Washington Insider -- Friday

Yet Another Government Shutdown Fight

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

USTR Report Says China Has Not Changed Policies

U.S. Trade Representative (USTR) Robert Lighthizer released an update Tuesday on US-China trade issues, saying China has not changed unfair and discriminatory practices that prompted Trump to impose tariffs on around $250 billion worth of Chinese goods.

The statement came via a 53-page update USTR released on its investigation into China's intellectual property practices under Section 301 of the 1974 Trade Act. That probe and the initial report from March provided the legal basis for Trump to impose tariffs on nearly half of all imports from China.

"We completed this update as part of this administration’s strengthened monitoring and enforcement effort,” Lighthizer said in a statement. “This update shows that China has not fundamentally altered its unfair, unreasonable, and market-distorting practices that were the subject of the March 2018 report on our Section 301 investigation.”

The announcement comes just over a week before a meeting between Trump and Chinese President Xi Jinping at the G20 summit in Buenos Aires.

Reuters: Chevron Granted Small Refiner Waiver For Utah Refinery

EPA has granted Chevron a hardship waiver for Renewable Fuel Standard (RFS) requirements for 2017 for its plant in Utah, according to a report from Reuters.

Chevron did not confirm that it received the waiver, but said in an email statement to the news service that seeking the waivers can help level the playing field. "EPA has acknowledged that it has granted several small refinery exemptions from the RFS. Any Chevron refinery not exempted from the RFS would be at a disadvantage in the highly competitive markets where we operate," the company said.

EPA data shows that 29 waivers have been granted for the 2017 compliance year with seven still pending. EPA granted 19 waivers for the 2016 compliance year with one still pending.

The agency has received 15 waiver requests for the 2018 compliance year but has not yet granted any, according to agency data.

Washington Insider: Yet Another Government Shutdown Fight

Well, the next potential government shutdown is being debated already, caused, POLITICO says, by a stalemate over the proposed border wall. Although a government funding deadline is only two weeks away, Democrats and Republicans are dug in as each side is “upping its demands and vowing not to buckle to the other.”

The president is pushing Republicans to budget at least $5 billion for his wall, far more than Senate Democrats are prepared to give, POLITICO says. Democrats in turn are considering pushes for legislation to protect special counsel Robert Mueller and the elimination of a citizenship question from the next census. In addition, House Republicans will formally become the minority party in just a month and a half, and many see this as “their last chance to get a down payment for Trump’s wall before entering legislative obscurity.”

The stakes have been lessened somewhat by deals this summer to fund about 75 percent of the government until next fall. But a partial shutdown isn’t what either party is looking for, either.

“I don’t want to engage in shutdown politics. Let’s fund the federal government and move on,” Senate Homeland Security Chairman Ron Johnson, R., Wis., said on Tuesday. “I wish Democrats would cooperate. They all said they want to secure the border, so OK: It’s going to require better barriers.”

“If that gets in the mix, there has to be something in return for that,” shot back Rep. Gerry Connolly, D., Va. “I myself have a pretty hard position that Democrats should not even be engaged in discussions about that because President Trump made it very clear that Mexico was going to pay for that wall.”

Indeed, though a shutdown would be viewed as poor optics for both sides, backing down might be worse, with each party’s base eager to fight.

Senate Minority Leader Chuck Schumer, D., N.Y., has made clear he’s in no mood to swallow a major concession on wall money that would boost the president, publicly urging Trump to stay out of the negotiations.

The president has refused to rule out a shutdown and has told GOP leaders that he wants no less than $5 billion for the wall. That’s more modest than Trump’s earlier demands, which went as high as $25 billion.

That sum of money seems out of reach and Democrats would need major concessions from Republicans to deliver even $5 billion at this point. Some Republicans have discussed providing that amount over two years but the GOP has yet to rally around that position and it’s not clear that the president would view that as enough.

People in both parties say there would be little reason for a shutdown if not for the wall demand. Both parties have broadly agreed to spending levels for 2019, but the border security portion is bedeviling Capitol Hill and has given Democrats an opening to ask for legislation protecting the special counsel and removal of the citizenship question.

Senate Democrats have endorsed $1.6 billion for the wall in a bipartisan Homeland Security funding bill an amount that made some in the caucus queasy. Democratic leaders say they will go no further.

That amount is “more than adequate,” said Senate Minority Whip Dick Durbin, D., Ill. “They are still sitting on money from a year or two ago that they can’t spend.”

House Republicans, meanwhile, are eager to get more wall money while they are in the majority and in position to get the president’s $5 billion. A senior House Republican aide told POLITICO that the House is still working toward that number in year-end spending talks and Senate Republicans say they are right there with them.

If both sides remain at odds, congressional leaders will have to begin weighing fallback plans. Already some Republicans think they may need a weeklong stop-gap bill to give more time for spending talks. Government funding currently runs out on Dec. 7. Most congressional leaders view that as a hard deadline and do not wish to prolong negotiations.

If the deep ideological rift between the two parties can’t be bridged, leaders might consider a continuing resolution to fund agencies through September. That might be preferable to kicking the fight until January, when House Democrats take over although such a fight could lead to reduced spending for priority domestic programs.

Meanwhile, the possibility of a partial shutdown still looms if the president decides he will not sign any bill that falls short of his border wall goals. Johnson made clear that’s not ideal, but he also played down the consequences if Congress fails to come to an agreement by the deadline.

So, we will see. Government spending levels have always been a key issue and likely will continue to be for the foreseeable future. It certainly is an important controversy that should be watched closely by producers as it intensifies, Washington Insider believes.

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