Washington Insider -- Monday

Political Fights and Threats to the Congressional Schedule

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

USDA's Censky Says Remaining MFP Payments Decision Coming Soon

USDA Deputy Secretary Steve Censky said $5.5 billion in Market Facilitation Program (MFP) 2 payments have been made to farmers since the Farm Service Agency began issuing checks the week of August 19. USDA is deciding whether to go through with the next installment of trade relief payments to farmers for 2019 production.

Censky said the department is aiming to make a final call "in the very near future... I think we are very much aware that producers have been impacted by the trade retaliation, they have been impacted by the weather, low incomes," Censky said.

MFP2 payments will potentially be in three installments: The first round became available over the summer, while the second and third tranches will be available in November and January, if warranted.

Meanwhile, Senate Ag ranking Member Debbie Stabenow, D-Mich., told Censky the trade mitigation program is upsetting the delicate balance lawmakers attempted to strike in the 2018 Farm Bill relative to spreading federal dollars evenly across the ag sector. Our expectation is the second and third installments of MFP2 payments will be made.

Rep. Neal Pleased With USMCA Process So Far

Mexican President Andrés Manuel López Obrador sent a letter to House Ways and Means Chairman Richard Neal, D-Mass., outlining steps Mexico is taking to strengthen labor standards relative to the US-Mexico-Canada Agreement (USMCA).

"I am very pleased with Mexico's demonstration of good faith," Neal said. He is among the Democrats working with the administration on USMCA issues. "Given the high labor and enforcement standards Democrats require from the new NAFTA agreement, I am eager to receive further details from USTR regarding the Trump administration's preparation to meet our priorities," Neal said in a statement.

Neal met with U.S. Trade Representative Robert Lighthizer and said that Democrats are still looking for assurances on enforcement. Asked whether the two sides might be able to reach a handshake deal by Thanksgiving, Neal replied: "I would like to think that, but I think that even based on what we discussed here today ... that there's still a ways to go." We expect the House will vote on USMCA most likely in December but it could still take place in November.

Washington Insider: Political Fights and Threats to the Congressional Schedule

Political uncertainties of many kinds and types are rising just now, and not just in trade policy, the Washington Post reported over the weekend. The report said that Congress is "heading toward a multicar collision that could leave a lot of collateral damage if lawmakers aren't careful."

It notes that the list of must-do items between now and year's end is "long and expansive, touching on every aspect of the federal government and beyond."

One result, the Post says, is that while chances for a government shutdown before Thanksgiving were once thought impossible but now, with no progress reported on any of the 12 spending bills, "the risk grows each week." This could mean a showdown that would be "far more sweeping than the 35-day partial shutdown earlier this year," the Post said.

In addition to the always tough budget fights, many non-budget Congressional authorities are expiring or lapsing, ranging from some foreign surveillance laws to the potential reinstatement of a very unpopular tax on medical devices.

The result is that while the "rational minds" in Washington see each of these issues as separate and distinct from the impeachment fight, the administration "has increasingly demonstrated" in the past few weeks that it regularly sees issues as "one large negotiation, linking together seemingly disconnected threads into one massive ball of legislative wax."

The article says the president's blowup with House Speaker Nancy Pelosi, D-Calif., on Wednesday over the crisis in northern Syria was clearly linked to her threat to impeach the president. At his rally in Dallas on Thursday night, he presented a "greatest hits parade of issues" he has long pushed, especially border wall funding and grievances against his political opponents including Rep. Adam Schiff of California, who chairs the Democratic House Intelligence Committee.

On Friday, at a photo opportunity to promote the first an all-female spacewalk, the president took a reporter's question about his acting chief of staff's conflicting answers on Ukraine policy and turned it into "a montage of ongoing crises." For example, he discussed his talks with Turkey's president, Recep Tayyip Erdogan, about a pause on attacking Kurds in northern Syria, railed against the Schiff-led investigation and claimed to have "taken control" of oil in the Middle East, the Post said.

This is leaving Congressional leaders "fearful that any of these must-pass bills could turn into a hostage situation" if the administration sees it as possible leverage against impeachment, the Post says.

The article discussed several must-pass items developed by a political intelligence firm, Cowen Washington Research Group. It included several numerous controversial concerns, including completion of the National Defense Authorization Act, which sets Pentagon policy and has been approved every year since 1946 -- but also the 12 bills that fund all federal agencies, which expired Oct. 1 but have been given a temporary extension until Nov. 21.

The list didn't include approving the a new North American trade pact—which both sides agree that waiting too far into next year will probably torpedo its chances of passing.

The most obvious obstacle created by these political tensions is simply "time," the Post says. The House schedule already has two week-long breaks between now and Christmas, leaving fewer than 30 planned days in session -- with quite a few of those days actually half-days to allow for travel.

The Speaker then must decide when to hold the House debate. At this time, she has not posted a deadline for completion, although most insiders believe it could wrap up by early February when voters start casting ballots in the 2020 presidential primary.

Senate Majority Leader Mitch McConnell, R-Ky., has indicated that if the House votes to impeach before or right after Thanksgiving, he would like to use those next several weeks before Christmas to hold a Senate trial—which, by rule, would begin each day just after lunch, six days a week, the Post says.

Technically, there would be a couple of hours each morning to process legislation, but it is likely that only "pretty noncontroversial bills" would be considered even if the usual long procedural votes and debate time were waived or shortened.

In addition, some of the current must-pass legislation has potential for side confrontations. For example, the 2017 tax bill included $17 billion worth of breaks that will expire at year's end, including the paid family leave measure and legislation that ended a tax on medical devices that was originally imposed in the 2010 Affordable Care Act.

Under normal circumstances, those popular credits would just be extended. However, following Wednesday's blowup between the president and the speaker, the Cowen group's analysts warned that anything could happen. "From a domestic political perspective, recent events in Washington are likely to cast a negative pall over the remainder of the year," the Cowen analysts wrote last week.

It is clear that political tensions are high and rising, especially those concerning trade but also many other economic policies as well -- issues that should be watched closely by producers as they emerge, Washington Insider believes.

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