Washington Insider -- Thursday

Food Program Rules Could Endanger Farm Bill

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

Ag Attention Turns To Lame Duck Work on Farm Bill

With the midterm elections now in the books, attention among ag stakeholders is once again focused on the farm bill, which currently sits in a House-Senate conference committee.

Thinking ahead of the election was that House Republicans had little to gain from capitulating on the SNAP issue before facing voters, and there remained hope the party might retain control of the lower chamber. With that now resolved, the calculus has changed considerably given the requirements (which could never have passed the Senate) would not be in any farm bill crafted by the next Congress, given Democrats will control the House.

Incoming House Ag Chairman Collin Peterson, D-Minn., has made it clear in initial post-election discussions that he is focused on wrapping up the farm bill during the lame duck, unwilling to even entertain the idea of going back to square one in the next Congress. Rather, Peterson is much more interested in starting off with oversight-related actions, such as examining USDA's controversial proposal to relocate the Economic Research Service (ERS) and National Institute for Food and Agriculture (NIFA) outside of Washington, DC.

"I think we're relatively close," Peterson remarked about the farm bill during a post-election call with reporters. "I think we can work this out and get this done before this Congress adjourns. That is my number one priority, to get that accomplished."

President Donald Trump even waded into the farm bill debate during a wide-ranging press conference Wednesday at the White House. "The problem is the Democrats are not giving us the 10 votes that we need," Trump said during a post-midterm news conference. "Everybody wants it, the farmers want it, but the Democrats are not approving the farm bill with work rules. We could have a very fast [bill] without the work rules. But we want the work rules in. And the Democrats just do not want to vote for that. So at some point, they'll have to pay maybe a price."

California Passes Animal Welfare Initiative

California voters on Tuesday overwhelmingly approved Proposition 12, a far-reaching animal welfare initiative that will impact egg farmers and livestock operations across the U.S.

The initiative requires all eggs sold in the state come from cage-free hens by 2022 and sets strict space requirements for pork and veal producers.

Producers who want to sell into California – the world's 5th largest economy – will have to follow the Proposition 12 standards.

The Humane Society of the U.S. (HSUS) drafted Proposition 12 to fix flaws with a similar animal welfare initiative – Proposition 2 – that was approved by California voters a decade ago. The 2008 measure, also backed by HSUS, banned the confinement of egg-laying hens, breeding pigs and veal calves in spaces too small to permit the animals to lie down, turn around or stand up and extend their limbs.

But Proposition 2 did not set specific space requirements and proponents say it has fallen short of the underlying goal to eliminate battery cages for hens and ensure livestock are afforded ample living space.

Proposition 12 seeks to remedy that, amending state rules to raise space requirements for laying hens from 116 square inches per bird to 144 square inches by 2020. By 2022, all laying hens must be kept in outdoor or indoor cage-free housing systems.

The veal industry will have to comply with new rules by 2020 that call for each calf to be granted at least 43 square feet of space. By 2022, pork producers will be required to provide each breeding pig with 24 square feet of space.

National egg, pork and veal producers opposed Proposition 12, arguing the rules are unnecessary and will increase prices for farmers and consumers. Critics contend the requirements are likely a violation of the interstate commerce clause of the U.S. Constitution.

Some animal welfare groups, such as Friends of Animals, PETA and the Humane Farming Association, also voiced opposition, arguing the measure doesn't go far enough and simply codifies industry standards that they find inadequate.

California voters backed the measure in droves and it passed with 61% of the vote.

Washington Insider: Food Program Rules could Endanger Farm Bill

Well, the big news ahead is that many of the same old fights will continue in spite of election results—for example, a few notables have opined that the proposed farm bill may move quickly to a vote “during the lame-duck session of Congress,” depending on the president “easing off stricter work requirements,” Sen. Chuck Grassley, R-Iowa, told the press recently.

The president has previously tweeted his support for tighter Supplemental Nutrition Assistance Program (SNAP) work requirements and asked Congress to pass the farm bill with those provisions. The Sept. 30 expiration of the current law “puts out to pasture” a number of programs that don’t have budget baselines. This has led lawmakers to acknowledge that they have until December, when the first commodity program expires, to complete a bill.

