Washington Insider - Friday

By DTN's Washington Insider

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

Biodiesel Tax Credit Update

Senate tax writers have filed legislation (S 2256) to extend more than 30 tax breaks that lapsed at the end of 2016, but top House Republicans have resisted. The tax incentives package, which includes biodiesel, could cost about $20 billion over the next two years, according to an estimate from the Committee for a Responsible Federal Budget, an independent watchdog. Lawmakers are unlikely to offset that cost with cuts to other programs, leading some lawmakers to oppose the bill because it would further boost the deficit if approved.

The tax extensions could get included in a final catchall spending package for the current fiscal year, if there is an omnibus measure rather than a contentious Congress just extending current spending through the end of Fiscal 2018. "I do not want to be pessimistic about it," Sen. Chuck Grassley, R-Iowa, said last week on WNAX radio. "We have done it every time it needed to be done in the past, and I expect that it will be done again. But you know, we have been promised, and promises are cheap in this town."

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Commerce's Ross Says Hard Issues Yet To Be Dealt In NAFTA 2.0

While there have been some gains or at least discussions on the "easy" issues in the NAFTA 2.0 talks, Commerce Secretary Wilbur Ross told CNBC that "very little has been done on the hard issues." And, Ross noted that it is "definitely a possibility" that President Donald Trump could exit NAFTA. He also noted that a final deal in the talks "will either be 100 percent or zero percent" acceptable, he added. "It won't be some percentage in between."

Regarding Trump's comments to CNBC last week in Davos that he was open to rejoining the Trans-Pacific Partnership (TPP) agreement if the U.S. can get a much better deal, Ross also appeared to downplay that possibility. "Remember, they don't have their act together among themselves," he said. "The so-called Group of 11 is not completely resolved on its own let alone resolved relative to concessions they might make to the United States."

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Washington Insider: Partisanship and the Congressional Agenda

This is a fascinating moment, Bloomberg says, as “both parties are looking forward to the fall elections” and the GOP, especially, faces an election-year dilemma: push partisan bills, or compromise. The group thinks this issue will dominate the discussions at the current planning retreat in West Virginia.

The GOP members from both chambers are attending the session, with the objective of setting their priorities ahead of the November election that will determine control of both houses of Congress.

“You would hope you could get some bipartisan cooperation but I recognize how difficult it is in any election year, particularly when control of both chambers is on the line,” said Tom Cole, R-Okla., who has been in Congress since 2002. “You’re not getting rewarded from your own base for compromise, and that’s a real problem.”

President Donald Trump, who has pressed a partisan agenda since taking office last year, called for both parties to work together during his State of the Union address on Tuesday. “Yet the approach he outlined was one that Democrats almost entirely reject,” Bloomberg said.

While the Republican-controlled House and Senate have different dynamics, if lawmakers want legislation to become laws, they’ll have to find a way to cooperate.

The GOP holds a 51-49 majority in the Senate and given that most legislation needs 60 votes to pass, lawmakers from both parties would need to cooperate. In the House, where the GOP holds a decisive majority, leaders are more beholden to lawmakers on the far right who have the power to scuttle legislation or threaten the tenure of Speaker Paul Ryan, should he capitulate to Democrats’ demands.

Republicans widened Congress’s partisan divide last year with tax cuts that passed with only GOP votes, but failed in its attempt to repeal Obamacare. While Senate Majority Leader Mitch McConnell, R-Ky., made it clear that he won’t push strictly partisan priorities, Ryan of Wisconsin has made no such pledge.

Ryan’s first decision will be how to shield immigrants brought to the U.S. illegally as children, a Democratic priority. Democrats’ core supporters have demanded that lawmakers force a solution by using their leverage on spending bills needed to keep the government open.

While a bill would have to be bipartisan to pass the Senate, House conservatives are urging Ryan to consider a Republican-only measure. Ryan must choose whether to negotiate a deal with the Senate before the House votes on a bill, or pass a GOP bill that would go to a conference committee to reconcile its differences with a bipartisan Senate plan.

So far Ryan has given vague promises to conservatives while insisting that the White House must sign off on whatever he puts on the floor for a vote, Bloomberg says.

The immigration debate will be an indicator of whether the parties will cooperate on Trump’s other priorities, according to Rep. Sandy Levin, D-Mich., who is retiring in 2018 after 36 years in Congress.

“The major issues will be tests: immigration and infrastructure,” Levin said. “I’m hopeful the speaker and Senator McConnell will really step up to the plate -- even at the risk that they won’t have all the Republicans with them -- because if they insist on having almost all the Republicans with them, they’re going to leave behind this country and the consequences I think will be very serious.”

That is a risky calculation for House leaders, because deals that get enough votes from Senate Democrats to become law risk alienating House conservatives, according to Frances Lee, a University of Maryland government and politics professor who researches Congress.

“It’s dangerous for party leaders to advance party legislation that’s not supported by most members of their party,” Lee said.

If the House tries to pass a bill solely with GOP votes, “a small bloc of Republicans" can refuse to support it "and then the question is, are they going to go and try to get additional votes in the House minority? That’s dangerous to do internally,” she said.

Ryan has been deferential to his far-right members, including the House Freedom Caucus, a group of about three dozen conservatives.

McConnell said in December he won’t push any GOP-only bills that would require near-unanimous support from Republican senators. Ryan said recently that ambitious overhauls of Social Security and Medicare will have to wait for bipartisan consensus, but he promised to push forward with measures to encourage beneficiaries of federal programs to seek employment.

Rep. John Yarmuth, D-Ky., first elected in 2007, said there is “no way” lawmakers would pursue policies this year that would be perceived as cutting benefits.

“In an election year, nobody’s going to want to mess with these programs,” he said.

So, we will see. While, no one wants to shut down the government, almost every consideration will involve deep, deep election year politics. How such concerns affect such key ag issues as the farm bill and NAFTA and other trade policies, remains to be seen—but odds are strong for a long, contentious debate on these and many other key issues, Washington Insider believes.

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(GH/BAS)

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