Washington Insider-- Monday

Strong March Jobs Report Helps Focus on Infrastructure

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

China Prominent in USTR Report on Trade Barriers

The National Trade Estimates Report on Foreign Trade Barriers issued by the Office of the U.S. Trade Representative (USTR) covers 61 countries, the European Union, Taiwan, Hong Kong and the Arab League, with a note that just because countries are not included in the report, it does not mean they not of concern to the U.S. Not surprisingly, China occupies 35 pages in the 574-page report, with several notations on the Phase One agreement between the U.S. and China.

“The Phase One Agreement also includes a commitment by China to make substantial additional purchases of U.S. goods and services in calendar years 2020 and 2021,” the report noted. “Importantly, the Phase One Agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement. Since the entry into force of the Phase One Agreement in February 2020, the United States continues to engage China as issues arise and will continue to monitor developments closely.”

The report noted several areas relative to agriculture where progress has been made, but still concluded, China remains a difficult and unpredictable market for U.S. agricultural exporters, largely because of inconsistent enforcement of regulations and selective intervention in the market by China's regulatory authorities.

The failure of China's regulators to routinely follow science-based, international standards, and guidelines further complicates and impedes agricultural trade.”

The report also focuses on China's overcapacity in several areas, their intellectual property rights actions, technology transfers and more.

DMC Payments Triggered For February

With monthly USDA prices for milk and feed components (corn, blended alfalfa hay, and soymeal) resulting in a National average margin in February of $6.22 per cwt., dairy operations with Tier 1 coverage levels under the Dairy Margin Coverage (DMC) will see payments triggered for levels at $9.50, $9, $8.50, $8, $7.50, $7 and $6.50.

Payments under Tier 2 coverage levels are triggered for $8, $7.50, $7, and $6.50.

For Tier 1, payments will range from $0.28 per cwt. at $6.50 coverage to $3.28 per cwt. for $9.50 coverage. The Tier 2 payments will range from $0.28 per cwt. for $6.50 coverage and $1.78 per cwt. for $8.

Washington Insider: Strong March Jobs Report Helps Focus on Infrastructure

The Hill is reporting this week that the strong March jobs report is helping the administration make its his case for a major investment in U.S. infrastructure funded by corporate tax hikes.

The U.S. Labor Department said that accelerating COVID-19 vaccinations, easing restrictions and growing confidence fueled a strong surge in hiring in March, helping the U.S. add 916,000 jobs last month and push the jobless rate down 0.2 percentage points.

The growing strength of the economy is sorely needed for millions of Americans who are still struggling to get by more than a year into the coronavirus pandemic. But it's also a significant political asset for the administration as it fends off Republican criticism of the next stage of its economic agenda.

GOP lawmakers have ripped President Biden for proposing a series of corporate tax hikes to fund the $2.5 trillion infrastructure proposal, called “the American Jobs Plan.” While Republicans are usually opposed to raising taxes in any context, they've argued that doing so now will undercut the recovery from the pandemic.

The exceptional March jobs gain, however, gives the president and the Democrats a boost as they push to kick the recovery into another gear, The Hill says.

“It's a once-in-a-generation investment in our economic future — a chance to win the future, paid for by asking big corporations, many of which do not pay any taxes at all, just to begin to pay their fair share,” the president said Friday.

“Asking corporate America just to pay their fair share will not slow the economy at all. It will make the economy function better and will create more energy.”

After shepherding a $1.9 trillion COVID-19 relief bill through Congress, President Biden is looking to cement a rapid recovery from the pandemic-driven recession and permanently lift the long-term trajectory of the U.S. economy with an eight-year building spree, he says.

The administration's proposal, released Wednesday, would fund projects to repair 20,000 miles of roads and 10,000 bridges, expand broadband access to rural and underserved communities, and replace all of the nation's lead pipes and service lines. It also includes investments in research, development and manufacturing, affordable housing, climate resilience, and access to home and community-based care.

“I think we were in a decent place in the past but I think the pandemic has really ripped the bandage off all the scars that we've been hiding for decades,” said Jane Oates, a former Obama Labor Department official who serves as president of non-profit WorkingNation.

“Building back better would be looking at people for what they can do, the skills they have, rather than looking at just where they had the privilege of attending school,” she said. “People and families who are out of work or working below the level they were working in February of last year – do we leave them out and wait and hope that everything will be okay?”

While some Republicans say they're interested in aspects of Biden's plan, its size, expansive scope and the tax hikes to cover its cost make it a non-starter for GOP lawmakers.

The measure can still pass through budget reconciliation without any GOP support if Democrats are united on the measure. But Democrats can afford barely any defections in the House and none in the Senate – and Republican lawmakers and conservative groups are reminding voters of the tax hikes in seeking to make centrist Democrats pull support for the measure.

“With lockdowns easing and vaccine distribution ramping up, small businesses are reopening and consumer demand is surging. However, the long-term economic outlook remains murky,” said Alfredo Ortiz, president of the Job Creators Network, a conservative non-profit campaigning against the administration's proposal.

“Biden's tax plan is a dagger in the heart of small businesses who are finally getting breathing room after one of the toughest years in history,” he said.

Most economists, however, expect the U.S. economy to accelerate even faster as COVID-19 vaccinations increase and funding from the administration's relief plan fuels further growth. The surveys used to calculate the March jobs report took place the week Biden signed the bill and before any new aid was disbursed.

Orin Klachkin and Gregory Daco of Oxford Economics said in a Friday analysis that the U.S. is on track to add more than 6 million more jobs this year. “Looking ahead, the labor market is poised for an impressive run as expanding vaccine distribution, more reopenings, and fiscal stimulus drive a hiring surge,” they wrote.

Even so, the U.S. would still be down more than 2 million jobs from pre-pandemic levels, and there roughly 4 million people who left the labor force because of COVID-19 still lack any clear path back in.

Biden administration officials say the long road to a full recovery and the deeply unequal impact of the pandemic makes passage of the American Jobs Plan even more urgent.

Janelle Jones, chief economist at the Labor Department, cited the increase in the unemployment rate for Asian Americans from 5.1% to 6% in March.

“And the rates for Black and Hispanic workers remain high,” she wrote in a Friday analysis. “At the same time, the average duration of unemployment increased by two weeks. We'll need a tight labor market to get them back to work.”

So, we will see. The administration and others are citing strong signs of recovery in support of their programs and proposals, but the opposition also is highly energized. The coming fights will continue to be highly significant for producers and should be watched closely as the season emerges, 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.

If you have questions for DTN Washington Insider, please email edit@dtn.com