Washington Insider -- Friday

Looking Ahead on Spending Concerns

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

China Confirms Trade Deal Signing In Washington Next Week

China has finally confirmed that the Phase One trade deal between the U.S. and China will be signed next week in Washington, with Commerce Ministry spokesman Gao Feng saying Vice Premier Liu He would travel to Washington January 13-15 to sign the pact.

Teams from the two sides remain in close communication on the signing, he noted. "The two teams have been engaging with each other closely about the text and the terms of that agreement," Gao said.

Bloomberg reported that Liu will be joined by People’s Bank of China governor Yi Gang, Commerce Minister Zhong Shan, vice minister of finance Liao Min, deputy chief of the National Development and Reform Commission Ning Jizhe, deputy international trade representative Wang Shouwen, and others. China’s ambassador to the U.S., Cui Tiankai, will also attend.

As for ag imports, Gao said that China will continue to improve the administration of its tariff rate quotas under its WTO commitments and will make full use of the quotas based on market conditions, a situation which Gao said is not inconsistent with increasing imports of ag products from the U.S.

Gao made the comments in response to a question on whether China would have to lower its grain imports from other countries to meet purchase commitments under the deal.

Senate Committees Mostly Set USMCA Consideration Plans

At least five of the six Senate committees that are to vote on the U.S.-Mexico-Canada Agreement (USMCA) have set their plans in place for the action next week.

The Budget Committee and Environment and Public Works Committee will vote Tuesday, with Wednesday votes scheduled in the Commerce Committee and Health, Education, Labor and Pension Committee with the Foreign Relations Committee to vote Thursday.

The Senate Appropriations Committee had not yet set a date for its consideration of the update to NAFTA as of late-Wednesday.

Despite the extra committee action, USMCA is expected to be approved handily by the chamber.

Washington Insider: Looking Ahead on Spending Concerns

Everyone seems to expect political volatility to worsen next year, but many say they are working to tamp down potential fights to the extent possible.

For example, the Senate’s top appropriators said this week that they are hoping the Fiscal Year (FY) 2021 budget that the President will send to Capitol Hill next month will closely follow the parameters of the recent two-year spending caps deal and “make it easier for them to start writing a new set of bills this spring.”

Senate Appropriations Chairman Richard Shelby, R-Ala., said he will meet later this week with ranking member Patrick Leahy, D-Vt., to discuss plans for handling the budget request, set to be released on Feb. 10. Shelby said a White House blueprint that honors the caps agreement will make it easier to avoid delays and crises as next fall’s election nears.

Shelby told reporters the deal that raised the discretionary spending caps still can guide appropriators’ work, even if the administration proposes increasing defense spending at the expense of domestic spending. “We have a two-year deal, we have the outlines to work on,” Shelby told reporters earlier this week.

“In any president’s budget, and I’ve been here a few years, I’ve never known one to be adopted — Democrat or Republican. A lot of them are unrealistic, lots of them are wish lists and some of them have good stuff,” Shelby said.

Leahy said President Trump’s FY 2020 budget that proposed deep cuts in domestic programs only added to appropriators’ difficulties in writing and moving bills out of committee last summer. He said that he and Shelby don’t want a replay of last year, where no bills moved until September, just weeks before the start of the fiscal year on Oct. 1.

“Our bills were done separate from it and I don’t think anyone expects the president’s budget this year to be anything more than a suggestion,” Leahy said.

Senator Roy Blunt, R-Mo., chairman of the Labor-HHS-Education Subcommittee, said appropriators still will have to set top-line spending figures for each of the 12 bills – called 302(b) numbers – even with the budget caps deal, so a fiscal 2021 budget from the White House that’s politically realistic could increase the odds the process goes more smoothly. “My advice would be to send a budget that’s more realistic to the final outcome than the budgets we’ve gotten in the last few years,” Blunt said.

He added that lawmakers in both parties are likely to once again ignore the deep cuts Trump’s budgets have proposed. He said both parties want to keep domestic funds steady. “When I called the secretaries of Education and Labor and HHS this year, my first comment was ‘you didn’t get what you asked for,’” Blunt said.

Shelby didn’t rule out a budget that seeks more money for Defense than agreed to in the budget caps deal. But he said the most likely vehicle for additional funds will be an “emergency” request to fund heightened military activities in the Middle East. He said he doesn’t know when such a request may come. “We’re always aware they could come but we haven’t seen anything yet,” Shelby said.

Sen. Lisa Murkowski, R-Alaska, who leads the Interior-Environment Subcommittee, said she would like to see funding for a road into Denali National Park. She said the road is slipping a lot but has never been a part of the deferred maintenance list, and she’s hoping the administration has “gotten the word on that one.”

Senate Military Construction-VA Subcommittee Chairman John Boozman, R-Ark., said he sees veterans’ programs getting a boost in the president’s request. “I think we’re going to see another significant increase,” Boozman said, pointing to needs for IT improvement and health care programs at the Veterans Affairs Department, and implementation of a law signed last year to expand a presumption of benefits to veterans who served in waters off the coast of Vietnam. “All those things are going to cost money,” he said.

Senate Appropriations Defense Subcommittee member Susan Collins R-Maine, and Senate Armed Services Committee member Angus King. I-Maine, wrote to Defense Secretary Mark Esper pressing the administration to support a larger Navy fleet. “We write to express our strong support for a 355-ship Navy and to urge continued support from the Department for a robust shipbuilding budget,” they said.

Senate Energy and Water Subcommittee ranking member Dianne Feinstein, D-Calif., is watching for funds to address nuclear cleanup. “We’ve got nuclear waste spread all over the country, in more than 80 different places and we need to get it confined in safe and secure underground placement, and so, that’s been a major priority for me,” she said.

So, we will see. Certainly the appropriations bills are not the only hot potatoes expected in the coming months, but a “modest calming” of the normal tensions over the size of the government and spending proposals are typically strong points of contention and should be watched closely by producers as the spending proposals and talks proceed, Washington Insider believes.

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