Budget to be used for tax reform

Congressional Republicans move budget forward to enact tax cuts; no cuts for agriculture; NAFTA talks continue into '18; guestworker revision advances; Doud approval progresses; Ibach confirmed by Senate.

P. Scott Shearer, Vice President

October 27, 2017

4 Min Read
Budget to be used for tax reform

The Republican-proposed fiscal year 2018 budget passed by Congress this week is a major step forward for Congressional Republicans and the administration’s effort to enact tax cuts. It will allow Republican leaders to use a procedural maneuver to pass tax legislation through the Senate with 50 votes.

The Fiscal Year ’18 passed budget is estimated to increase the deficit by $1.5 trillion over 10 years. The House of Representatives plans to pass its tax bill by the Thanksgiving recess with the Senate soon afterwards.

The goal of the administration and Republican leadership is to finish the tax bill by the end of the year.

No cuts required for ag in budget
The Fiscal Year ’18 budget passed by Congress this week does not require any instructions to reduce farm bill spending. The earlier-passed House version included instructions to the House Agriculture Committee to reduce agriculture spending by $10 billion over 10 years. The Senate budget did not include any reductions.

This is very helpful as the House and Senate Agriculture Committees begin their efforts on a new farm bill using the existing funding baseline. The baseline is a projection by the Congressional Budget Office at a particular point in time what future federal spending on mandatory programs would be under current law. This baseline is a benchmark against which proposed changes in law are made according to the Congressional Research Service.

Even with this good news, funding is going to be the driving factor with the farm bill. There are 37 expiring programs in the current farm bill that will not have funding (baseline) beyond 2018.

These programs include programs in conservation, bioenergy, trade, rural development, research, etc. The committees will need to find new funding for these programs to continue.

Major disagreements in latest NAFTA round extends negotiations into 2018
The latest completed round of North American Free Trade Agreement renegotiations in Washington, D.C., found major differences between the United States and Canada/Mexico on a number of issues including dairy, autos, dispute resolution, government procurement and the United States’ proposed sunset clause which would end NAFTA after five years unless the three countries agree to extend the trade agreement.

The differences among the countries were evident in the trade ministers’ comments after the round. U.S. Trade Representative Robert Lighthizer says of the latest round, “We have seen no indication that our partners are willing to make any changes that will result in a rebalancing and a reduction in these huge trade deficits.”

Canadian Foreign Minister Chrystia Freeland says the United States’ proposals were “unconventional” and would “turn back the clock” with its “winner-take-all mindset.”

The fifth round of negotiations will begin Nov. 17 in Mexico City. The three countries have agreed to extend negotiating rounds through the first quarter of 2018. The original goal was to complete the negotiations by the end of this year.

Ag guestworker bill passes committee by 1 vote
The Agricultural Guestworker Act by Congressman Bob Goodlatte (R-VA), chairman of the House Judiciary Committee, survived by one vote (17-16) in the Judiciary Committee. The bill replaces the existing H-2A farmworker visa program that is seasonal with a new H-2C program that would allow foreign farmworkers to work year-round.

The increase in demand for H-2A workers has increased sharply over the years as many agricultural sectors have struggled to find workers. The bill would allow up to 450,000 visas to be issued with 40,000 set aside for meat and poultry processors. The cap could be increased on an annual basis to meet demand.

The bill was the subject of very contentious debate with Democrats claiming the H-2C workers could be paid so little they would be used to undercut existing workers and likening the program to indentured servitude. Democrats expressed concern over the wage provisions and that the bill would displace American workers. Even the very conservative Breitbart.com opposes the bill saying that the “huge supply of temporary H-2C visa-workers would drag down Americans’ wages because the outsourcing workers would be paid a government-set wage slightly above the minimum wage.”

The H-2C wages would be at least $8.34 an hour for farmworkers, or 15% over the federal minimum wage. Meat and poultry H-2C workers would be paid the greatest of state/federal minimum wage or the prevailing wage for the “occupational classification” or the “actual wage level paid by the employer.”

Senate Finance Committee approves Doud
The Senate Finance Committee approved Gregg Doud’s nomination to be the next chief agriculture negotiator at the U.S. Trade Representative. Doud, strongly supported by the agricultural community, has extensive experience in trade and agricultural policy.

He previously served as chief economist for the National Cattlemen’s Beef Association and was a staff member of the Senate Agriculture Committee where he worked on trade and livestock issues. His nomination now goes to the Senate.

Ibach confirmed undersecretary of Marketing and Regulatory Programs
The Senate has confirmed Greg Ibach as USDA’s undersecretary of Marketing and Regulatory Programs. Ibach most recently was Nebraska’s director of agriculture.

About the Author(s)

P. Scott Shearer

Vice President, Bockorny Group, Inc.

Scott Shearer is vice president of the Bockorny Group Inc., a leading bipartisan government affairs consulting firm in Washington, D.C. With more than 30 years experience in government and corporate relations in state and national arenas, he is recognized as a leader in agricultural trade issues, having served as co-chairman of the Agricultural Coalition for U.S.-China Trade and co-chairman of the Agricultural Coalition for Trade Promotion Authority. Scott was instrumental in the passage of China Permanent Normal Trade Relations and TPA. He is past chairman of the USDA-USTR Agricultural Technical Advisory Committee for Trade in Animals and Animal Products and was a member of the USAID Food Security Advisory Committee. Prior to joining the Bockorny Group, Scott served as director of national relations for Farmland Industries Inc., as well as USDA’s Deputy Assistant Secretary for Congressional Affairs (1993-96), serving as liaison for the Secretary of Agriculture and the USDA to Congress.

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