Update on Farm, Trade, Budget, Tax Issues

Perdue | USTR | Tax reform | Border wall | Cotton safety net | EPA RFS overreach

The slow-then-fast Congress is in a likely short-run fast period, so here are some updates of some policy issues of note.

Perdue finally gets Senate confirmation. It was well expected. The final vote tally was 87-11. The eleven senators voting no on Perdue: Kirsten Gillibrand (D-N.Y.), Bernie Sanders (I-Vt.), Richard Blumenthal (D-Conn.), Cory Booker (D-N.J.), Kamala Harris (D-Calif.), Ed Markey (D-Mass.), Robert Menendez (D-N.J.), Jack Reed (D-R.I.), Ron Wyden (D-Ore.), Elizabeth Warren (D-Mass.) and Sheldon Whitehouse (D-R.I.). They defended their votes by citing concerns that ranged from Perdue’s approach to food stamps to trade with Cuba to GMO labeling and a close relationship with agribusiness. As new leaders of USDA always do, a meet-and-greet with the many USDA employees will take place this morning. Perdue’s first assignment will be to travel to Wisconsin this week with the lingering U.S.-Canada dairy trade spat at the top of his list.

Expect some quick USDA personnel announcements. Sources signal a few other top USDA political positions have been decided on, including a deputy secretary. An ag trade ambassador has also been tapped over at the U.S. Trade Representative’s office, but that will not likely be announced until USTR-nominee Robert Lighthizer gets confirmed by the Senate, as is expected in early May.

USTR-nominee Robert Lighthizer finally gets a Senate Finance panel vote today. Committee Chairman Orrin Hatch (R-Utah) said an agreement has been reached at the committee level to consider Lighthizer to serve as USTR, including a separate vote on a waiver of a lobbying law. The waiver, expected to be attached to the omnibus spending package, would create an exemption from the Lobbying Disclosure Act of 1995 for deputy USTRs who served prior to enactment of the law. Lighthizer was a deputy USTR in the 1980s and subsequently worked as a registered foreign agent for the government of Brazil. A Senate floor vote on the Lighthizer nomination would likely take place in the first weeks of May, congressional sources said. Discussions have taken place to include the waiver and some form of the miners’ benefits fix in the must-pass omnibus spending bill that comes due at the end of the week. “Congress and the American people need one official to hold responsible for US trade policy,” Hatch said. “Once Bob Lighthizer is confirmed, we will have that official.”

President Donald Trump to announce the broad outline of his plans for changes to the U.S. tax code on Wednesday. President Trump has directed staff to accelerate efforts to draft a tax reform plan which would slash the corporate rate from 35 percent to 15 percent in what sources said was an opening position on the topic. Priority will be given to cutting rates versus concern about the deficit. Trump has promised a big tax announcement tomorrow, while Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn meet today with Republican congressional leaders. A House-GOP tax reform blueprint backed by House Speaker Paul Ryan (R-Wis.) released in June calls for replacing the 35 percent rate with a 20 percent rate applied to companies’ domestic sales and imported goods, while exempting their exports. Ryan has questioned whether a 15 percent rate can realistically be paid for, and he and Kevin Brady (R-Texas), chairman of the tax-writing House Ways and Means Committee, have said they are committed to revenue neutrality. That means Republicans are not in agreement and that is even before noting a far different tax reform approach favored by Democratic lawmakers.

US budget roadblock removed as Trump may accept border wall funding later this year. President Donald Trump indicated Monday that he might sign legislation that would avert a government shutdown even if lawmakers leave out the $1.4 billion he has requested to begin construction of a wall along the US-Mexico border. Trump told a group of conservative journalists gathered at the White House yesterday that he could put off until September asking Congress to include the money in the federal budget. The announcement from Trump could help appropriators and leaders finish bipartisan, bicameral negotiations on the 11 remaining Fiscal 2017 spending bills before the Friday deadline. Democrats are strongly opposed to the wall funding. Democratic votes will be needed, since spending bills need 60 votes to clear procedural hurdles.

A big cotton safety-net change is expected to be in a forthcoming spending measure. The final language is still being worked out, but the cost of the big change will be largely offset by changes to generic base language relative to the 2014 Farm Bill. The cotton policy change, if included in the final omnibus budget package ahead, would take place for the 2017 crop of cotton. It would make designated producers eligible for the safety net programs – Price Loss Coverage (likely favored by cotton producers) or the Ag Risk Coverage Program. Any payouts would not be made until the fall of 2018, thus impacting the Fiscal Year 2018 budget.

Judge sees possible overreach in EPA’s biofuels decision. The scaling back of advanced biofuel blending requirements between 2013 and 2014 may be an abuse of the EPA’s authority, a federal appeals court judge said during oral arguments in a lawsuit challenging an aspect of the agency’s renewable fuels regulation. A Justice Department attorney representing the EPA argued the agency action would ensure the most biofuel possible actually reached consumers, but Judge Brett Kavanaugh of the U.S. Court of Appeals for the District of Columbia Circuit dismissed that stance as agency overreach. A Justice Department attorney representing the Environmental Protection Agency (EPA) argued the agency action would ensure the most biofuel possible actually reached consumers, but Judge Brett Kavanaugh of the US Court of Appeals for the District of Columbia Circuit, dismissed that stance as agency overreach. “I don’t see this statute as necessarily that kind of grand authority for EPA,” Kavanaugh said. “If things are totally screwed up, then Congress should fix it.” The oral arguments before the D.C. Circuit are part of a biofuel industry challenge to the EPA’s Renewable Fuel Standard (RFS) volume requirements for 2014-2016.