Policy Updates and Issue News December 2017

The nation’s capital has been an interesting place throughout 2017 to say the least.  Donald Trump shocked a large portion of the American public to become our 45^th President.  After his inauguration, it took the FBI an inordinate amount of time to run background checks on his cabinet and subcabinet appointees because of heightened security concerns.  Some appointees still have not been confirmed. 

Secretary of Agriculture Sonny Perdue emerged as a popular and respected spokesman for agriculture and rural residents.  The farmer, businessman and former governor now serving as Secretary appears to have the President’s ear on USDA matters and he’s very popular in the countryside.  The President and Secretary are keeping campaign promises to reduce burdensome regulations and rein-in government overreach for producers and landowners.

President Trump has the most exercised thumbs in the history of the Presidency.  His tweets have set a new precedent for social media, public policy, diplomacy and the presidency.  He continues to keep Washington and the media off guard.

The Republicans controlled both the Senate and the House of Representatives during 2017.  Yet healthcare reform went down in flames.  The legislative process moved at a snail’s pace all year.  Tax reform eventually passed both houses along party lines and was signed by the President.  The final tax package will require considerable time and expertise to analyze.  The jury is still out on the new law’s benefits.  Several pieces of “must-do” legislation were kicked into January, including the FY’18 budget, debt ceiling and fate of the young immigrant “Dreamers” who were brought to the United States as children without documentation.

The National Grange had fun early in the year observing Washingtonians learn how to spell R-U-R-A-L again.   The rural vote that pushed President Trump to victory suddenly captured the attention of writers, broadcasters, political pundits, public policy wonks and so-called “coastal elites”.  Farmers, ranchers, small businesses, rural residents and small town Americans suddenly were rediscovered.

 It’s interesting to note that numerous individuals and organizations claim to speak about rural America, speak into rural America, speak from rural America and supposedly speak for rural America.  Yet the Grange is the primary organization speaking as rural America’s farmer, rancher, rural resident and small town citizen. 

Moving into 2018, Washington’s political climate could deteriorate further as politicians focus on mid-term elections.  Democrats believe they can recapture the House and are keeping their eyes on the Senate.  Bipartisan compromise on the budget, federal deficit, welfare reform, infrastructure, immigration, healthcare and a farm bill could be illusive.

 The Supplemental Nutrition Assistance Program (SNAP or food stamps) will remain part of the farm bill under Agriculture Committee jurisdiction.   SNAP reforms will be keenly bipartisan and are expected to be relatively modest such as preventing duplicative SNAP benefits and taking a look at able-bodied adults without dependents on SNAP benefit rolls.   

Senate Republicans now have only a one vote 51-49 majority after Democrat Doug Jones prevailed in the recent Alabama election.  Not all senators of either party agree on every issue.  Therefore, major pieces of legislation moving through the Senate in 2018 may require bipartisan negotiation to pass.

Congress ran home for Christmas without resolving spending battles and deadlines.  That means lawmakers have to work diligently to avoid a government shutdown by January 19 when the short term continuing resolution expires.  Democrats may not agree to a funding deal to keep the government running without a deal to protect young immigrants, the “Dreamers”, from being exported beginning in March.

Lawmakers of both parties are also under pressure to increase the budget caps and prevent automatic across-the-board spending cuts known as sequestration.  A deal will be difficult to negotiate with both sides battling over defense vs. nondefense spending increases.  If a deal can be reached, congressional appropriators can work on a package to fund the government through next September.

The Senate failed to take up a House-passed disaster relief bill for hurricane, flood and wildfire victims before Christmas.  Battles between states for funding levels will have to be resolved by home-state Senators before aid can be approved. 

A surprisingly high number of people signed up under ObamaCare during the recent enrollment period.  Health care professionals suggest that a core group of people wants health insurance even though it is a smaller and less functional program than originally hoped for.  The zeal for repealing the law appears to be fading somewhat in Congress.  Congress might actually take bipartisan steps to mend the law in 2018 starting with efforts to stabilize insurance markets.

Legislation authored by Senator John Thune (R-SD) and signed into law by president Trump will add skilled nursing facilities to the Rural Health Care Program.  Skilled nursing facilities provide the same services that are traditionally housed at hospitals but are often remote from doctors and sophisticated laboratory and testing facilities.  This new program addition will provide vital health care services in remote areas with little or no access to many types of doctors and specialists through high-capacity broadband connectivity.

