Washington Insider-- Monday

New Coronavirus Stimulus Fight

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

USDA CFAP Webinar Reveals Few Details on Program

USDA’s webinar to provide information about the Coronavirus Food Assistance Program (CFAP), as expected, provided little detailed information on how the program will function, including the key issue of payment limits.

Instead, the 15-minute session focused on the number of forms that will need to be completed by producers to participate. Officials took few questions during the session and did not provide details when asked about specific commodities and livestock eligible for CFAP payments.

Ahead of the webinar, it was clear USDA was likely focusing the session on those producers who currently do not participate in U.S. farm programs, like specialty crop producers.

USDA expects the final rule for the program to be out soon – it currently has training for FSA staff May 21 and 22.

WTO Chief Announces Early Exit

WTO Director General Roberto Azevedo announced Thursday he will seek to exit his role leading the world trade body August 31 and called for action to replace him.

His departure is a year ahead of the scheduled end of his term leading the WTO.

U.S. Trade Representative Robert Lighthizer said the U.S. would participate in the process of finding a successor. “Despite the many shortcomings of the WTO, Roberto has led the institution with grace and a steady hand,” Lighthizer said in a statement. “In the coming months, the United States looks forward to participating in the process of selecting a new Director General."

The trade body and its predecessor the General Agreement on Tariffs and Trade (GATT) have not been led by someone from the U.S., Africa or the Middle East, while five of the nine leaders of the trade bodies have been European.

Washington Insider: New Coronavirus Stimulus Fight

Politics has become increasingly difficult and opaque these days as the House completed work on a new $3 trillion economic stimulus bill that Republicans and President Donald Trump say has little chance of passage without major changes, Bloomberg says.

The measure would give cash-strapped states and local governments more than $1 trillion while providing most Americans with a new round of $1,200 checks. House Speaker Nancy Pelosi, D-Calif., says it should be the basis of talks with the GOP-controlled Senate and White House, in spite of GOP concerns. The measure was praised by New York Governor Andrew Cuomo, a Democrat whose state has been hammered by coronavirus-related expenses and plunging revenues.

Cuomo also criticized what he called a rising tendency to look at the COVID-19 death toll by political affiliation, since the hardest-hit states are led by Democrats. “Shame on you,” he said.

New Jersey Governor Phil Murphy also urged action in the Senate, citing a “bipartisan chorus” that wants to help struggling states. The funding contained in Pelosi’s bill is “absolutely necessary,” he said.

Trump and Republican congressional leaders have acknowledged, however, that some sort of further economic stimulus will likely be necessary as the economy continues to shed jobs. The number of people filing for unemployment benefits since March now exceeds 36 million.

“Phase four is going to happen but it’s going to happen in a much better way for the American people,” the president told reporters Friday.

Amid the House effort to pass another stimulus bill, The Hill reported that Federal Reserve Chair Jerome Powell shook markets and alarmed lawmakers this week with yet another dire warning: The U.S. could suffer through years of sluggish growth and meager job gains well after the pandemic passes without further economic stimulus, he said.

In a speech Tuesday, Powell urged lawmakers to set aside concerns about the mounting national debt and provide the fiscal support necessary to keep the economy from spiraling deeper into the worst downturn since the Great Recession.

“Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery. This trade-off is one for our elected representatives, who wield powers of taxation and spending,” Powell said. His comments were in spite of those by White House officials and other GOP leaders who declared a “formal pause” on negotiations even as the unemployment rate spiked to 14.7% and the U.S. lost 20.5 million jobs in April.

Powell’s current call for aggressive fiscal action was not his first since the coronavirus pandemic “forced thousands of businesses to close and millions of Americans to lose their jobs.” He urged lawmakers in a speech on April 29 to unleash the “great fiscal power” of the U.S. to defeat COVID-19 and has warned throughout the crisis the Fed’s unprecedented response alone would not save the economy.

Powell is also only one of the latest in a line of Fed chiefs -- including his past two predecessors, Janet Yellen and Ben Bernanke -- to nudge Congress toward spending more than it might be comfortable spending.

In the current outbreak, Powell was among the first federal officials to express concerns over its potential threats as President Trump and his top aides initially appeared to brush off the rising danger, The Hill said.

The Fed’s swift response helped stabilize financial markets as the U.S. lockdown began and earned Powell near unanimous praise. Even the president, who once “floated” firing him, has more recently called him his “Most Improved Player” despite his fierce defense of the Fed’s political independence. "He has done a very good job over the last couple of months, I have to tell you that," Trump told reporters during a meeting this week.

Powell’s most immediate challenge now is to convince fellow Republicans to overlook their ideological opposition to deficits and steer the country through the current worsening crisis, The Hill says.

The Hill notes that Powell had caught the attention of the Obama White House in 2011 when he implored Republicans to raise the federal debt limit when he was a fellow at the Bipartisan Policy Center. President Obama then nominated him to the Fed alongside a stalled Democratic nominee, former Fed Governor Jeremy Stein. The Senate confirmed both in May 2012.

Once again, Powell is imploring Republicans to loosen the federal pursestrings for now and tackle the long-term challenge of the $24 trillion debt “amid a partisan showdown.”

Democrats have seized on Powell’s recent comments to boost pressure on Republicans to approve more spending. He argued that this week that the costliest choice the Congress faces is inaction, The Hill said.

So, we will see. There appears to be widespread belief now that governments who did not provide significant relief in the recent recession had much worse outcomes than those that did, although a number of politicians are arguing for a somewhat more cautious approach in the future, This is a debate that Powell appears to be well positioned to influence and which should be followed closely as it intensifies, Washington Insider believes.

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