Washington Insider--Monday

By DTN's Washington Insider

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

National Truck Driver Shortage Projected to Grow to 200,000 by 2020

The nation's truck driver shortage is worsening, according to the American Trucking Association. ATA estimates that there currently is a 35,000 driver shortage that is projected to grow to around 200,000 by 2020, and could reach as many as 240,000 by 2024.

ATA President Bill Graves says one possible solution to finding news sources of drivers may be the push for immigration reform in Washington. "Our ability to solve this driver shortage will be tied to what we can do with immigration," Graves said. "I think it's very possible as the demand for trucking grows, we're going to have to figure out how to use non-traditional employees to fill those vacancies."

For the past 20 years, the International Brotherhood of Teamsters has fought to keep Mexican trucks and drivers from operating anywhere in the United States outside a relatively small buffer area at the U.S.-Mexican border. The union's argument is that trucks registered in Mexico are not safe enough to drive in the United States and that Mexican drivers also would pose a safety threat.

However, the organization has not leveled similar charges against trucks and drivers from Canada. Some observers believe that is because Canadian drivers are members of the Teamsters, while Mexican drivers are not. These same observers will be watching closely to see whether the union will continue its objections to drivers from Mexico if those individuals begin driving for U.S. companies and joining the Teamsters.

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CBO Says New Method for Calculating Inflation Would Cut Deficit by an Average $3 Billion Per Year

The nonpartisan Congressional Budget Office says using a more accurate measure of inflation for both federal benefit programs and indexing tax brackets would cut the 10-year budget deficit by slightly more than it had previously projected.

In a new report ––"Options for Reducing the Deficit"–– CBO says that moving to the Consumer Price Index to determine cost-of-living allowances would shave about $182 billion from federal expenditures over 2015-24. That was above the $162 billion estimate CBO made in 2013.

Using the same method for indexing tax brackets would yield $150 billion over the same time period by raising additional revenues, CBO says. That was a $10 billion increase compared to the 2013 estimate.

Expect the next Congress to look more closely at the current methodology as a way to both reduce spending and increase revenues over time.

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Washington Insider: EPA and the RFS Delay

The Environmental Protection Agency last week once again was in the spotlight, just when you thought there could not really be more surprises in the wings. In a somewhat shocking move, it announced Friday that it won't issue a final Renewable Fuels Standard for ethanol and biodiesel for 2014 by the end of the year.

Instead, the agency said it will issue a new rule in 2015 to set standards for 2014 through 2016 in an effort to bring the annual rulemaking back into compliance with statutory deadlines after several lengthy, recent delays.

As most everyone knows by now, the Energy Act required that the final rule for 2014 by published by the end of November, 2013 –– so that regulation already is nearly a year overdue. Last week’s announcement kept the 2013 in place rule “until the new rule can be issued.” Certainly, this policy of delay pleased no one and is contributing to growing uncertainty over what future renewable fuel policies will be.

Petroleum groups have long argued that the current policy is unworkable and now say that EPA's continued delays and missed statutory deadlines are strong evidence the law is unworkable and should be repealed. The RFS for 2012 came out 40 days late and the 2013 rule was more than eight months behind schedule. On the same day the new schedule delay was announced, the American Fuel & Petrochemical Manufacturers said it plans to sue the EPA over delays in issuing the final 2014 rule.

So, now the main question is whether Congress will step into the picture and change the law, or will the administration and the EPA will be allowed to ignore a key part of it. House Energy and Commerce Committee Chairman Fred Upton, R-Mich., Energy and Power Subcommittee Chairman Ed Whitfield, R-Ky., and Environment and the Economy Subcommittee Chairman John Shimkus, R-Ill., said in a joint release on Friday that they are open to revisions to the law that would allow the EPA to better administer the RFS.

“EPA cannot just choose to arbitrarily ignore the law and the deadlines established by Congress, they said. “This unexpected announcement highlights that there are still significant challenges facing the RFS and underscores the need to come together and find a practical, bipartisan solution.”

The problem, of course, is how to define the changes that should be made, since the economics and politics of renewable fuels have changed dramatically in recent years. The law, observers note, contains both volumetric and percentage requirements which have required the use of more renewable fuels than the law allows, an internal conflict that the petroleum industry hates.

There are other problems. The renewable fuels sector has failed to grow as expected, with grain-based ethanol serving as a transition to cellulosic fuels while competitive pressures on food production resources decline. It also has failed to stand up to environmental scrutiny and has lost much of its initial support from environmental groups.

Perhaps most important of all, it has been overtaken by seismic shifts in energy economics and now has lost much of its role in the effort to reduce reliance on Middle-Eastern petroleum.

Nevertheless, the RFS is widely seen across U.S. crop agriculture as an essential source of crop production value, even as the current bumper crop weakens markets and outlooks. So, efforts to reduce the mandates have very little support across the Midwest from either side of the aisle.

In the Senate, Jim Inhofe, R-Okla., who will chair the Senate Environment at and Public Works Committee in the next Congress, is joining the call for the law to be revised –– perhaps. “This [the EPA announcement] only feeds the environment of uncertainty our economy has suffered with over the past six years, and is not how we should do business in America,” he told the press.

The result is certainly a surge of criticism for the administration but no real clamor for specific policy reforms yet. Pundits say the odds are growing that the House could enact some RFS changes but that view still favors no change, or little change, by the Senate and almost no chance for repeal.

At the same time, the new willingness to consider changes that would not have been on the table at all in earlier years should be noted –– although even those who enjoy criticizing the administration tend to argue that the current energy policies are simply too deeply embedded into the agricultural economy to change just now. So, the betting is that neither the administration nor the Congress will be willing to seriously consider a major reform in the near future.

This more than likely means energy may be yet another area where policies just bump along, in spite of a growing belief that they are internally contradictory –– a major dysfunction that adds to the growing negative view of the U.S. food system by the general public, Washington Insider believes.

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(GH/CZ)

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