Our nation’s opioid epidemic shows no signs of abatement in the drug crisis facing Americans according to a new report from the Centers for Disease Control and Prevention.  The age-adjusted rate of overdose deaths in 2016 was 21 percent higher than 2015.  The age-adjusted rate of drug overdose deaths involving synthetic opioids other than methadone (drugs such as fentanyl, fentanyl analogs, and tramadol) doubled from 2015 to 2016. 

As we reported last month, a Morning Consult study sponsored by the American Farm Bureau and the National Farmers Union found that,

• 74% of farmers and farm workers say they have been directly impacted by the opioid epidemic
• 3 in 4 farmers say it is easy to access large amounts of opioids without a prescription
• Only 1 in 3 rural adults say it would be easy to access drug addiction treatment

The AFBF and NFU have now launched a campaign to provide access to information and resources that can help struggling farm families and rural communities; see the website, www.FarmTownStrong.org.

National Grange president Betsy Huber released a statement in December commending the Centers for Medicare and Medicaid Services on their proposed Medicare Part D rule aimed at driving down out-of-pocket costs at pharmacies.  The rule will make it harder for Pharmacy Benefit Managers to pocket rebates and discounts intended for consumers and help ensure these savings actually get to patients.

The National Grange is intrigued by a new possibility to close the rural broadband gap by using TV “white spaces” spectrum.  These are vacant channels that use TV frequencies that are generally cheaper than fiber optic cable.  Using unlicensed low band spectrum below 700 Mhz, signals can travel over hills and through buildings to deliver broadband connectivity.  Of the 34 million Americans that lack a broadband connection, over 23 million live in rural areas.

Early in December, the Federal Communications Commission (FCC) voted to repeal a set of two-year-old regulations patterned after 1930’s telephone utility anti-monopoly statutes.   Known as “net neutrality”, these rules required internet providers to treat web content equally. Under the FCC’s new plan, broadband providers can tier internet speeds for websites based on user-traffic and charge extra for access to content such as Netflix and Facebook.

 One of the National Grange’s major policy priorities is to expand high speed connectivity to homes, schools, libraries, farms ranches, businesses, hospitals, clinics and first responders in rural and small town America. The reason rural residents don’t have broadband now is because of the ole “pay for” rule; there just aren’t enough of us to pay the capitol expense of getting us connected under a utility-based system like net neutrality.  We may have to pay a little more for the broadband investment in rural areas that weren’t financially viable before.  For rural and small town America, the argument is all about getting connected, not how fast Snapchat or the latest games and music apps download.

Legislation to reform the tax code is now history and becomes part of the law of the land.  For tax payers, there appears to be some winners, some losers and a draw for others.  The majority of new tax provisions will sunset (expire) at some point over the next ten years.  If the economy stalls, the sunset provisions will likely kick in.  If the economy improves, certain tax code provisions can be extended by Congress.

The agriculture community is generally pleased with the net results of the tax bill.  Of course, not all agricultural producers and small business owners are affected the same way by tax law changes.  The best advice is to consult your accountants and tax advisors.

Here are some key provisions of the new tax law for Grangers:

• Individual tax rates – Seven brackets, lower rates for most taxpayers (10%, 12%, 22%, 24%, 32%, 35%, 37%)
• Personal standard deduction – Doubled to $12,000 for single and $24,000 for married joint filers
• “Pass-through” business income tax treatment for farms, self-employed workers and small businesses – Deduction allowed for 20% of “pass-through income, up from 15% deduction for most tax payers, which will likely lower farmers’ effective tax rate
• Estate or “death” taxes – Exemption doubled from $5.1 million to $11.2 million for individuals and $22.4 million for qualifying couples
• Child tax credit – Doubled to $2,000 credit for each child.
• Mortgage interest deduction – Threshold lowered from $1,000,000 to $750,000 for new mortgages
• State and local tax deduction – Deduction capped at $10,000
• Corporate tax rate – Lowered to 21% from 35%
• Cash accounting – Cash accounting is preserved for agriculture and small business
• Section 179 expense – Deduction raised from $500,000 to $1,000,000 indexed for inflation; allows a producer to expense rather than depreciate capital purchases of machinery, property (except structures) and software
• Net operating losses (NOL) – Allows two years carryback for farms
• Capital gains – Unchanged (up to 23.8%)

The National Grange neither supported nor opposed the tax bill as it moved through Congress.  The priority for the Grange was to assure the best tax advantage possible for Grange members.