Washington Insider - Monday

State of the Union and Infrastructure

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

NAFTA 2.0 Talks: Officials Tout Progress but No Major Breakthroughs

The sixth round of NAFTA 2.0 talks is in the books, with all sides signaling there has been at least incremental progress, but none are signaling there have been no major breakthroughs in the talks that ran January 21-29 in Montreal.

All sides in the Montreal-based talks were touting the progress, something U.S. Trade Representative Robert Lighthizer characterized as "some" progress certain issues. "We finally began to discuss some of the core issues, so this round was a step forward — but we are progressing very slowly. We owe it to our citizens, who are operating in a state of uncertainty, to move much faster." Lighthizer remarked at a joint press conference with his Mexican and Canadian counterparts.

Attention now will be on going through several issues leading up to the next installment of the talks to be February 26-March 6 in Mexico City, hoping to get "major breakthroughs" in that process.

EPA Sends WOTUS Rule Implementation Delay to OMB

The final regulation to delay the implementation date of the Waters of the U.S. (WOTUS) rule to 2020 has been sent over to the Office of Management and Budget (OMB) for review and is expected to be completed within a month. The U.S. Supreme Court ruled last week that U.S. district courts are the proper ones to handle WOTUS issues, a move that would mean the stay issued by the Sixth U.S. Circuit Court of Appeals would be lifted. Lifting that stay would mean the rule would likely go into effect in 37 states as 13 states are covered by a hold on the rule that was put in place by a North Dakota district court.

Meanwhile, in a brief filed with the Court of Appeals for the Eleventh Circuit on Friday, Georgia and nine allied states asked judges to forgo the normal waiting period and send a lawsuit against WOTUS back to district court.

Washington Insider: State of the Union and Infrastructure

There’s talk around Washington about President Donald Trump's Post-Davos somewhat more bipartisan attitude and Bloomberg is reporting that the speech is expected to include support for the administration’s infrastructure proposal.

Since its inception. The Trump Administration has touted a plan to upgrade U.S. public works as something that can win Democratic backing. The President is expected to appeal to Democrats on infrastructure in tonight’s State of the Union address with a proposal that could include at least $200 billion in federal money over 10 years to spur states, localities and the private sector to spend as much as $1.6 trillion.

Democrats say that’s not nearly enough and Senate Minority Leader Chuck Schumer and other Senate Democrats want something like $1 trillion in federal investment.

Democrats’ call for more funding comes in addition to the tax measure’s $1.5 trillion cost over 10 years. Bloomberg says that would be tough since lawmakers are already fighting about budget spending with mid-term elections looming in November.

Trump is expected to introduce his infrastructure plan tonight and to provide “detailed principles” a week or two later to start the legislative process, adviser DJ Gribbin said.

With Republicans controlling the Senate by only a 51-49 margin, Trump likely will need Democratic votes.

Sen. Tom Carper, D-Del., the leading Democrat on the Senate Environment and Public Works Committee and a former governor, said he supports encouraging states and localities to generate funding for projects, but he is skeptical about the administration’s approach. “I’m still not sure how you transform $200 billion into $1 trillion. You’ll have to show me, he said.”

Rep. Bill Shuster R-Pa., who is chairman of the House Transportation and Infrastructure Committee, said he has told Trump that any bill must be bipartisan and “fiscally responsible.”

Allocating $200 billion in federal funds is “a drop in the bucket” compared with the cost for slashing taxes for corporations and the wealthy in the tax bill, said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee. It appears Trump also wants to shift the funding burden to states and cities already strapped for cash, he said.

“This is not a formula to pull our infrastructure out of disrepair,” Wyden said in a statement.

White House officials have said the plan being developed also would allocate funding for rural projects, money for federal lending programs and “transformative” projects that can’t secure private financing. Streamlining environmental reviews and permitting to get project approvals in an average of two years also will be part of the plan, officials have said.

Congressional Republicans have been supportive of streamlining project approvals and leveraging federal dollars, though lawmakers who represent rural areas, including Sen. John Barrasso, R-Wyo., chairman of the Senate Environment and Public Works Committee, have expressed concerns about relying too heavily on private investment that doesn’t work well in less-populated areas.

While some administration proposals are good, $200 billion in federal funds “barely gets you out of the starting gate” in addressing deficient bridges and other U.S. needs, said Ed Rendell, the former Democratic governor of Pennsylvania who co-founded Building America’s Future, a bipartisan coalition of officials that promotes infrastructure spending. He called the White House framework “dead on arrival.”

“It’s all show and no go,” Rendell said. “You can’t do infrastructure without a significantly sized federal commitment, and I think it has no chance to get Democratic votes -- and it won’t get 100 percent of the Republican votes because of the Tea Party.”

Getting a major infrastructure bill enacted in 2018 will be “an uphill climb,” said Stephen Sandherr, chief executive officer of the Associated General Contractors of America, representing more than 26,000 construction companies and other firms. Sandherr said a lot of his members are more optimistic than he is because of the partisan political battles during the past year.

“To think that they’re all going to now, all of a sudden in the new year sit around a campfire, hold hands and sing ‘Kumbaya’ on infrastructure is a little bit unrealistic,” Sandherr said on a conference call with reporters earlier this month.

So, the infrastructure effort is extremely important to producers as they attempt to compete in distant markets. So are the trade talks especially those that involve NAFTA. So, it will be extremely important to watch closely for the President’s take on these and other trade and economic policy issues that potentially could affect future markets and growth, Washington Insider believes.

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