Washington Insider -- Monday

Edging Closer to Spending Bills

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

China’s Xi Insists Country Wants Phase One Deal With US

Chinese President Xi Jinping said the country wants to reach an initial trade deal with the U.S. but also was not afraid to retaliate if need be. "We want to work for a 'phase one' agreement on the basis of mutual respect and equality," Xi said at an international forum in Beijing organized by Bloomberg. "When necessary we will fight back, but we have been working actively to try not to have a trade war. We did not initiate this trade war and this is not something we want."

He also commented that China has a “positive attitude” on the trade talks. Xi met with former U.S. Secretary of State Henry Kissinger Friday, with Xinhua reporting Xi stated that the two sides need to boost communications when it comes to strategic issues so as to avoid misunderstandings.

Chinese diplomat Wang Yi Wang Yi said on Friday the U.S. needs to meet China halfway and should promote healthy and stable development of bilateral relations.

Meanwhile, the South China Morning Post quoted Ian Bremmer of the Eurasia Group political consulting firm as saying the Hong Kong issue will not impact the trade deal provided things do not escalate. “I was with Liu He two nights ago, it was very clear to me in his level of, not confidence but certainly hopefulness, and cautious optimism that we will move to a phase one deal and that Hong Kong was not going to play into that,” Bremmer stated. "President Trump has made it clear that he is not going to talk about Hong Kong, and not allow it to interfere as long as they are discussing trade."

President Donald Trump today told Fox Business News that “We have a deal potentially, very close, he [Chinese President Xi Jinping] wants to make it much more than I want to make it, I am not anxious to make it,” As for Hong Kong, Trump said the U.S. has to “stand with Hong Kong, but I am also standing with President Xi.”

Grassley Waiting On EPA’s Next Move On Ethanol Targets

Sen. Chuck Grassley, R-Iowa, again met with President Donald Trump on the issue of biofuel policy, but said he wants to see EPA’s final plan before he is willing to say that the agency will live up the pledge on making sure that 15 billion gallons of conventional ethanol get used.

“I left the meeting satisfied that the president was saying the same thing — and [EPA Administrator Andrew] Wheeler heard him say it — said we got to produce 15 billion gallons,” Grassley said.

Grassley said he told Trump that EPA’s actions since a September meeting on the topic “leaves a lot of questions whether or not we are going to get the 15 billion gallons that we said we were going to get.”

Washington Insider: Edging Closer to Spending Bills

The Hill is reporting this week that top negotiators from the House and Senate have reached a long-stalled deal on top-line spending levels for the fiscal 2020 bills.

The report cited House Appropriations Committee Chairwoman Nita Lowey, D-N.Y., and Senate Appropriations Committee Chairman Richard Shelby, R-Ala., who say they have settled on “302(b)s,” which set the top-line number for each of the 12 government funding bills.

The Friday night agreement marks a “breakthrough” for the government funding negotiations and comes after days of behind-the-scenes horse trading, including back-and-forth funding offers, between Senate Republicans and House Democrats as they hunted for a path to a deal.

In the meantime, Congress passed another very short-term spending bill last week, giving lawmakers until Dec. 20 to prevent a shutdown. To do that, they'll either need to pass the fiscal 2020 bills or another continuing resolution.

Although the House has passed 10 of the 12 Fiscal Year (FY) 2020 bills and the Senate has passed four, lawmakers hadn't been able to reach a final deal on any of them “as they awaited the deal on the top-line numbers.”

Shelby and Lowey said they want to pass each of the 12 funding bills by Dec. 20. That gives them less than a month — roughly 15 session days — to iron out the details of the bills and get them through both chambers.

"The subcommittees are getting to work immediately in an effort to pass all 12 bills before the CR expires on Dec. 20," The Hill reported.

The deal on subcommittee allocations adheres to the defense and nondefense caps agreed to as part of a two-year budget deal announced in July. Under that agreement, overall defense spending was $738 billion for fiscal 2020, while nondefense spending was $632 billion.

The agreement between Shelby and Lowey does not resolve all of the remaining issues, including the “looming fight over the border wall, The Hill said. The House included no money for new border barriers in its Department of Homeland Security bill, while the Senate included $5 billion for the border in DHS as well as an additional $3.6 billion that could be reprogrammed from military projects to the border,” The Hill said.

Democrats are also eager to block President Trump from reprogramming funds for the wall under emergency powers, a major sticking point with Republicans.

Now it is up to the subcommittees to try to work out several tough policy differences, including the wall. "Individual funding items are being left to the subcommittees in keeping with long-standing committee practice," The Hill reported.

In addition, other policy fights — including policies related to abortion and the number of Immigration and Customs Enforcement beds—are significant potential roadblocks for negotiators as they draft the FY 2020 bills.

While many members have been skeptical that it would be possible to pass 12 appropriations bills by the new December deadline, The Hill says its sources expressed optimism that the timeline was achievable. Lowey and Shelby’s ability to strike a deal on the allocations had been a major stumbling block for weeks. Appropriators had noted that without a deal before Thanksgiving, the new deadline was “ambitious.”

“If they can get those numbers done, I still think we have time to get those bills done before the end of the year when we get back,” Rep. Tom Cole, R-Okla., an appropriator, said ahead of the announcement of the deal last week.

Senate Minority Leader Charles Schumer, D-N.Y., warned the President to stay out of the funding negotiations as lawmakers head toward the Dec. 20 deadline.

"On the first path, President Trump stays out of our way and gives Congress the space to work together and find an agreement," he said. "On the second path, President Trump stomps his feet, makes impossible demands and prevents his party, the Republicans, from coming to a fair arrangement."

So, we will see. It appears now that numerous members prefer the newly proposed budget levels to those that would be used if another CR is required. At the same time, the remaining time is very short and several of the potential remaining issues are highly contentious. These talks include very high stakes and should be watched closely by producers as they proceed, Washington Insider believes.

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