Washington Insider - Thursday

The White House Budget Request for SNAP

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

White House Confab On and Trade and More

Democratic senators Sherrod Brown of Ohio, Bob Casey of Pennsylvania, Gary Peters of Michigan and Ron Wyden of Oregon joined a longer list of Republican senators and House members for a meeting with President Trump on trade matters Tuesday, which ran into the afternoon. President Trump told them the U.S. should have a reciprocal tax... “a fair tax.” But a "senior administration official" again later said there was no such tax in the works at this point. On the forthcoming Section 232 report on several sensitive trade topics including steel, the president said he wants to hear from both political parties before making a trade decision relative to Section 232.

Trump noted that the U.S. has a trade deficit that he inherited. Sen. Roy Blunt, R-Mo., warned Trump against starting a trade war with other countries on which U.S. companies depend for goods. “We need to be careful here that we don’t start a reciprocal battle on tariffs,” Blunt said. On trade with Canada, Trump specifically noted how hard it is to deal with the country relative to lumber and selling them U.S. farm products.

Sen. Hatch: Congress Has First Swipe on Tax Law Fixes like Section 199A

Uncertainties regarding the new tax reform law should first be Congress’ responsibility, Senate Finance Chairman Orrin Hatch, R-Utah, said in remarks at a Brookings Institution’s Tax Policy Center discussion.

“Where things are potentially unclear in the law, Congress should be the one to determine and explain what was intended, and, if need be, such as with section 199A, provide a timely fix,” Hatch said in prepared remarks at a committee hearing, referring to a provision that would create an unexpected advantage for agricultural cooperatives in farmer marketings of grain.

“I will continue to facilitate this type of constructive interaction between Congress and the administration as things move forward, and I expect that [Treasury] Secretary [Steven] Mnuchin will continue to ensure this important dialogue continues,” Hatch said at the hearing on President Donald Trump’s proposed budget, where Mnuchin is testifying Treasury and the IRS are in the midst of writing rules and guidance for the tax law HR 1 (115), which took effect Jan. 1.

Washington Insider: The White House Budget Request for SNAP

Much of the media attention this week has been focused on the administration’s budget request. Ag committee members, hoping for a placid farm bill reauthorization later this year often weighed in with bipartisan wishes for strengthened support for the sector in its time of low prices and noted how important broad support is, especially for the nutrition and conservation programs—as well as for commodities.

Well, what happened was a “budget surprise” that caught the attention of many, even the urban press. The surprise was proposal to return to an old approach which would some nutrition program participants half their benefits in a “Harvest Box” of foods.

The Times called this a “cache” of cheaper peanut butter, canned goods, pasta, cereal, “shelf stable” milk and other products. In addition, the budget proposal called for a radical overhaul of the country’s core food assistance program intended to shave about $21 billion a year from the federal deficit over the next 10 years. The reaction was immediate, and largely negative the Times said.

The report also cited administration officials as admitting that the food-box plan had virtually no chance of being implemented anytime soon. In fact, the Times said it was told by administration officials who worked on the proposal that it was a “political gambit by fiscal hawks in the administration aimed at outraging liberals and stirring up members of the president’s own party working on the latest version of the farm bill.”

“I don’t think there’s really any support for their box plan. And, I worry that it’s a distraction from the budget proposal to cut SNAP by some 30 percent. That’s the real battle,” said Stacy Dean, vice president for food assistance policy at the Center on Budget and Policy Priorities, a progressive Washington think tank. “The dangers are these other proposals to cut benefits. But all anyone is talking about today are the boxes.”

The Times also said that Secretary Sonny Perdue had “stealthily” pitched the idea over the last few weeks to the White House’s Domestic Policy Council as a novel way to reach the administration’s self-imposed goal of slashing federal food assistance programs by $214 billion over the next decade. It was quickly embraced by Office of Management and Budget Director Mick Mulvaney, a fiscal hawk who is seeking to steer a debate increasingly dominated by free-spending Republicans and Trump, who has insisted on major budget increases for the Pentagon and Homeland Security, the Times said.

The budget documents released this week omitted important details about the proposal, including the costs of creating a nationwide distribution network for the boxes, especially in rural areas hard hit by the economic downturn and the opioid crisis.

“We have had like 25 hearings on SNAP. The witness list was controlled by Republicans and this idea was never, ever broached,” said Representative Jim McGovern, D-Mass., ranking Democrat on the House subcommittee that oversees federal food assistance programs. “I think it’s dead on arrival — I hope it is.”

While the box idea may have appealed to administration officials, it was quickly dismissed by the two Republican agriculture committee chairmen, Senator Pat Roberts of Kansas, who leads the Senate agriculture committee, and his counterpart in the House, Representative Mike Conaway of Texas.

Conaway is drafting a farm bill that is expected to cut SNAP spending by tightening some eligibility requirements. Roberts is overseeing an effort to craft a version of the bill that includes fewer cuts in hopes of gaining the bipartisan support needed to push the measure through the Senate.

Secretary Perdue, in particular, has been outspoken in his call to reduce nutrition program rolls, criticizing what he calls a culture of dependency among SNAP recipients. But McGovern said the administration was painting “a distorted picture” of the poor and ignoring the fact that most SNAP recipients are employed and more than a quarter are disabled and unable to seek work.

Well, presidential budget requests are often “dead on arrival” and a good many parts of this request likely will share the same fate. In addition, it likely will sharpen the ongoing discussion of impacts of administration efforts to recast trade policies that have developed very significant ag export markets.

So, we will see. Suddenly, the farm bill debate shows signs of becoming much sharper and more controversial than only a few weeks ago—a fight that producers should watch very closely, Washington Insider believes.

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