Washington Insider -- Thursday

Shutdown Ahead in Washington

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

House Clears Farm Bill by Wide Margin

After passage of the 2018 farm bill conference report in the Senate yesterday, the House followed suit, clearing the legislation by a healthy margin of 369-47.

The vote went largely as expected, with wide majorities of lawmakers from both parties voting in favor of the conference report. There had been concern that the legislation, which lacked new Supplemental Nutrition Assistance Program (SNAP) work requirements included in the House-passed version of the bill, might not garner a majority of GOP votes. In the end that proved not to be the case with just 44 Republicans voting no along with three Democrats.

The margin was also a far cry from the narrow 213-211 vote to clear the House's version of the legislation this past summer. In that case, no Democrats backed the bill and 20 Republicans also opposed the measure.

The conference report was released late Monday after weeks of wrangling back and forth between the four Ag panel leaders – Senate Ag Committee Chairman Pat Roberts, R-Kan., Ranking Member Debbie Stabenow, D-Mich., House Ag Committee Chairman Mike Conaway, R-Texas, and Ranking Member Collin Peterson, D-Minn. The four wrestled with a host of issues, including the SNAP provisions. But other areas emerged as sticking points during the process, including changes to the farmer safety net programs, conservation and others.

CBO Scores $867 Billion Farm Bill As Budget Neutral

The Congressional Budget Office (CBO) released their score of the Agriculture Improvement Act of 2018 (HR 2), saying the legislation will spend $428 billion over the 2019-2023 period and a total of $867 billion over 10 years (2019-2028).

Outlays under Title I (commodity programs) are expected to rise $263 million over 10 years while conservation program outlays are seen falling $6 million. As for specific commodity program provisions, CBO estimated the option for farmers to pick whether they want to be in the Ag Risk Coverage (ARC) or Price Loss Coverage (PLC) program starting with the 2021 crop year would boost outlays by $153 billion over 10 years.

Changes made to the PLC program would increase outlays by $137 million compared to the baseline, CBO said, while ARC outlays are expected to fall $186 million; modified loan rates in the bill would increase outlays $136 million.

Allowing farmers to participate in the Dairy Risk Management and Livestock Gross Margin insurance program on the same production would increase outlays $123 million.

Under conservation programs, the shifts in the Conservation Reserve Program (CRP) result in no change in outlays over the 10-year period while changes to the Conservation Stewardship Program (CSP) would reduce outlays by $12.4 billion over that period compared to the baseline. However, outlays under the resulting changes to CSP and Environmental Quality Incentives Program (EQIP) would boost outlays $8.45 billion over the 2019-2028 period.

Washington Insider: Shutdown Ahead in Washington

Tensions between the White House and Congress accelerated during the recent sit-down between the President and Congressional leaders. Many think this makes a government shutdown increasingly likely, Bloomberg says this week.

Tuesday’s session and the acrimony it generated highlighted the gulf between Democrats and Trump over must-pass U.S. spending legislation while putting a possible compromise further out of reach.

In fact, Bloomberg says, “Trump and Democrats are so far apart they can’t even agree on the terms of the debate — whether it’s about a wall or a fence or border security generally.” The president is insisting on $5 billion for a concrete wall while the Democrats think that $1.375 billion for fencing along the southern frontier with Mexico is the maximum that can be approved.

A shutdown, which would occur after Dec. 21, “likely would be very different in scale than others in recent years,” Bloomberg notes. Only some departments and agencies would be shuttered and their “essential employees” would still report to work. That’s because Congress and Trump previously approved funding bills for three quarters of the $1.2 trillion in operating expenses for federal agencies.

And the outlook for the spending bill is seen by some less dire than the immediate reactions would suggest. For example, hours after Trump and the Democratic leaders aired their differences, the president said: “Believe it or not, I think it was a very friendly meeting.”

“I don’t mind having the issue of border security on my side,” he told reporters. “If we have to close down the country over border security, I actually like that, in terms of an issue.”

House Democratic leader Nancy Pelosi, D-Calif., privately bragged to other Democrats about the outcome of the meeting with the president. “The fact is we did get him to say, to fully own that the shutdown was his,” she said. “That was an accomplishment.”

Pelosi later told reporters that she and Trump spoke by telephone later — she called it “a pleasant conversation” — and that the president said he is still reviewing the options that the two Democrats laid out.

At the same time, lawmakers from both parties said they aren’t sure how the impasse can actually be resolved.

And there may be more bumps in the road ahead. For example, the influential House Freedom Caucus hasn’t yet made a decision on whether to support the newly-revised lame-duck tax package, Rep. Mark Meadows, R-N.C., its chairman, told reporters yesterday.

House Ways and Means Committee Chairman Kevin Brady, R-Texas, released the revised bill on Monday. Meadows had previously said that an earlier version — which lacked sweeteners like a repeal of a church politicking ban — wouldn’t be able to pass the chamber. Meadows said negotiations are ongoing and there are some additions he would like to see made to the bill.

In addition to the extremely intense fight over the proposed border wall, many in Congress are looking forward to next year as Rep. Pelosi nears a deal to clinch the votes needed to become House speaker by promising her staunchest opponents that she’ll set an expiration date on her leadership. Five Democrats who signed a letter demanding new leadership are signaling that they’ll support Pelosi for speaker in exchange for term limits on Democratic leaders.

The concept being proposed is quite complex, Bloomberg says. It would limit top party leaders while in the House majority to three two-year terms and would be retroactive, meaning that Pelosi would only have two years left to be speaker following the four years she led the chamber from 2007-2010. Leaders could also seek an additional two-year term under modified rules.

Such a deal all but secures the speaker’s gavel for Pelosi, Bloomberg thinks, but could possibly come at the cost of defining how long she’ll stay, something she previously resisted doing because she said it would compromise her leverage in negotiations with Republicans.

For this potential agreement, the Democratic caucus would vote on the term limits after the speaker vote in January, with Pelosi’s support. If the caucus doesn’t support the limits, Pelosi would still respect the deal and leave the speakership in either 2021 or 2023, Bloomberg says.

Finally, President Trump says he is willing to meet Chinese President Xi Jinping again on trade as he hailed Beijing for resuming soybean purchases. “I just heard today that they’re buying tremendous amounts of soybeans. They are starting, just starting now,” Trump told Reuters. He said trade talks with China are already underway by phone, with more meetings likely, the President said.

So, we will see. There are so many issues outstanding just now that some “grand bargain” likely would be required to allow many significant achievements in the immediate future, especially as the new House majority settles in. While the farm bill is on the way to Trump's desk, there are literally dozens of bitter fights ahead that producers should watch closely as they proceed, Washington Insider believes.

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