Washington Insider-- Tuesday

Budget Fight Begins in Earnest

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

Australia-China Trade Tensions Continue To Rise

China announced tariffs of up to 212% on Australian wine, contending the country uses subsidies to bolster its exports. The move is the latest instance of a decline in Sino-Australian relations, and Simon Birmingham, Australian Trade Minister, said they would amount to a “devastating blow” for Australian business as china accounts for 42% of Australian wine exports.

Australia is also preparing to take action against China at the World Trade Organization (WTO) over tariffs on barley imports.

China in May placed tariffs of 80.5% on Australian barley, saying it was being sold at unfairly low prices with the help of subsidies. Australia rejected that finding and directly appealed to Chinese authorities to reverse the duties but was rebuffed. “So now the WTO appeal for barley is the next step,” Birmingham said Sunday. The government is holding talks with the local grains industry and other sectors to gauge support for filing a complaint, he added.

The rising tensions have resulted in some benefits to the U.S., but surprisingly no U.S. barley exports have taken place thus far even though the Phase One agreement also resulted in a China-U.S. accord on barley.

USDA Forwards Plan To OMB On Regs For GE Animal Movement

USDA has forwarded to the Office of Management and Budget (OMB) what is being labeled a pre-rule on regulations covering the movement of animals that are modified or produced by genetic engineering.

The rule was sent to OMB November 25 and there is no statutory deadline for the item and it is not clear yet what direction USDA plans to head on the topic.

Plus, given that it is not even in the proposed rule stage, the issue could well be finalized by the incoming Biden administration.


Washington Insider: Budget Fight Begins in Earnest

Bloomberg is reporting this week that key Republicans have withheld support for an initial agreement on government funding totals, as lawmakers continue to work toward a deal on an omnibus appropriations measure by the end of next week.

House Minority Leader Kevin McCarthy, R-Calif., is opposed to an agreement by Rep. Nita Lowey, D-N.Y., and Sen. Richard Shelby, R-Ala., who lead the House and Senate Appropriations Committees. President Trump hasn't commented on the agreement and White House Office of Management and Budget staff didn't respond to Bloomberg's request for comment.

Broad Republican opposition to an agreement on allocations would make it difficult for lawmakers to agree to an omnibus by the Dec. 11 funding deadline, increasing the odds of either a stopgap measure or a shutdown, Bloomberg said.

Lowey and Shelby agreed last Tuesday to a set of top-line spending allocations for all 12 appropriations categories, allowing lawmakers to start negotiating the details of an omnibus. The agreement covered emergency funding expected to be proposed, Bloomberg said and was thought to overcome a major disagreement in current spending discussions. House Democrats had included $247.4 billion in emergency funds that would be exempt from statutory spending limits, while Senate Republicans only included $12.5 billion in emergency funds.

It's unclear how much emergency money is included now in the current draft agreement--lawmakers and aides haven't provided details and tend to be secretive with initial agreements on top-line spending allocations, Bloomberg said.

But McCarthy, a Trump ally, told the press he isn't happy with the agreement's emergency funds, which go beyond the bipartisan 2019 agreement on how much discretionary money to spend in fiscal 2020 and 2021, Bloomberg said.

The White House was initially silent on the idea of an omnibus appropriations package, rather than smaller bills or a stopgap measure, until Chief of Staff Mark Meadows made it clear Trump wanted a deal.

So, appropriators also are preparing another short-term, stopgap bill into next year, just in case, Bloomberg says.

It's possible the House will complete its legislative business early the week of Dec. 7, according to a schedule update by House Majority Leader Steny Hoyer, D-Md., a sign that House leaders haven't ruled out a quick deal ahead of the Dec. 11 deadline. Hoyer's update encouraged House members to stay in Washington after the last scheduled votes of the week on Friday.

“As conversations surrounding legislation related to government funding, coronavirus relief, and a few other items are ongoing, these bills will be considered by the House as soon as they are ready,” the most recent update said.

Also, President-elect Joe Biden is expected to take a significant step this week toward addressing the damage to the U.S. economy inflicted by the coronavirus pandemic, as he names an economic team led by his choice for Treasury secretary, former Federal Reserve Chair Janet Yellen. She is seen as a “battle-tested policy maker” who can draw on her nearly two decades at the Fed to help rebuild an economy in dire need of government cash and confidence.

The President-elect has called for trillions of dollars in new stimulus to aid the small and mid-size businesses that are the nation's primary jobs engine.

Yellen's expected to champion what she's called “extraordinary fiscal support” to support the pandemic-ridden economy--deficit spending that she says is affordable given extraordinarily low interest rates.

Others in Biden's economic policy team are also expected to be unveiled in the next few days including longtime Democratic policy staffer Neera Tanden who is expected to lead the Office of Management and Budget as well as Cecilia Rouse, formerly of the Obama administration and currently dean of Princeton University's School of Public and International Affairs, who would head the Council of Economic Advisers. Both roles require Senate confirmation and observers expect at least Tanden's nomination to be controversial.

So, we will see. Dealing with spending bills likely will continue to be controversial, as will the proposals for membership in the new economic policy team. And while there is little enthusiasm for a standoff on the spending proposals this fall, this is a “hardball era” in Washington and bitter fights among competing interests in both parties are intensifying along with the lingering hostilities over the legitimacy of the recent election. These are important fights in many cases and should be watched closely by ag producers as they emerge, Washington Insider believes.

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