Washington Insider-- Friday
Old Political Hurdles on Infrastructure Remain
Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
Scott, Costa Throw Hat Into the Ring For House Ag Panel Chair
While ag interests are still reeling with the defeat of House Ag Committee Chairman Collin Peterson, D-Minn., in Tuesday's election, Washington appears focused on who will take over that spot on the committee.
Many have talked of Rep. Marcy Fudge, D-Ohio, as a potential successor. Fudge chairs the Nutrition, Oversight, and Department Operations Subcommittee and has focused much of her attention on those programs as a member of the panel.
But Rep. David Scott, D-Ga., chairman of the Commodity Exchanges, Energy, and Credit Subcommittee and number two in seniority on the Democratic side of the full committee, has thrown his hat into the ring to take over the top post.
While touting farm roots in Georgia in a deal colleague letter announcing he was seeking the chairman's gavel, Scott also said the core focus of the panel includes food, nutrition and financial resources.
His message to other lawmakers is that he would focus the panel on farm, food, nutrition and other issues. Noting he would be the first African American to chair the House Ag panel, Scott said if selected, he would have a “principled focus on addressing inequities in agriculture and advancing racial progress for all.”
Also making a push for the chair is Rep. Jim Costa, D-Calif., who falls right behind Scott in seniority on the committee for Democrats. Costa chairs the Subcommittee on Livestock and Foreign Agriculture and has served on the committee since 2005. His district represents one of the major agricultural regions of California.
FY 2020 US Ag Exports Beat Forecast, Imports Set A New Record
Exports of U.S. agricultural products reached $135.9 billion in Fiscal Year (FY) 2020 with imports at $133.2 billion for a trade surplus of just $2.7 billion.
USDA in August forecast FY 2020 ag exports at $135.0 billion against imports of what would have been a record $131.7 billion which would have resulted in a forecast surplus of $3.3 billion.
The FY 2020 export mark is just above the $135.5 billion figure registered in FY 2019 but well short of the FY 2018 mark of $143.4 billion and even further below the FY 2014 record of $152.3 billion.
What moved the export and import figures past forecast levels were September U.S. ag exports of $12.2 billion against imports of $11.0 billion for a monthly trade surplus that was at $1.3 billion. The monthly export total was the largest since November 2019 and imports were at their highest since June.
U.S. agriculture registered a trade deficit six months during FY 2020, including a record of $1.13 billion in June.
For FY 2021, USDA in August forecast exports to rise to $140.5 billion against imports forecast at $136 billion for a surplus of $4.5 billion.
Bloomberg is reporting this week that a renewed fight on infrastructure funding is likely this fall. Both presidential candidates made sweeping campaign promises to strengthen the nation's roads, bridges and other infrastructure, but the issue has long defied solution. As a result, Bloomberg says that the next president likely will hit the same speed bump that has plagued Washington for years: how to pay for it.
Former Vice President Joe Biden, like President Donald Trump, didn't commit in his campaign platform to a concrete way to raise revenue for the ailing Highway Trust Fund, the federal government's central mechanism for paying for highways and transit. The fund is facing insolvency because it mainly relies on gasoline and diesel fuel taxes, which haven't increased since 1993.
President Trump, despite vows to “rebuild our country” and two years of Republican control of both chambers of Congress, was unable to address the shortfall so far during his presidency. Even as Congress faced a deadline to reauthorize federal funding for highways, transit, rail, and safety programs earlier this year, lawmakers from both parties instead punted the problem to next September.
“I've tried this before. We're not going to be able to raise the gas tax,” Biden, who voted to increase the gas tax in 1993, said at a forum on infrastructure in February.
“There are an infinite number of ways to be able to fund this, thinking creatively,” said Chris Campbell, who helped shape the last major transportation law as Republican staff director of the Senate Finance Committee.
Rail supporters are also hoping Biden, sometimes called “Amtrak Joe,” would deliver a long-sought victory on the $11 billion Gateway rail tunnel project under the Hudson River between New York City and New Jersey, which supporters say has languished under Trump.
Lawmakers have traditionally opposed tinkering with taxes unrelated to transportation to pay for infrastructure, such as corporate or payroll levies, Campbell said. To pay for the last long-term transportation law, lawmakers used a slew of funding tools, such as requiring the Energy Department to sell crude oil from the country's emergency supply.
“There are as many proposals as there are members of Congress” on the Transportation and Infrastructure Committee, ranking member Sam Graves said ahead of Election Day.
Democrats will likely use a measure from House Transportation and Infrastructure Chairman Peter DeFazio, D-Ore., a $500 billion highway, transit, and rail measure from this Congress. The measure was already passed by the House and is expected to be the starting point for negotiations this fall — although that legislation lacks a specific proposal to fix the Highway Trust Fund. It would instead dodge the problem by transferring about $145 billion to the Highway Trust Fund from the general fund.
Republicans, such as Graves, have long called for a transition to taxing the miles people drive, known as vehicle miles traveled, as opposed to gallons of gasoline used. A 2019 report from the Congressional Budget Office found that a vehicle miles traveled tax on trucks would alleviate at least some of the shortfall in the Highway Trust Fund. However, that revenue boost would come at a higher cost to the federal government than the administrative costs of collecting the current diesel fuel tax.
DeFazio's bill would establish a national vehicle miles traveled fee pilot program that would include commercial and passenger vehicles. It wouldn't fully replace the gas tax.
“We have a lot of people out on the road that simply aren't paying for the use of that road,” Graves said.
There's also the question of how the election winner would spend infrastructure money. Biden's plan aligns with DeFazio's bill in that it melds climate priorities with transportation policy, though it doesn't offer many specifics on existing programs. Biden is expected to use the Department of Transportation or other agencies to accomplish the plan's goals. His proposal highlights spending for public transit, a component of transportation policy that Republicans have typically played down.
President Trump hasn't released a concrete infrastructure proposal during his time as president, though he did endorse a bill approved by the Senate Environment and Public Works Committee, which included a climate change section for the first time in highway legislation.
Transportation for America, a group run by former Obama Department of Transportation official Beth Osborne, has long argued that Congress must set goals about what should be achieved with any transportation program, as opposed to arguing about how much money should be spent. The group supports DeFazio's bill because it charts a path to updating policy.
“Putting more money into existing programs doesn't work,” Osborne said in a phone interview before Election Day.
So, we will see. The first priority of the next congress is likely to be to stimulate the economy — a fight many expect to be bloody given that the Congress still is likely to be deeply divided. However, infrastructure also is likely to be high on the list—and figuring out how to pay for those costly investments is expected to be just as difficult as it has in the past and to include a number of bitter fights that producers should watch closely, Washington Insider believes.
Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN's Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the US Ag Policy, US Farm Bill and DTN Ag News sections on their News Homepage.
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