Washington Insider -- Tuesday

The Next Anti-virus Subsidy Bill

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

USDA Seen Sending Ag Aid Plan Forward This Week

President Donald Trump late last week said that USDA would be coming soon with an aid plan for U.S. ag producers, with the package to be around $16 billion. That figures to be the $9.5 billion in the third round of COVID-19 aid that is to “support agricultural producers impacted by coronavirus, including producers of specialty crops, producers that supply local food systems, including farmers' markets, restaurants, and schools, and livestock producers, including dairy producers.”

Plus, there is around $7 billion to $9 billion in Commodity Credit Corporation (CCC) authority remaining.

Indications are the plans for the aid will head to the Office of Management and Budget (OMB) this week, with announcement of the effort either yet this week or next week, according to contacts.

The broader aid effort involving the additional $14 billion in CCC authority will not come immediately as USDA Secretary Sonny Perdue has indicated the additional CCC authority is not available until July.

USDA Confirms HPAI in South Carolina Turkey Operation

USDA Thursday confirmed that the first case of highly pathogenic avian influenza (HPAI) since 2017 had been confirmed in a commercial turkey operation in South Carolina.

The situation prompted several adjustments to U.S. export markets, with only the European Union (EU) and some other smaller customers for U.S. poultry deploying blanket bans on all U.S. poultry. The EU one is somewhat surprising in that during the 2015 HPAI outbreak in the U.S., the EU deployed more-targeted restrictions.

Most U.S. poultry importing countries have blocked imports from the area immediately surrounding the detected case, from the county involved or all of South Carolina.

China and South Korea have not deployed blanket bans on U.S. poultry in the wake of the find of the H7N3 HPAI find.

The phase-one agreement with China called on the two sides to agree to a regionalization of poultry issues – that any trade bans in the event of something like bird flu could not be nationwide bans.

Washington Insider: The Next Anti-virus Subsidy Bill

Pressure is mounting for the “next” virus subsidy bill but The Hill is reporting that some GOP lawmakers are seeking to hold back, at least for now. Others such as Sen. Josh Hawley, R-Mo., are calling for a rapid infusion of new federal aid costing trillions of dollars.

The report also notes that at the state level, Republican Gov. Larry Hogan of Maryland, the chairman of the National Governors Association, is spearheading a push for an additional $500 billion to states.

At the same time, there is another fight underway. Some GOP voices such as Sen. John Kennedy, R-La., want to speed up the timeline for reopening the U.S. economy instead of having U.S. taxpayers supplant the role of private employers.

The Trump administration and Senate Republicans agree that Congress needs to approve at least another $250 billion for the broadly popular Paycheck Protection Program, a small-business lending program that will forgive loans to employers who keep workers on payroll. The initiative was allotted $349 billion late last month.

But actually defining that step is proving to be hard.

Hawley made a splash this past week with a Washington Post OpEd calling on the federal government to immediately start covering 80% of wages for workers at any U.S. business, up to the median wage, for as long as the crisis lasts.

He also proposed a bonus for businesses that rehire workers laid off over the past 30 days.

However, such a bold government intervention quickly drew opposition from some of his fellow Republicans.

“I think it’s way too broad. I think a much more focused approach is needed,” said former Sen. Judd Gregg, R-N.H., who once chaired the Senate Budget Committee and served as an adviser to Senate Majority Leader Mitch McConnell, R-Ky., and his leadership team.

He thinks it’s better to wait and see how the $2.2 trillion coronavirus relief package, which became law on March 27, plays out. “They should be ready to pass another initiative, but I don’t think they need to pass it immediately,” he said.

“We got to get this economy back open,” Kennedy said. Government shut it down.”

McConnell and his leadership team have endorsed the wait-and-see approach. He says Congress should focus first on patching up problems and oversights in last month’s $2.2 trillion measure, which was hastily negotiated in less than a week with McConnell, Treasury Secretary Steven Mnuchin and Senate Democratic Leader Charles Schumer, D-N.Y.

“The country needs us to be nimble, to fix urgent problems as fast as we can, to be able to have focused discussions on urgent subjects without turning every conversation into a conversation about everything,” McConnell said. The GOP leader argued that Schumer and Speaker Nancy Pelosi, D-Calif., are pushing for more money for state and local government budgets when “literally no money has gone out the door yet.”

Democrats say a phase-four coronavirus relief package should be at least $500 billion, double the small-business infusion McConnell sought last week. But it’s not clear if the GOP leader’s preference for slowing legislative action is supported by Mnuchin.

Schumer announced said on Friday that he thinks a deal with the Treasury secretary is possible early this week. He said he had a constructive call with Secretary Mnuchin last week during which he agreed to pursue bipartisan talks with the House and Senate Democrats and Republican leadership on interim Emergency Coronavirus Relief legislation. And, he thinks “There’s no reason why we can’t come to a bipartisan agreement.

Schumer’s statement indicated he’s now interested in a four-person negotiation between the top Republican and Democratic leaders in the Senate and House. McConnell rejected that format last month ahead of the negotiations on the phase-three bill.

Republican senators, however, want direct involvement in the talks, and some are skeptical of Mnuchin’s commitment to conservative principles, especially after he negotiated the second coronavirus relief package almost entirely with Pelosi.

GOP lawmakers such as Sen. Tom Cotton, R-Ark., were furious that Mnuchin agreed to mandating two weeks of sick leave for medium-sized businesses. And, GOP leaders in Congress also are coming under pressure from governors in both parties.

The National Governors Association on Saturday asked Congress for $500 billion to help states facing budget deficits from their fight against the coronavirus.

“Congress must appropriate an additional $500 billion specifically for all states and territories to meet the states’ budgetary shortfalls that have resulted from this unprecedented public health crisis," the group said

That could be a big ask. Bailing out state budget shortfalls is not a popular idea in the Senate GOP conference. “We’re generally not interested in bailing out the states,” Sen. Ron Johnson, R-Wis., said when the previous coronavirus bill was being crafted. “They’re their own form of government. They have their own taxing authority.”

So, we will see. Much depends on the virus and how the measures employed against it succeed in tamping it down, actual life or death measures that producers should watch closely as the country attempts to deal with this evolving disease threat, Washington Insider believes.

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