Washington Insider-- Tuesday

Comments on Spending Bills and the Economy

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

Soybean Growers Join Calls for EPA to Reject Retro Refiner Exemptions

The American Soybean Association (ASA) has become the latest group to call on EPA Administrator Andrew Wheeler to reject 52 pending retroactive Small Refinery Exemption (SRE) requests and apply a 10th US Circuit Court decision curbing the granting of the waivers.

“The approval of these gap filings would deal a devastating blow to soybean farmers and biodiesel producers by stifling demand for biodiesel,” wrote ASA President Bill Gordon. “Simply put, protecting the RFS is a priority of our organization. We urge you to consider the perspective of the soybean farmer as EPA addresses this gap filing issue.”

ASA said prolonged uncertainty in the biofuel sector created by the SRE issue “continues to stifle investment in American biofuels, destabilize agriculture markets and hurt U.S. soy growers, who are already grappling with supply chain disruptions due to COVID-19, the U.S.-China trade war, and other causes of instability.”

Japan Boosts Port Inspections For Some US Commodities

Japan has increased port inspections for seven U.S. commodities due to COVID-19. Japan has temporarily increased on-arrival inspections for fresh cherries, mangoes, papayas, nectarines, prunes, fresh potatoes and hay, according to a report from USDA's ag attache in Tokyo.

Before COVID-19, Japan used annual on-site phytosanitary inspections for certain U.S. ag exports. “During these inspections, Japanese inspectors travel to the United States to verify that production sites are free of quarantine pests of concern for Japan,” the report said. “Due to COVID-19-related travel restrictions, Japanese inspectors have not been able to visit the United States to carry out on-site inspections in the 2020 growing season.”

The increased inspection rates will stay in place until inspectors can travel to the U.S. without restrictions, the report said.


Washington Insider: Comments on Spending Bills and the Economy

Some things are almost eternal, including Congressional fights over spending.

Bloomberg is reporting this week that House Democrats plan to fight President Donald Trump on numerous issues, including World Health Organization funding, military bases named after Confederate officers, border wall money and limits on food stamp eligibility, as fiscal 2021 spending negotiations ramp up.

And, Bloomberg notes, “that's just the first three of their 12 annual appropriations bills.” Democrats released their State and Foreign Operations, Agriculture-FDA, and Military Construction-VA spending measures this week and plan to quickly complete subcommittee markups.

To nobody's surprise, “the contents of the bills foreshadow a difficult path” to funding the government during a presidential election year, pandemic, and nationwide civil-rights debate, the report says.

House appropriators plan to hold subcommittee markups this week for Homeland Security, Interior-Environment, Legislative Branch, Energy and Water, and Labor-HHS-Education. Finally, they're also scheduled to release this week their Commerce-Justice-Science, Transportation-HUD, Financial Services, and Defense bills ahead of “midweek” markups.

Senate appropriators, meanwhile, are “stuck” less than three months before the Sept. 30 deadline to fund the government. Democrats have said they want to offer amendments on the coronavirus response and the national outcry over police violence, issues Republicans believe are so controversial they'd ruin any chance of bipartisanship. Due to the stalemate, the chamber's appropriators haven't released any bills or scheduled markups.

Bloomberg lists several “major takeaways” from the first three House Democratic appropriations bills, and begin by noting the funding proposed for the World Health Organization, which would force the president to send $200 million to the organization despite his plan to cut off payments.

The Agriculture-FDA bill would block the administration's rule limiting Supplemental Nutrition Assistance Program eligibility for able-bodied adults without dependents. It would also undo line-speed waivers for meat and poultry processing plants.

The federal government in April approved a record number of line-speed waivers for poultry slaughterhouses in a single month--which worker-safety advocates and unions have said increases the risk of on-the-job injuries.

In addition, the House Military Construction-VA spending bill would bar funds for installations named after Confederate officers, a move that doubles down on a provision in the annual defense policy measure that would require officials to rename some military bases. That bill also would also bar funding for a wall on the southern U.S. border, and block the administration from funding military construction projects where money has been reprogrammed to build border barriers.

The bill's $581 million Base Realignment and Closure fund includes $200 million for cleanup of per- and polyfluoroalkyl substances, often called “forever” chemicals, including Perfluorooctane Sulfonate and Perfluorooctanoic Acid contamination.

In addition to its reporting on spending legislation, Bloomberg reports that CBO now expects lower real GDP from late 2019 to late 2020, reflecting its revisions to previous estimates of a slower economic bounceback in the second half of this year.

Fourth-quarter real GDP is now projected to fall 5.9% in 2020, before increasing 4.8% in 2021, CBO said last week. It had projected in May real GDP would fall 5.6% from late 2019 to late 2020. The current outlook is mostly similar, “except that economic growth in the second half of 2020 is now projected to be slower,” CBO said.

Real, inflation-adjusted GDP is expected to recover to its pre-pandemic level by mid-2022, CBO said, but that the unemployment rate likely will not return “to its late 2019 level of 3.5% for much of the coming decade. It's expected to be 10.5% at the end of 2020 and 7.6% in late 2021, CBO said.

The projections are “surrounded by an unusually high degree of uncertainty” due to the coronavirus, the report says.

So, we will see. There is little that is surprising in most of these fights, although the outcome seems increasingly difficult to forecast, as CBO notes. Certainly, the pre-election politics is bitter and controversial, and will intensify until the fall election, and beyond, and should be watched closely by producers as it emerges, Washington Insider believes.

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