Washington Insider-- Wednesday

Impacts of Relief Standoff

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

CFAP Payouts Just Over $7 Billion But USDA Will Make Rest of Payments Now

Payments under the Coronavirus Food Assistance Program (CFAP) total $7.04 billion as of August 10, still short of half of what USDA estimated to be the initial payments based on 80% of the total projected payments.

Just over half of total payments made so far have gone to livestock – $3.54 billion – including $3.07 billion for cattle. Payments to non-specialty crop producers are at $1.85 billion with $1.33 billion for dairy. Specialty crop payments are at $305.6 million, 4.34% of total payments.

But late Tuesday, USDA announced that it will now make the remaining 20% payments to those who have already received the payments and that it would make 100% to new producers enrolling for the aid. Plus, the signup deadline is now pushed back to September 11 from an original August 28.

USDA also added several more commodities to the program, mostly specialty crops, with all sheep now eligible.

USITC Vote Will Continue Countervailing Duty Investigation On Fertilizer

The U.S. International Trade Commission (USITC) voted August 7 that there is a “reasonable indication that a U.S. industry is materially injured by reason of imports of phosphate fertilizers that are allegedly subsidized by the governments of Morocco and Russia.”

The USITC decision means that the U.S. Department of Commerce (DOC) will continue its countervailing duty investigations concerning imports of these products from Morocco and Russia.

DOC is due to make its preliminary determinations on or about September 21.

Some weighed in with the USITC on the impacts that duties could have on farmer, citing potentially higher costs for a key crop input in the coming growing season. However, the request for the investigation was filed by fertilizer producer Mosaic based on the contention that the imports were negatively impact that company.


Washington Insider: Impacts of Relief Standoff

Bloomberg is reporting this week that there are casualties across the nation regarding the outcome of the “failed negotiations on another trillion-dollar plus rescue package for a U.S. economy mired in a historic, pandemic-induced recession.”

Near the top of the list, Bloomberg says, are the families, businesses, and state and local governments that have lost a safety net at a time when some suggest that recent gains in employment “may be transitory as the continuing spread of COVID-19 infection forces a retrenchment.”

Much of the debate comes in spite of recent steps taken by the administration to try to mitigate these impacts – such as diverting disaster money to boost unemployment insurance and suspending collection of payroll taxes for some workers.

President Donald Trump claims his actions “will take care of, pretty much, this entire situation,” Bloomberg says – but many economists disagree and even the administration's top aides have admitted that the Executive Orders are “no substitute for a legislative deal.”

One thing the administration's response didn't do was spark an immediate return to the bargaining table. Treasury Secretary Steven Mnuchin commented Monday that the White House would listen to any proposal put up by Democrats. Speaker Nancy Pelosi, D-Calif., was asked whether talks would resume after two weeks of fruitless negotiations bit offered only that “she hopes so.”

The president said Monday night that Democrats have contacted the administration “and want to get together,” and may be more inclined now to negotiate. However, Democratic congressional aides told Bloomberg that “Democratic leaders have had no contact with the White House since Friday.”

In the meantime, the administration's executive orders are being criticized as a “thinning lifeline of relief for an already stalling U.S. economic recovery,” although Bloomberg reported that some lawmakers are suggesting that the growing concerns may increase “willingness to return to the table for negotiations.” The administration's redirection of disaster aid would provide an additional $300 a week for the unemployed, plus $100 in state funds—down from the weekly $600 in the expired CARES Act.

The president's other major action could potentially have a bigger impact, Bloomberg said as it defers payroll taxes from September through the end of the year for workers who earn as much as $8,000 a month – which could put an extra $600, at most, in employees' pockets.

These steps are proving controversial and are widely seen by Democrats as a backhanded way to defund Social Security and Medicare. The payroll tax deferral would “endanger seniors' Social Security and Medicare,” speaker Pelosi said. President Trump said if he's re-elected in November, he may extend the deferral and terminate the tax for some workers.

Bloomberg notes that throughout his presidency, the administration has faced a barrage of lawsuits from Democrats and liberal advocacy groups challenging its broad assertions of executive power, usually over contentious issues like his crackdown on sanctuary cities or his refusal to cooperate with congressional investigations.

There also are criticisms that Saturday's actions are efforts to wrest core powers away from Congress and are likely to be tied up in litigation over whether they violate core constitutional principles like the separation of powers.

In particular, states are wary of the effort to require them to provide part of the aid being authorized. A day after the administration took executive action to offer $400 per week in supplemental unemployment benefits, including 25% that would be required from state coffers, governors pushed back. The leaders of states including New York and Michigan said the President's plan ignores the cash-strapped reality of most states, which have deep budget holes as a result of the coronavirus pandemic.

For example, New York Gov. Andrew Cuomo said the president's order was based on “shaky ground legally” and it was “impossible” for states to pay. “The concept of saying to states 'you pay 25% of unemployment insurance' is just laughable,” Cuomo said. “The whole issue here was getting states funding.”

Another Democrat, Michigan Gov. Gretchen Whitmer, said requiring states “that are facing severe holes” in their budgets to pay 25% of the funding while the federal government cuts funding for unemployed workers is problematic. “His refusal to provide full federal funding to states across the country to help us combat this virus will hurt the brave men and women on the front lines,” Whitmer said.

In addition to the discussions of economic policy, Bloomberg notes that the pandemic-induced downturn that initially had hints of being the sharpest but shortest on record is now displaying “increasing signs of economic scarring” that resemble past slumps. Beneath a headline number showing a better-than-expected gain in July jobs, the government's recent employment report contained indications of underlying weakness. Payrolls remain 13 million below pre-pandemic levels and the number of people out of work for 15 weeks or longer more than doubled from the prior month, to 8 million. The labor-force participation rate fell for the first time in three months and the number of people discouraged by job prospects hit a five-year high.

So, we will see. Clearly, both the economic pressures and the tense pre-election climate are affecting the debates now underway. These are tense and involve high stakes, and should be watched closely by producers as they intensify, Washington Insider believes.

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