Washington Insider - Tuesday

The Farm Bill and Food Stamps

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

RFA's Dinneen: Cruz Scapegoating the Renewable Fuels Standard

Bob Dinneen, president and CEO of the Renewable Fuels Association (RFA), commented in a Texas newspaper about Sen. Ted Cruz's, R-Texas, hold on Bill Northey, President Donald Trump’s choice to be USDA’s undersecretary for farm production and conservation. Cruz objects not “because he thinks Bill Northey is not qualified for the position; he agrees Northey is a terrific person, but because he wants to use the leverage of holding up Northey to force changes to an energy program completely unrelated to USDA.” He wants to see changes to the Renewable Fuels Standard (RFS).

Dinneen wrote that, “Not only is the senator wrong to hold one of President Trump’s nominees hostage, he is wrong in his continued criticism of the RFS. Sen. Cruz believes the RFS disadvantages independent refiners by requiring them to purchase credits when they choose not to blend the amount of renewable fuels the law requires. Cruz points to the recent bankruptcy filing of a Pennsylvania refinery as evidence of the program’s failure. But that refinery is the oldest in the country; it suffers from antiquated technology; is captive to higher priced imported crude oil; and has made a series of poor business decisions leaving it vulnerable to the highly volatile credit market. It is certainly not a good poster child for RFS reform. It’s a poster child for gross mismanagement.” Dinneen noted that this week, more than 1,000 energy experts from across the globe will descend on San Antonio for the 23rd annual National Ethanol Conference. The conference will celebrate groundbreaking achievements and outline future challenges the renewable fuels industry will face.

Trump Keeps Talking NAFTA Exit As He Hails Infrastructure Plan

If Mexico and Canada do not agree to an updated NAFTA 2.0 agreement, President Donald Trump Monday again talked of getting out of the pact. "I always said we're going to renegotiate it or terminate it," Trump said while unveiling his infrastructure plan. "Hopefully, the renegotiation will be successful, and if not, we'll be even more successful."

Trump also talked of putting a reciprocal tax in place to account for countries that place higher duties/tariffs on U.S. goods than the levels imposed on imports from those countries. "We send them our product, same product as they're sending us; and they'll charge us 50% and 75% tax — and that's very unfair," Trump declared. "So we're going to be doing very much a reciprocal tax, and you'll be hearing about that during the week and during the coming months."

The White House later appeared to downplay the potential that a reciprocal tax was in the cards. "There is nothing formal in the works right now," a senior administration official said. "He was simply reiterating the same sentiments he's been saying about reciprocal trade for years."

Washington Insider: The Farm Bill and Food Stamps

There has been some significant attention to farm bill issues recently. For example, last week’s budget bill included support for dairy and cotton producers which likely will make it easier for Congress to refine those programs in the coming farm bill debate, Politico said.

However, Bloomberg is suggesting now that the administration is warning about coming cuts to some USDA programs, as well as tougher “work rules” for the Food Stamp Program. It noted that Secretary of Agriculture SonnyPerdue said recently that tighter rules may be necessary to discourage a “lifestyle” of government dependence.

Recommendations on the Supplemental Nutrition Assistance Program, or SNAP -- commonly called food stamps, -- are being watched especially closely, because a partisan dispute over those issues nearly derailed the previous farm law that ultimately passed in 2014. Nutrition initiatives, including SNAP, account for most of the bill’s costs.

The White House on Monday proposed cutting an average of $21.4 billion a year out of SNAP. That would include capping SNAP payments for people to no more than $90 a month in benefits and instead sending SNAP recipients a USDA foods package, dubbed "America's Harvest Box," with staple items in it such as "shelf-stable milk, ready to eat cereals, pasta, peanut butter, beans and canned fruit, vegetables, and meat, poultry or fish." The White House states this is a cost-effective approach that would provide significant savings to taxpayers. White House budget director Mick Mulvaney was excited about this idea, referring to it as a "Blue Apron-type program" for SNAP.

“It lowers the cost to us because we can buy [at wholesale prices] whereas they have to buy it at retail. It also makes sure they're getting nutritious food. So we're pretty excited about that.”

Further reforms would seek to reduce SNAP benefits for people considered as able-bodied adults.

About 45.6 million Americans used the Supplemental Nutrition Assistance Program in October 2017, the most recent available data, according to USDA. The total was 5.1% higher than a year earlier and 8.7% above a month earlier, a spike caused by temporary benefits given to victims of hurricanes that struck the Southeast U.S., Bloomberg said.

Enrollment peaked at 47.8 million in 2012. Economic growth has reduced numbers, but states have also reduced rolls by reinstating work requirements for recipients that existed before the financial crisis of 2008. Those reductions “empirically prove” that recipients who could cover their food budgets without government assistance are in the SNAP program, Perdue said.

Senate Agriculture Committee Chairman Pat Roberts, R-Kan., who has raised concern about fraud in the SNAP program, said recently that while some food stamp rules may be tightened, changes to the program aren’t likely to be dramatic, given a need to attract Democratic votes in the Senate. Secretary Perdue also said the administration wouldn’t be pushing for radical change to the program.

Many people who receive food stamps do work. In 2015, USDA said that 57% of working age adults in the program either had a job or were looking for one; another 22% did not work because of a disability.

Perdue also commented about the tensions that frequently surround the program, and commented that “[W]e would welcome more statutory and administrative authority” to deny state waivers for the supplemental nutrition assistance program. However, committee ranking member Rep. Collin Peterson, D-Minn., said he is concerned that there is too much focus on SNAP work requirements going into the 2018 farm bill.

“I've said to many people what I'm concerned about in this farm bill is that we're going to get wrapped around the axle on SNAP like we did last time,” said Peterson. “It seems like all of the rhetoric I hear regards work requirements for able-bodied adults.”

Under current SNAP rules from the 2014 bill, able-bodied adults can receive only three months of benefits. However, states can request to temporarily waive the time limit when unemployment is high. The current law is set to expire Sept. 30.

“We don't have any statutory authority to change those waivers, but I think you'll see some good suggestions in the farm bill,” said Perdue.

Well, we will see. Budget hawks traditionally find the nutrition programs to be prominent targets for cutting spending, partly because they help provide urban support for commodity and conservation programs—which, also are targets of budget hawks. Thus, in spite of a few areas of recent political agreement, numerous areas of tension over issues important to producers remain, including, especially those involving trade and the coming debates over farm bill reauthorization which should be watched closely as they materialize, Washington Insider believes.

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