Washington Insider-- Wednesday

Biden Administration's Large-Scale Economic Plan

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

Ag Groups Press For Action On US-Mexico Issues Under USMCA

U.S. ag and commodity organizations continue to press the Biden administration on agricultural trade issues with Mexico, calling for continued action on implementation of the U.S.-Mexico-Canada Agreement (USMCA).

The groups highlighted several existing and emerging friction points in U.S.-Mexico ag trade relations, including actions related to biotech crops, organics, market access and enforcement of European Union (EU) geographic indications (GIs). The groups noted that biotech crop issues and Mexico's actions on glyphosate are significant issues and create “a significant risk and uncertainty to cross-border trade of corn and corn products.”

The groups also noted that U.S. dairy market access to Canada remains an issue that needs to be addressed. The groups' letter came as newly installed U.S. Trade Representative Katherine Tai held virtual discussions with her Canadian counterpart on USMCA and other issues.

USDA Increases SNAP Benefits With Funding From American Rescue Plan

USDA on Monday announced a 15% increase in Supplemental Nutrition Assistance Program (SNAP) benefits through September 2021, providing an estimated $3.5 billion to households experiencing food insecurity during the COVID-19 pandemic.

The funding was part of the American Rescue Plan. The 15% increase in SNAP benefits will provide about $28 more per person, per month, or more than $100 more per month for a household of four, in additional SNAP benefits.

“We cannot sit by and watch food insecurity grow in the United States,” said USDA Secretary Tom Vilsack. “The American Rescue Plan brings help to those hurting the most due to the pandemic. It increases SNAP benefits so households can afford to put food on the table. It invests in working people and small towns and small businesses to get the economy back on track. And it makes the most meaningful investments in generations to reduce poverty.”

Washington Insider: Administration's Large-Scale Economic Plan

Bloomberg is reporting this week that the White House is preparing to send to the president a large-scale economic plan that's “expected to make infrastructure and climate change its leading priorities.”

The proposed programs are expected to include as much as $3 trillion worth of measures to include in the long-term economic investments that will follow the $1.9 trillion coronavirus relief bill signed earlier this month.

Infrastructure and climate change have long been described as major priorities in the proposals and new details show the administration is looking at some $400 billion for so-called green spending, according to persons involved in the effort. The plan also addresses investing in human capital, with tuition reductions proposed for minorities along with health care initiatives.

Unlike the COVID-19 emergency-spending program, the longer-term proposals will feature a major revenue-raising effort. Bloomberg said increasing corporate taxes and rates for the wealthy are expected to be core components of what's set to amount to the biggest tax increases since the 1990s.

The New York Times and Washington Post both reported earlier on White House discussions of the new investment program that Bloomberg says likely will be divided into two main components. The $3 trillion investment figure compares with economists' estimates that ranged of around $2 trillion to $4 trillion. Bloomberg noted that no final spending total has yet been decided on and $3 trillion is what will be presented for consideration at this time.

In related news, Bloomberg said that the rich got richer in the U.S. last year, as wealth created by rebounding stock and real-estate markets skewed toward high earners. The richest 1% of households saw their net worth rise by some $4 trillion in 2020, meaning that they captured about 35% of the new wealth generated nationwide, according to the latest quarterly study of household wealth from the Federal Reserve. The poorest half of the population, by contrast, got about 4% of overall gains, Bloomberg said.

Widening wealth gaps during the pandemic have become a key driver of Biden administration policy, cited by officials as reasons for the proposed tax increases on high-income groups.

In the meantime, the administration is coming under increasing pressure to respond to a growing crisis at the border, with the surge of migrants fleeing Central America showing no signs of abating. In response to the new pressure, the president sent two top White House officials to Mexico and Guatemala this week for talks in his latest attempt to stem the flow of illegal migration.

The trip comes as Sen. Kyrsten Sinema, D-Ariz., and John Cornyn, R-Texas, wrote to the White House to urge the president to use his “full authorities” to respond to the “border crisis.” The letter argued that “immediate action” is needed to ensure there's enough space to house migrants and to improve the asylum process.

Roberta Jacobson, the coordinator for southwest border affairs, and the National Security Council's Western Hemisphere Director Juan Gonzalez will meet with senior leaders in Mexico and Guatemala to “develop an effective and humane plan of action to manage migration,” NSC spokeswoman Emily Horne told the press. They plan to discuss ways to stop the migrants from traveling north to the U.S. border as well as strategies to address the root causes of the migration, such as corruption, violence and poor economic conditions in Honduras, El Salvador and Guatemala.

The surge has been increasingly embarrassing for the administration given its promises to liberal activists for a more humane immigration system. That pledge has come under increasing fire from conservatives – joined by some Democrats from border states – who are pressing the president for a firmer policy to deal with migrants seeking asylum. The influx of border crossings is especially pronounced among unaccompanied children and teenagers, creating a humanitarian predicament and political problems for the White House. President Biden said Monday that he plans to visit the U.S.-Mexico border “at some point” for a first-hand look at conditions.

White House Press Secretary Jen Psaki said today said the U.S. has amplified warnings to people in Central America not to come, citing more than 17,000 radio ads aired in the region by the State Department. At the same time, she denied the situation amounts to a crisis.

“Children presenting at our border who are fleeing violence, who are fleeing prosecution, who are fleeing terrible situations, is not a crisis,” she said. “We feel that it is our responsibility to humanely approach this circumstance and make sure they are treated and put into conditions that are safe.”

Also this week, the recently confirmed U.S. Trade Representative held her first meetings with counterparts from the European Union and the UK, Bloomberg said. Participants are hoping they can resolve the dispute over subsidies to manufacturers Boeing and Airbus. Katherine Tai and European Commission Executive Vice President Valdis Dombrovskis discussed “their strong interest” in resolving the dispute, Tai's office said. In a separate meeting with British Trade Secretary Liz Truss, Tai agreed to partner with the nation toward the same goal.

The new administration's trade objectives have been dampened somewhat as a result of the recent fractious sessions with China in Alaska. Follow-up efforts have concentrated on reassuring investors in important sectors of the U.S.-China markets and downplaying potential long-term concerns. At the same time, it is clear that China is a major market for U.S. ag products and producers should watch those trends closely as the season progresses, Washington Insider believes.

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