Washington Insider -- Wednesday

House Budget Plan

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

Perdue: No Timeline to Resume Imports of Fresh Brazilian Beef

There is no timeline for the U.S. to resume imports of fresh beef from Brazil, according to USDA Secretary Sonny Perdue, despite a push from Brazilian Agriculture Blairo Maggi for a resumption of trade.

The two officials met in Washington, with Perdue signaling the resumption of trade would be dictated by progress made by Brazil. Brazil's Agriculture Ministry released a recording of Maggi's remarks where he said that the U.S. could lift the ban in 30 to 60 days. Perdue, however, countered that "Open dialogue is good, but we need to see progress."

Meanwhile, Brazilian federal food inspectors started a 24-hour protest Monday, slowing inspections in the country. Inspectors union Anffa Sindical called on members to stop accessing the Agriculture Ministry's databases linked to foreign trade activities, a move that would slow on-site checks and export oversight. The inspectors union has decried what they say is a shortage of inspectors.


Lawmakers Urge Administration to Help Cotton Producers

Use of the Cotton Ginning Cost Share Program on an ongoing basis starting with the 2016 crop year is being called for by a bipartisan group of lawmakers in a bid to provide more assistance to cotton farmers struggling with high costs a declining farm income.

"We can’t continue ignoring the economic turmoil of U.S. cotton farmers," the 109 lawmakers said in a letter to President Donald Trump. "While countries like China and India are pouring billions of dollars into subsidies for fiber production each year, America’s cotton producers have been struggling to scrape by without a safety net to help them soldier through these tough times – the steepest slide in net-farm income since the Great Depression."

Cotton farmers will continue to see their equity erode or will have to take on additional debt to stay in operation the lawmakers said. "We strongly urge you to use your authority to operate on an ongoing basis the Cotton Ginning Cost Share Program effective beginning with the 2016 crop year," the letter said. "The cost share program, administered by the Department of Agriculture, is desperately needed to provide policy stability in the absence of a comprehensive policy for cotton farmers in the existing farm bill to effectively respond to sustained and deep economic losses due to price and revenue declines."

The Obama administration used the program for the 2015 crop year, spending some $300 million via the effort. Lawmakers called the program an "effective and efficient means of providing economic relief to America’s cotton farming families."

The letter was spearheaded by House Agriculture Committee Chairman Mike Conaway, R-Texas, House Agriculture Committee Ranking Member Collin Peterson, D-Minn., General Farm Commodities and Risk Management Subcommittee Chairman Rick Crawford, R-Ark., Subcommittee Ranking Member Rick Nolan, D-Minn., House Appropriations Agriculture Subcommittee Chairman Robert Aderholt, R-Ala., Subcommittee Ranking Member Sanford Bishop, D-Ga., and committee members Rep. Jodey Arrington, R-Texas, and Rep. Tom O’Halleran, D-Ariz.


Washington Insider: House Budget Plan

Earlier this week, House Republicans unveiled a 2018 budget that ignored the President’s request for $54 billion in cuts to departments and agencies such as USDA, State and the National Institutes of Health.

Instead, spending outside of defense would be reduced by $5 billion. The GOP proposal would boost funding for the nation’s defense by $72 billion, $18 billion more than Trump sought, Bloomberg reported.

Congress previously ignored Trump’s requested spending cuts for the last months of the fiscal year that ends Sept. 30.

The new plan outlines $1.13 trillion in spending to keep the government open when the 2018 fiscal year starts Oct. 1. The House Budget Committee plans to vote on the plan today, with a vote by the full House expected next week.

The House budget also would start a fast-track process for achieving two long-sought Republican goals, a tax-code overhaul and long-term cuts to entitlement programs such as food stamps and Medicaid, measures the GOP-controlled House and Senate would be able to pass without Democratic votes.

The tax code changes wouldn’t be able to be enacted without $203 billion in entitlement cuts over 10 years, though that amount hasn’t been fully agreed to yet by all House Republicans. It doesn’t provide any new detail on what the tax plan will look like.

Like Trump, House Republicans insist that the policies enacted by their budget would erase the deficit within 10 years, in part through faster economic growth, assumed to average 2.6% annually over the next decade, shrinking the deficit over the period by a total of $1.5 trillion. The Congressional Budget Office estimates that growth will average 1.9% under current law.

Cutting domestic spending isn’t the fight Republicans leaders want to focus on this year, especially since reductions outlined in March met a wall of resistance from all but the most conservative members of Congress.

An administration official said the $5 billion cut to domestic spending, while much smaller than what Trump sought, is a step in the right direction toward reducing the budget deficit. The official lauded the budget for easing passage of some entitlement cuts.

Dan Holler of the conservative group Heritage Action, though, is pressing Republicans to deliver on their promises to cut federal spending.

“The Republican Party has shown time and time again that they are not willing to govern as they campaigned,” Holler said. “This is when the rubber meets the road, when they actually do what they said they would do.”

Even if House and Senate Republicans agreed to back Trump’s cuts, they would meet universal opposition from Democrats. And while the budget measure can be adopted with a simple majority, using only Republican votes, a separate funding bill needs 60 votes in a Senate where the GOP holds 52 seats out of 100.

"They are bowing to reality. It would be hard to get appropriations bills through Congress with that level of cuts," said Steve Ellis of Taxpayers for Common Sense, a group that opposes government waste.

On entitlement spending, the main dispute among House Republicans is how much to cut. House Budget Chairwoman Diane Black, R-Tenn., is proposing to speed cuts to food stamps, Medicaid and other social safety-net programs of at least $203 billion over 10 years.

The entitlement cuts, which could be achieved in part by setting work requirements for many recipients, are a key demand from House conservatives in exchange for supporting the smaller agency budget cuts.

But moderate Republicans late last month told House Speaker Paul Ryan, R-Wis., that $200 billion is too large a cut for them to support.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said it makes sense to focus on so-called “mandatory” programs like entitlements--while ignoring Trump’s call to cut "discretionary" funds for programs like Head Start and cancer research--because the entitlement programs are larger and are growing faster.

While the president vowed not to touch Medicare for senior citizens, the House budget assumes Congress will make $487 billion in future cuts. They’re offering a proposal similar to Ryan’s plan to give seniors the option to forgo traditional Medicare and buy private plans using limited government subsidies. Over time, seniors would bear more and more of the cost of their health care.

So, the budget battle has grown increasingly bitter and the end of these battles is not yet in sight. These certainly are issues producers should watch closely as they proceed, Washington Insider believes.


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