Washington Insider-- Friday

By DTN's Washington Insider

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

Farm Lobby Notes Possible New House Speaker Ryan Has Targeted Crop Insurance Cuts Before

It did not take the farm lobby long to worry about some budget cutting ideas of the past from House Ways & Means Chairman Paul Ryan, R-Wis., who reportedly is mulling whether or not to answer GOP leaders' call for him to enter the race for House speaker.

As budget chairman from 2011 to 2014, Ryan twice proposed that farmers pick up a larger share of their insurance costs by reducing the federal government's share, which on average amounts to 62% of premium costs to cover more than 130 crops -- the bulk of the crop insurance subsidy costs go to corn, soybeans, wheat and cotton. President Barack Obama has also proposed cutting the farmer premium subsidy in prior budget requests.

Members of the American Association of Crop Insurers will be meeting next week with lawmakers and staffers in Washington. The visit was scheduled before current House Speaker John Boehner, R-Ohio, announced his plan to retire and set off a scramble to replace him.

"We're aware that Congressman Ryan has spoken about those kind of changes. We know there are those that don't understand the program and they don't understand agriculture policy more generally," David Graves, president of the American Association of Crop Insurers told Congressional Quarterly. "We're concerned about all proposals from anyone to reduce funding for the farmers' risk management program," he added.

Michael Torrey, president of the Crop Insurance and Reinsurance Bureau also commented on the topic. "No matter who is the next speaker of the House, the crop insurance industry will continue to educate members about the importance of the federal crop insurance program to producers, lenders, ag input suppliers and the overall health of our rural economies," Torrey said in a statement.

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House to Mark Up Surface Transportation Bill Oct. 22

House Transportation and Infrastructure Chairman Bill Shuster, R-Pa., announced a markup of a surface transportation reauthorization bill on Oct. 22, a week before funding for current transportation programs expires.

Uncertain is whether the panel will find the money to pay for the measure and get it to the president's desk before current authorization expires Oct. 29. The announcement did not specify the length of the authorization bill. Lawmakers will have to either clear a long-term bill or consider another short-term extension before the end of the month. More information is expected to be released today.

The House markup leaves little time to bring the bill to conference with the Senate, which has passed its own six-year measure (HR 22) that is only half funded. Senators have suggested the House take up the Senate's revenue offsets if lawmakers cannot find any more funding, but Shuster has suggested that is not the House's preferred route to a multi-year bill.

The Senate passed a six-year highway bill in July that included three-years' worth of pay-fors including a $46 billion transfer of general funds to the Highway Trust Fund that would be offset by reducing the Federal Reserve's dividend payments to member banks and the sale of crude oil, among other things.

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Washington Insider: Debt Limit Anxiety Building

The Hill reported late this week that the prolonged turmoil within the House GOP is causing anxiety that Washington will have real trouble raising the debt limit by the November deadlines. Concerned players are telling the press now that they see reasons to believe Congress could miss its deadline.

A key problem is that House Republicans have no leader now that Speaker John Boehner, R-Ohio, is out of the long-term picture and the Majority Leader Kevin McCarthy, R-Calif., has pulled out of the speaker's race.

So not only are the internal GOP politics increasingly complicated, they make it especially difficult for any potential Speaker to even vote to raise the government's $18.1 trillion borrowing limit. Furthermore, the degree of Republican control is being described as a problem because it puts more pressure on the GOP to come up with a plan that the party has been unable to produce so far, the Hill says.

In this environment, it's increasingly difficult to get the necessary deals made. "The whole weight of force is behind the people who are against the debt limit," Francis Creighton of the Financial Services Roundtable told the Hill.

Debt-limit crises are nothing new, and have occurred frequently during the Obama administration. In the past, Wall Street has generally expected that Washington will sooner or later raise borrowing limits before defaulting on its debt.

However, there seems to be a greater possibility that this time will be different "because of this void in leadership that no one really knows whether or how it will be filled ... they're worried not about an intentional decision to default, but just the mess of trying to figure out who's going to lead and running out of time," the Hill notes.

When the Treasury Department announced its Nov. 5 deadline, some believed it was timed for Boehner to come to the rescue: The lame-duck Speaker could move legislation raising the debt ceiling, which then could be approved on Democratic votes, the thinking went. Rep. Tom Cole, R-Okla., said Boehner would be better equipped to shepherd the debt-limit vote than a just-elected successor would be.

But now observers are suggesting that could be more difficult. A weakened McCarthy would have to support bringing a debt-ceiling bill to the floor and any would-be successor to Boehner such as Rep. Paul Ryan, R-Wis., would be under enormous pressure to reject it.

And, for Boehner, the math might be difficult there, too. By some counts, he now would need a total of 30 Republicans to vote for a debt-limit bill if all Democrats voted yes.

Several members of GOP leadership voted against that 2014 bill, including Ryan. He also voted against the 2013 measure to end the government shutdown and raise the nation's borrowing limit. But he voted for the 2011 Budget Control Act that created sequestration and hiked the debt ceiling.

So, the lack of negotiations or even opening demands in the debt-limit fight is starting to worry conservatives, who fear leadership will force a vote on a "clean" extension without any spending reforms when the clock runs out.

Other lawmakers are hoping that Boehner, who has said he will stay on as Speaker until the House elects his successor, will find a way forward in talks with Senate Majority Leader Mitch McConnell, R-Ky., and Obama. Rep. Bill Flores, R-Texas, head of the conservative Republican Study Committee who is eyeing his own Speaker candidacy, said recently, "I think we have to work with Speaker Boehner on that."

But now, the Hill says Wall Street and K Street are warning panic will begin to set in if there's no clear plan when Congress returns next week -- a point at which Washington will have a little more than two weeks to cut a deal. So, the new key worry is continued "disruption in the leadership positions," and that would ratchet up concerns very quickly," James Ballentine of the American Bankers Association told the Hill.

There are a spate of press reports as we go into the coming weekend describing many of the same scenarios. There seems to be a conviction that John Boehner has a plan and the will to follow it, but at the same time, could encounter more than a little willingness among his deep right wing members to defeat any new Boehner plan that doesn't meet all their concerns.

So, we'll see. Prospects for smooth successes in dealing with debt ceilings and budget woes seem to be declining rapidly, with potential negative consequences that could reach across the economy and should be watched very carefully if they materialize, Washington Insider believes.

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(GH/SK)

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