Washington Insider -- Monday

By DTN's Washington Insider

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

RFS, EPA To Have A Court Battle On Monday

The DC Circuit Court on Monday, April 24, holds oral arguments on challenges to the 2014-2016 Renewable Fuel Standard (RFS) volume requirements.

The program has supporters and detractors among both political parties. EPA Administrator Scott Pruitt has asked judges to put other challenges to agency rules on hold, but EPA in this case is pushing maximize administrative flexibility.

EPA will defend itself against charges it set volumes for conventional biofuels, advanced cellulosic biofuels and biomass biodiesel either too high or too low, depending on who you ask. It will defend its waiver to set the conventional biofuel requirements below congressional levels; and it will argue it was under no obligation to change who must comply with the program.

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Trump Launches Probe of Steel Exports to US from China, Others

President Trump launched a trade probe against China and other exporters of cheap steel into the U.S. market, raising the possibility of new tariffs and sending shares of some U.S. steel makers up over 8 percent.

The decision to use a 1962 law allowing the U.S. government to limit imports that threaten its security readiness is intended to deliver on Trump's campaign promises, but observers note it risks setting off trade tensions with China. Trump signed an executive order for a 270-day review to determine whether steel imports were harming national security. If the Commerce Department does find harm, Trump will have up to 90 days to decide whether to impose broad import restrictions.

Only about 2% of American steel imports come directly from China. But global steel makers and industry experts blame China for shipping its surplus steel to other countries, which drives down prices and prompts those countries to further process the steel into high-value products for export to the US. Trump trade officials have suggested they could bring trade actions against those countries as well.

The steel industry in the U.S. employs about 140,000 people, or less than one-tenth of 1% of the American work force, according to the New York Times. China’s steel makers, by contrast, employed 4.7 million workers in 2014, the last official figure released, or 0.6% of China’s labor force then.

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Washington Insider: Busy Week Ahead in Capitol

The coming week will be an interesting and important one for agriculture. As lawmakers return after their two-week spring break, the Senate is expected to move quickly to a vote on the nomination of Sonny Perdue to be USDA Secretary, a test he is expected to pass easily.

The White House anticipates Perdue will be sworn-in on Tuesday.

And, there’s much, much more. President Trump is expected to release his tax plan later in the week, at about the same time House Republicans renew efforts to advance their own blueprint.

However, tension in the Capitol is building the most over the question of whether lawmakers will be able to come to terms on a way to keep the government funded beyond Friday — the day the current funding mechanism expires.

Bloomberg and others and others have been reporting all spring on details of the budget fight, but it’s a moving target. Democrats are pushing a draft bill that contains little for the White House to like in order to take advantage of what they think is the executive’s “desperation for a victory in the wake of the failure of the Republican health-care bill.”

The downside to this is that the president could reject the deal, which could lead to a “shutdown showdown.” Bloomberg further notes that for House Speaker Paul Ryan, R-Wis., “completing the Fiscal 2017 spending bills was always going to be a major test.”

Conservatives in the House regularly bolt on spending measures they consider too costly, forcing Republican leaders to partner with Democrats to pass appropriations bills—a squeeze play that has been going on since they took control of the House. For example, Ryan relied on Democrats to complete the fiscal 2016 funding cycle by arguing that he had just inherited a fiscal mess from his predecessor, John Boehner, an excuse he no longer can use.

This year, Ryan may need to tack to the right to save his job and reject a bipartisan compromise that could threaten the shuttering of government operations, Bloomberg says.

At this point, Republican congressional leaders say they are backing off attempts to convince Democrats to accept major spending cuts as part of the Fiscal 2017 package, arguing that Trump’s proposals for domestic agency cuts are best hashed out in the fiscal 2018 bills. Instead they are focusing on more limited goals including an increase in funding for defense.

However, House and Senate aides say Trump is a wild card both because of his mercurial negotiating style and because this is his first time dealing with a government funding showdown.

"This is not a problem within the appropriations process. We can get this done and we can get it done in a bipartisan way," said House appropriator Tom Cole, R-Okla., just before the break.

The spending cliff could have been avoided in December had Congress passed a bipartisan spending measure that had largely been negotiated for the remainder of the fiscal year. Instead, the incoming administration directed Republican leaders to hold off until the newcomers were in place and could weigh in on the spending decisions.

The administration had decided earlier to use the shutdown deadline to prod Congress to agree to $33 billion in extra defense and border wall funding, partly paid for with $18 billion in domestic cuts.

Senate Majority Leader Mitch McConnell, R-Ky., repeatedly says he expects to reach an accommodation with Senate Democrats, some of whom he will need to avoid a filibuster of the spending bills. Schumer told reporters this week there is “quiet agreement” that a deal can be struck if the President doesn’t insist on poison-pill amendments.

Bloomberg says it thinks that Republicans and Democrats may be able to come together on an increase for the Defense Department smaller than the one the President requested. The request will not be paired with cuts to domestic agencies, a strategy that can be sold by the White House as a victory and by Democrats as a necessary concession in the face of increased threats in the Middle East, Afghanistan and the Korean peninsula.

Speaker Ryan also has been saying he expects a stronger commitment to the military in the omnibus spending legislation. In a recent speech in London, the speaker said that part of the reason for his European trip is to reassure allies that Republicans intend to invest in the military.

Appropriations Committee staff members have been whittling down the list of outstanding issues during recess, House and Senate aides say, but there are still a number to consider. At the start of the two-week congressional recess, negotiators were trying to agree on 115 points of contention on the spending package and so-called policy riders.

With a Republican in the Oval Office, the demand for such riders has diminished, Ryan told Bloomberg — but it is still significant. One such issue is a rider to prevent funding to so-called sanctuary cities. There are others.

The first move this week will likely be to extend the process for a few days for breathing room. Then, the heavily political issues will require decisions by the leadership. The odds now seem to favor passage of a budget and avoiding a shutdown, but that sound you hear is a Capitol holding its breath—a process producers should watch carefully as it proceeds, Washington Insider believes.

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