Policy Updates and Issue News April 2017

The National Grange Fly-In April 24-26 was a huge success. Seventeen Grangers from eleven states made the rounds for meetings in 31 congressional offices on Capitol Hill. The youngest member of the Granger Fly-In delegation, Daniel Wilkins age 10 from Texas, can be seen on the National Grange web site shaking hands with his home-state Senator Ted Cruz. The group was briefed at the National Grange Building next to the White House before departing to the Hill to discuss dairy issues with Canada, rural broadband, agriculture workforce/immigration, farm bill, infrastructure, healthcare, taxes, trade and numerous state specific issues

Former Georgia Governor Sonny Perdue was confirmed as the 31st Secretary of Agriculture by the Senate April 24. In a statement following the confirmation, National Grange President Betsy Huber said his strong background as the son of a farmer, a government administrator, businessman and the product of rural America make Perdue an excellent choice to be Secretary. The next day, the new Secretary walked into a meeting with USDA employees, peeled off his coat, discarded his tie, rolled up his sleeves, saying, “I was a farmer first. This Job at USDA is about work. It’s about getting things done.” Perdue then joined President Trump for a Farmers Roundtable at the White House where the President signed an Executive Order creating a task force on rural prosperity and making Perdue its chair. A couple days later, the Secretary hosted the Senate and House chairs and ranking minority members of the agriculture committees and agriculture appropriations subcommittees for breakfast at USDA, seen around Washington as a politically savvy move.

Congress finally reached a bipartisan budget deal to keep the government open through the end of the fiscal year September 30. The house passed the $1.1 trillion spending package Wednesday, May 9 with an overwhelming bipartisan vote 309-118. On Thursday, May 4 the Senate voted 79-18 to pass the bill with no Democrats voted against it. The budget deal adds $12.5 billion in new money for the military, $1.5 billion for new border security such as technology investments and repairs to existing border fencing, and infrastructure plus wildfire relief for the western states. The package does not include some of the administration’s top priorities like money for a border wall, funding restrictions on Planned Parenthood or penalties on “sanctuary cities”. Most agencies and programs will continue at existing level funding with last year’s budget.

Budget negotiations unexpectedly caused a rift between cotton and dairy producers and their allies in congress. The stunning failure to agree on aid to dairy and cotton producers creates a multibillion –dollar budget hole as they prepare to write the 2018 farm bill. The cotton industry thought it had a deal in the budget package to establish cottonseed as an “other oilseed” so cotton producers would be eligible for Price Loss Coverage under the 2014 farm bill. But when Michigan Senator Stabenow and Vermont Senator Leahy tried to add a similar assistance program for dairy producers, the deal fell apart for both dairy and cotton. In the end, both programs fell victim to budget baseline limitations.

The House passed the American Health Care Act aimed at repealing and replacing the Affordable Care Act on Thursday, May 4 by a narrow 217-213 vote. A similar measure had to be pulled in March because of a lack of votes. A series of deals the week of May 1 brought the conservative Freedom Caucus and wavering Republican moderates on board.

The ObamaCare replacement now goes to the Senate where the House-passed bill is expected to be heavily rewritten in hopes of garnering 51 votes under a special rule known as budget reconciliation. Democratic Senators will argue that various parts of the House bill will not meet Senate rules governing what can be included in reconciliation, thus requiring a 60 vote margin to pass.

Congress has been trying to figure out how to repeal and replace the Affordable Care Act since January. Several replacement bill versions have come from the White House, the House Republicans and individual congressmen. None of these legislative packages could muster enough votes to pass. One version would have charged those over 55 years of age far higher insurance premiums. Another did not cover preexisting conditions. Yet another proposal would allow the states a plethora of options to run their own healthcare program.

The House adopted two amendments to the revised American Health Care Act that garnered enough support for the Act to pass the House. One amendment provided $8 billion over five years to help people with preexisting conditions afford their premiums (Health policy experts say that’s not near enough money). The other amendment allows states to waive ObamaCare community rating rules which ban insurers from charging sick patients more than healthy ones (which could allow insurers to charge exorbitant premiums to sick people). The House decided to fast-track consideration of the replacement without the nonpartisan Congressional Budget Office analysis which could have taken another week or so.

The new American Health Care Act could face a dramatic overhaul over in the Senate where members are in no big hurry to bring it to the floor. A number of senators from both parties are concerned by analyses that the legislation would significantly cut federal subsidies for people between 50 and 65 especially in rural areas. Senators also question the potential amount of profit for insurance companies in the House bill.

Revising the Internal Revenue Service tax code is a priority for President Trump. Job creation, economic growth and helping low-and-middle-income families who have been left behind by the economy were three priorities of the Trump campaign. Looking back to the Reagan era when tax cuts sparked the economy, the administration is again proposing major revisions to the tax code. The major code changes in the President’s proposal are:

• Reduce the current seven tax brackets to three at 10 percent, 25 percent, and 35 percent
• Double the standard deduction so a married couple pays no tax on the first $24,000 of income
• Set the top capital gains rate at 20 percent
• Increase tax benefits for families paying for child and dependent-care
• Repeal the death tax
• Eliminate most tax breaks that mainly benefit high income individuals
• Lower the business tax rate to 15 percent
• Levy a one-time tax on overseas profits to encourage capital investment and job creation in the United States

Of course, any tax code reform proposal will have to be passed by the House and Senate where it will undergo intense scrutiny and possible revisions. Tax reform is on Congress’ priority list and should begin moving through the process soon.

It seems as though Secretary Perdue has convinced President Trump to use a scalpel instead of a meat cleaver to the North American Free Trade Agreement (NAFTA). The Secretary apparently explained the disastrous economic and political implications of terminating NAFTA outright after which the President committed to …”give renegotiation a good, strong shot.” Perdue said the three highest priorities for agriculture he heard during his Senate confirmation process were “trade, trade, trade.” Ag groups were increasingly concerned with the President’s talk of scraping NAFTA. Both Canada’s prime minister and Mexico’s president weighed in to persuade him to reconsider. Private and government economic analyses of totally dumping NAFTA show the big winners to be the services industry, IT and the biologics industry. Big losers would be agriculture and the automotive industry.