Washington Insider -- Friday

FY 2020 Spending Progress Slow

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

Chile Cancellation of APEC Summit Sets Off Search for US-China Deal Signing Location

Chile Wednesday cancelled the upcoming Asia-Pacific Economic Cooperation (APEC) summit where President Donald Trump and Chinese President Xi Jinping planned to meet and potentially sign Phase One of a trade accord between the two nations.

The cancellation by Chile came as social unrest continued to rock Santiago. APEC officials indicated there were no plans to hold the meeting elsewhere, but Reuters reported that the U.S. was indicating a Trump/Xi meeting could take place in Alaska or Hawaii with China said to be suggesting Macau.

Trump has also indicated he may want to travel to Australia for the Presidents Cup golf tournament that starts December 9, putting him in the region.

Chinese diplomatic observers and government advisers said the APEC cancellation had eased the pressure on negotiators from China and the U.S. to finalize the Phase One portion of the trade deal. The Trump administration insisted it would continue to press to finalize Phase One of the accord in the coming weeks.

“We look forward to finalizing Phase One of the historic trade deal with China within the same time frame, and when we have an announcement, we’ll let you know,” White House spokesman Hogan Gidley told news services.

USDA’s Censky Downplays APEC Summit Situation Re: US-China Trade Deal

The cancellation of the Asia-Pacific Economic Cooperation (APEC) summit in Chile prompted immediate speculation that the prospects for signing Phase One of a trade deal between the U.S. and China were suddenly dimmed or put into question.

While addressing reporters via a teleconference from Ghana, USDA Deputy Secretary Steve Censky was asked about the situation. While acknowledging he was not in Washington and that the APEC development was new, “I will say that I do know that those discussions between the United States and China have been continuing this week to try and finalize that Phase One agreement.”

Given that, Censky reasoned, “everything is still all systems go for the United States and China to keep working to finalize that Phase One trade agreement as quickly as possible. And of course, we had the goal of having it finalized by mid-November for the APEC summit in Chile.”

“But I think the goal of having it finalized by mid-November still remains,” Censky concluded.

Washington Insider: FY 2020 Spending Progress Slow

The Senate on Thursday cleared a “minibus” spending package that covered $214 billion in government spending for Fiscal Year (FY) 2020 (HR 3055) which melded the Agriculture (S 2522), Commerce-Justice-Science (S 2584), Interior-Environment (S 2580) and Transportation-HUD (S 2520) spending bills.

But, as CQ Roll Call reports, “But further progress isn't guaranteed.” That view comes as a procedural vote on a second “minibus” package (HR 2740) would fund the Defense (S 2474) and Labor-HHS-Education measures. The procedural vote, which needed 60 votes to be approved, was rejected.

The issue, not surprisingly, Democrat objections on the border wall. “Democratic objections to funding levels and disagreement over when and how the Trump administration should be able to divert Pentagon funding for the border wall doomed the cloture motion to proceed to debate,” CQ Roll Call said.

However, Senate Majority Leader Mitch McConnell, R-Ky., blamed the impeachment situation for the Democratic opposition to moving ahead on the spending plan. "I'd hoped our Democratic friends would be able to put impeachment aside, at least, long enough to fund the Department of Defense," McConnell said.

Senate Minority Leader Chuck Schumer, D-N.Y., did not cite the impeachment situation in his remarks on package. "A bill that is supposed to provide resources for our troops and their families actually steals money from them and puts it toward a border wall that President Trump promised Mexico would pay for," Schumer stated.

But the wall is not the only component that is a stumbling block. There are significant differences between the House and Senate over topline spending numbers even after the budget accord reached in July that set overall spending amounts.

"The only thing that will move the appropriations process forward is agreement on allocations, a step which will require Senate Republicans to drop their demands to fund a border wall by cutting education," said House Appropriations Committee spokesman Evan Hollander.

This now keeps the spending situation more uncertain than it has been. Currently, the government is operating on a continuing resolution (CR) that is in place through November 21. But the fact the Senate has not moved ahead on most of the spending plans, odds are rising even higher that another CR will be needed to keep the government from shutting down just ahead of Thanksgiving.

Some favor just a short-term extension of spending, while others want any temporary government funding plan to keep the government open into 2020.

Given that lack of agreement, getting even a temporary funding plan in place could prove to be a challenge.

There are also precious few legislative days that both chambers will be in session this month, with a break for Thanksgiving at the end of the month.

Some also fret that if the government were to shut down, that could imperil the Market Facilitation Program (MFP) 2 payments that have been flowing to farmers. The first installment of those payments has totaled over $6 billion and a decision is looming on making a second tranche of those payments this month.

A chunk of U.S. farm income is coming from the government – $33 billion out of the estimated $88 billion in net farm income is expected to come from government payments of one form or another.

So we will see. It appeared after the most-recent government shutdown, that all parties – the House, Senate and the administration – agreed that shutting down the government yielded no real benefits and produced only costs. Hopefully, that view will not have faded as November 21 draws closer and closer. Agriculture needs to closely monitor this situation as these issues outside of agriculture could impact spending for the agency responsible for dealing with farmers, Washington Insider believes.

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