Still, there’s much more than the farm bill on the new Democratic to-do list, Bloomberg says. It includes an ambitious infrastructure program, fixes to the Affordable Care Act, and an initiative to encourage voting and small donors. The party also may work to strike early deals on trade, prescription drug prices, and possibly changes to the immigration system.

Bloomberg, along with most others, says they are looking for more partisan friction and gridlock under the expanded Republican Senate majority. This is partly because House Democrats say they plan to revive the oversight role of Congress, a task they say has been ignored by the Republicans over the last two years.

Among the areas they say they will focus on are Russian interference in the 2016 elections, ethical lapses at the Environmental Protection Agency and the Interior Department and Commerce Secretary Wilbur Ross’s plans to add a citizenship question to the 2020 Census. Strategists in both parties already are warning that the opportunity for legislative deals will be short-lived.

More likely to attract bipartisan interest is the infrastructure plan that Democratic leaders unveiled in anticipation that Trump’s own proposal would get traction in the current Congress. The administration’s $200 billion plan primarily focused on transportation stalled amid concerns it lacked adequate funding and revenue sources. The plan Democrats want is five times that amount — $1 trillion — and also calls for upgrades to water systems, broadband, schools, and more, Bloomberg says.

Democrats have proposed deficit spending to cover infrastructure spending but it’s not clear either side is willing to increase the federal gas tax to pay for upgrades.

The House and Senate also will consider the new trade agreement that Trump negotiated with Mexico and Canada to update the North American Free Trade Act and possibly other trade deals.

In addition, lawmakers haven’t ruled out another attempt to negotiate an immigration overhaul package, including a solution for the Deferred Action for Childhood Arrivals program to allow undocumented children brought to the U.S. as children to avoid deportation. Complicating any deal, however, are Trump’s demands for $25 billion in border wall money and more recent threats to do away with birthright citizenship.

A even tougher fight likely will concern Democrats’ plans to save or expand protections under the Affordable Care Act, including stabilizing the health insurance markets and insuring chronically ill people. Although GOP candidates in the 2018 campaign promised to protect coverage for pre-existing conditions, they also defended previous efforts to kill the law. Democrats said they might try to strike deals with the administration to reduce prescription drug prices.

Efforts to expand benefits or boost infrastructure are set to bump up against a growing realization that the federal budget deficit is likely to hit the $1 trillion level next year as the 2017 tax law is projected to further reduce federal revenue.

The ballooning deficit and federal debt are likely to be center stage this spring, when leaders will have to start negotiating a way to raise the nation’s borrowing authority. Congress has suspended the debt ceiling until March 1, although Treasury has tools to delay that deadline.

“Whatever happens, Congress has to do something with the debt limit, now probably by March 1,” said William Hoagland, former Republican Senate Budget Committee chief of staff who is now executive vice president of the Bipartisan Policy Center. “They just can’t avoid it.” To even maintain funding levels, they would have to raise the caps by $50 billion in both 2020 and 2021 — which adds another $100 billion to the deficit, Hoagland said.

Democrats probably won’t try to upend the 2017 tax law and they may even work with the GOP to make some changes, such as repealing the cap on state and local deductions. But don’t look for them to consider the GOP’s follow-on Tax Reform 2.0 plan that includes a bill to make permanent individual tax cuts or Trump’s recent call for a new middle class tax cut, Bloomberg says.

Bloomberg also notes that Senate Majority Leader Mitch McConnell, R-Ky., has said little about his legislative agenda or how he will react to House initiatives like the infrastructure plan. For now, the GOP leader wants to clear the decks of some 150 Trump nominees awaiting confirmation votes and prepare for even more next year. Still, McConnell has hinted he will pressure Democrats to ratchet back their plans and “even cut Medicare and Social Security.”

So, we will see. The stage seems to be set for continued long and bitter fights for the foreseeable future, including many that affect agriculture and which should be watched closely by producers as they emerge, Washington Insider believes.

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