutdown.

First up this week is tax reform. House Republicans expect to pass the tax bill today and then the Senate will take up the bill as the House sends them its "continuing resolution" through Jan. 19, which also includes Republicans' much-desired Pentagon funding boost.

The upper chamber is expected to amend the government funding bill and send it back to the House, which is where things could get ugly. Leadership sources in both chambers say the Senate version of the spending bill could include the bipartisan Obamacare stabilization effort to satisfy Collins.

The White House is expected to back that approach because the tax bill repeals another part of Obamacare that conservatives despise: the requirement that everyone carry health insurance.

It's unclear, however, whether even a Trump endorsement would make the Obamacare language on the spending bill palatable to House conservatives. House GOP leaders during a Thursday afternoon conference last week began running the idea by lawmakers, but it didn't go over well.

Privately, senior Republicans say any House plan to stick the Senate with a bill it can't pass would be political suicide. They worry it could lead to a shutdown — which could backfire in the November midterms.

Even more complications could still arise for the spending legislation. House conservatives have said recently that if the bill includes the Obamacare subsidies patch, they want it to also include language barring federal funding for abortions. Senate Democrats, whose votes are needed for passage, would likely push back.

Beyond that, lawmakers also have to iron out several less-discussed policy matters that could wind up tied to the spending bill.

Nonetheless, Trump administration officials and senior Republican lawmakers are publicly confident that funding for the government won't dry up. "I think we're determined that it's not going to happen, and it won't happen," Cornyn said late last week.

So, this will indeed be a busy week and we will have to wait for the outcome since it remains cloudy at best, Washington Insider believes.

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