Randy Russell (RR), president of The Russell Group, and John Gilliland (JG), a partner at Gilliland & McKinney International Counsellors, weighed in on a variety of complex issues – ranging from trade and immigration reform to climate change and tax policy – during an AgriTalk question and answer session on Thursday with Jim Wiesemeyer, Pro Farmer Washington policy analyst. Here’s a recap of some of the key points from their respective discussions.
JW - What’s the timeline for tax policy both decreases and increases? What is the possibility that the Democrats could overreach on this issue?
RR - My response to that, Jim, is grab your wallet. Taxes are going up. Corporate tax rates are going to be increased. They are looking at treating capital gains as ordinary income, so you pay depending upon what your individual tax bracket was. They’re looking at potentially increasing the corporate tax rate that the Trump administration with Congress in 2017 cut to 21%. They’re looking at raising it to 28%. They’re looking at things like the stepped-up basis. So yeah, tax revenue and tax increases are definitely in the works.
JW - We just had a unanimous confirmation of Katherine Tai for U.S. Trade Representative. What’s your assessment?
JG - Katherine is well-known in Washington in the trade bar. She’s very experienced. She’s a seasoned hand. She brings a lot of technical expertise to the job. She understands China, having worked as an attorney in the office of the USTR earlier in her career on enforcement issues. She’s very open minded. She has a good reputation on both sides of the aisle. She’s well respected in the House and in the Senate. She was an attorney earlier in her career at the office of the U.S. Trade Representative, where she was in charge of enforcing China’s obligations, both in its commitment to United States and also at the World Trade Organization. Now, that was a tough job, but it gave her a lot of experience focused on the way China does business and its policies as well. I’m a fan. I think she’s going to bring a lot of levity to the job.
JW - Relative to the U.S.-Mexico-Canada agreement, are you hearing anything from your clients relative to implementation issues, anything from Mexico and maybe dairy in Canada, or not?
JG - There’s a lot of focus on the use of the new labor mechanism with respect to Mexico. The USDA brought in a new sort of rapid response mechanism to enforce labor standards in Mexican factories. There’s going to be a lot of pressure and expectation on the Biden administration to follow through on that enforcement. You mentioned Canada dairy, no developments on that yet. But that’s going to be something that Katherine Tai is going to have to pick up.
JW - What do you predict on immigration reform from this Congress?
RR - I think progress made there will be incremental and not comprehensive. I think it’s gotten more complicated because of an unforced error that the Biden administration has put into effect. What I mean is changing the Trump executive orders dealing with staying in Mexico, as well as reimposing the catch and release program, and now we’ve got a situation at the border. I don’t know whether you call it a crisis or not, but we’re looking at having as many as 1 million to 2 million folks trying to enter the United States at the southern border this year, and it’s really taxing the infrastructure that we have. I think that complicates this debate. This was not an easy debate to begin with. But I think it really has a ramification on the Republican side of the aisle. We need immigration reform, particularly in agriculture, whether you’re talking about in the produce sector for seasonal workers or for the dairy sector for year-round. God knows we need to have some legal certainty for those workers, to reform those programs. It’s going to get much tougher, I think, unfortunately.
JW - It seems USDA Secretary Tom Vilsack is focusing on equity issues. What’s the bottom line on this issue, which apparently, other than climate change, is his top topic?
RR - It’s a very high priority for Sec. Vilsack and also for David Scott, who’s the first African American Chairman of the House Agriculture Committee. Sec. Vilsack has announced that he wants to set up a racial equity commission. The first thing I think they’ll do is name this racial equity commission, and I think their Deputy Secretary nominee, Jewel Bronaugh, who is African American from the state of Virginia, will play a big role on that as well as Janie Hipp, who is going to be the general counsel, and she’s a Native American. Look for those two to play a critical role. I think they’ll look at things like distribution of payments under farm programs, access to crop insurance, access to FSA direct and guaranteed loans, and also the makeup of state and county FSA committees. I think those will be the areas they focus on.
JW - What’s your bottom line on climate change in this town, on a policy front?
RR - Climate is front and center, whether it’s in the Biden administration or in Congress, I think this is a multi-year look at climate. And I think what you’ll see is progress made this year on addressing climate-friendly practices in agriculture, incentivizing those practices, but they’ll be voluntary and incentive focused. In the end, what we need to do is foster the growth of private markets. For carbon and carbon equivalents, we’re going to have to give some additional incentives to producers, whether it’s row-crop producers, specialty crop producers, livestock producers, to either capture carbon, capture methane, or reduce methane emissions, and that’s going to take additional incentives. And we also need to put things in place that are going to help grow these private markets, help standardize measurements of carbon that are captured or sequestered, as well as the verification necessary when you generate those credits. If we’re going to have buyers and sellers of these credits, people have to have confidence in the quality of them, and that comes down to high-quality measurement and verification.
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