Washington Insider-- Tuesday

Jobs Report and Spending Deal

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

Peterson Urges Deal on Brazil Ethanol Duties

House Agriculture Committee Chairman Collin Peterson, D-Minn., is urging the Trump administration to quickly reach a deal with Brazil to scrap its duties on U.S. ethanol.

Tariffs on U.S. ethanol to Brazil stand at 20% after an earlier tariff-rate quota (TRQ) arrangement expired August 31. “Brazil's move to increase tariffs on American ethanol is more bad news for our producers. The Trump Administration should continue working with Brazilian officials to restore the duty-free access that was in place from 2012 to 2017,” Peterson said in a Friday (September 4) statement.

“Tariff wars have consequences, and our biofuels producers are seeing that firsthand," Peterson remarked of the lack of an agreement to head off the higher duties.

EPA's Wheeler Promises More Regulatory Easing If Trump Reelected

President Trump would continue his efforts to ease regulatory burdens on businesses if re-elected for a second term, while also working to eliminate slowdowns that have delayed Superfund projects, Environmental Protection Agency (EPA) administrator Andrew Wheeler said.

In an interview with the Wall Street Journal, Wheeler said a second term for the Trump administration would allow his agency to press forward with measures such as including a cost-benefit analysis of any new regulations.

He would also push for expanded “science transparency,” requiring the scientific justification behind new regulations to be disclosed. Wheeler expanded on his priorities for a possible second Trump term Thursday (September 3) at the Nixon presidential library in Yorba Linda, Calif. The event commemorated the 50th anniversary of President Nixon establishing EPA in 1970. “The EPA's mission has been straight forward since its founding: protect human health and the environment,” Wheeler said in remarks at the event.


Washington Insider: Jobs Report and Spending Deal

Federal Reserve Chairman Jerome Powell sees the U.S. unemployment data for August as positive but cautions that the economy's recovery from the pandemic has a long road ahead.

“The recovery is continuing; we do think it will get harder from here,” Powell said in a Bloomberg report. Friday's jobs report was “a good one,” he said, adding that “to get us back to full employment, we're going to have to get the disease under control.”

“There may be a modest slowing in the pace of improvement, but improvement goes on. And in the labor market, I would say it goes on at least at the pace we expected.”

Powell spoke following a Commerce Department report that said the US labor market extended its rebound for a fourth month in August, with the unemployment rate falling by almost 2 percentage points, to 8.4%. The much better-than-expected improvement in the jobless rate spanned demographic groups, while the payroll gains of 1.37 million were broad-based across industries.

Other recent economic data have been mixed, however. While a measure of manufacturing expanded in August at its fastest pace since late 2018, consumer spending--the heart of the U.S. economy--decelerated in July, Bloomberg noted.

Powell suggested that more support for the unemployed and small businesses may be necessary to help Americans hard hit by the coronavirus crisis. Lawmakers remain deadlocked on another aid package, with Democrats pushing for a much bigger program than Republicans and the White House are willing to agree to.

There was also some welcome news from the administration, the Washington Post reported. It said that Treasury Secretary Steven Mnuchin said Sunday that he and House Speaker Nancy Pelosi D, Calif., have agreed to work on a short-term spending bill to avert a government shutdown Oct. 1, weeks before the election.

“The speaker and I have agreed we don't want to see a government shutdown,” Mnuchin said.

Mnuchin said he expects a “continuing resolution” to extend government funding into December— although the date has not yet been agreed on.

Without action by Congress, agency funding would expire at midnight Sept. 30, and the government would begin to shut down. Mnuchin's comments suggest that the White House is not girding for a clash over this spending deadline, though White House officials have in the past tried to negotiate deals with Democrats in Congress only to have President Trump announce that he is opposed at the last moment.

A spending bill into December would allow lawmakers to return to the Capitol for a “lame-duck” session following the election and complete spending legislation for the 2021 fiscal year that starts Oct. 1.

Short-term spending bills have become routine for Congress in recent years as lawmakers have failed to reach “on time” agreement on the 12 annual must-pass spending bills that fund the government agencies. This so-called “discretionary spending” accounts for about one-third of the overall federal budget, while programs such as Medicare, Medicaid and Social Security that continue automatically from year to year make up the rest.

The House leadership confirmed earlier this past week that Speaker Pelosi supports passage of a so-called “clean CR,” meaning a government funding bill without extraneous legislation attached.

“The good news is we've agreed on a clean CR, and I hope by the end of the week, we can begin moving forward with that, because that's important to the American people,” Mnuchin said.

“The most important thing is to make sure at the end of the month, we don't shut down the government and we get something past the election,” he said.

At the same time, Mnuchin repeated his view that more stimulus is needed for the economy. The Washington Post noted that talks on additional coronavirus economic relief legislation broke down in August and have remained stalled. Lawmakers will return to the Capitol today and leaders in both parties say they hope to reach agreement on a new coronavirus relief bill.

But they remain far apart and it's unclear whether a deal will be possible. Democrats are unwilling to agree to legislation that spends less than $2 trillion, while Republicans say that figure is too high.

Senate GOP leaders have been hoping to try advancing a slimmed-down bill costing about $500 billion, but they've struggled to reach agreement even on that. The latest hang-up involves a push by Sen. Ted Cruz R-Texas, for a school-choice provision opposed by some fellow Republicans.

Sen. John Barrasso R-Wyo., a member of the Senate GOP leadership, said Sunday that Senate Republicans anticipate opposition from Pelosi and Senate Minority Leader Charles E. Schumer D-N.Y., to their emerging bill.

“We have a targeted package that the Republicans want to put forward to help people get back to work,” Barrasso said on Sunday.” “There's paycheck protection money in there for our small businesses to continue. I expect Chuck Schumer and Nancy Pelosi to block that,” Barrasso said.

So, we will see. The general mood in Washington is as toxic as ever, and may even be worsening, observers say. As always, the spending and antivirus proposals should be watched closely by producers as they intensify, Washington Insider believes.

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