Washington Insider-- Wednesday

By DTN's Washington Insider

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

Spending on Food Stamps, Other Nutrition Programs Falls for First Time in 15 Years

The money that USDA's Food and Nutrition Service spends on domestic food and nutrition assistance programs fell in fiscal 2014 for the first time in 15 years, according to a new department report. Overall nutrition spending was $103.6 billion in FY14, down 5% ($5.5 billion) from the $109.1 billion spent a year earlier.

The decrease was driven largely by an 8 percent decline in expenditures for USDA's Supplemental Nutrition Assistance Program (SNAP, or food stamps), which totaled $73.9 billion in fiscal 2014. Expenditures for all the other food and nutrition assistance combined increased by less than 1%.

Lower SNAP expenditures reflected a decrease in both participation and average benefits per person. An average 46.5 million people per month participated in the program in fiscal 2014 — 2% fewer than the previous year — as economic conditions continued to improve. SNAP benefits per person averaged $125.37 per month ($1,500 per year), or 6% less than the previous fiscal year.

The declines in expenditures, participation and average benefits per SNAP recipient will likely come as welcome news to members of Congress who argue that USDA safety net programs are far too generous.

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Japan's Farmers Urge Government to Retain High Tariff Walls to Protect Five Products

The Trans-Pacific Partnership (TPP) free trade agreement currently being negotiated among 12 Pacific Rim nations has as one of its major goals the reduction and/or phase-out of protectionist tariffs on a number of traded products. The government of Japan, which employs significant import duties on a wide range of agricultural products, finds itself caught between the desire to expand its exports and the lobbying efforts of farm groups which predict existential disaster if anti-competitive barriers are removed from agricultural imports.

Earlier this week, Japan's largest agricultural organization, the Central Union of Agricultural Cooperatives (JA-Zenchu), called on Japan's Agriculture Ministry to retain the country's high import tariffs on rice, wheat and barley, pork and beef, dairy products and sugar –– the so-called sensitive products under negotiation by the United States and Japan. Agreement between the two economic superpowers on this topic is widely viewed as a prerequisite to concluding the 12-nation TPP.

Japan's negotiators have had their hands tied somewhat by resolutions passed by both houses of their parliament stating that the country would retain tariffs on the five sensitive products and by the lobbying of their farm groups. In the United States U.S. farm and commodity organizations last year urged that if Japan remained wedded to high tariffs on agricultural products, the TPP process should proceed minus Japan.

So, the absolutist positions appear to be a TPP that includes Japan and its high farm tariffs, or a TPP with no Japan. The United States and Japan have been trying for more than a year to find a compromise, a search that appears destined to continue for the foreseeable future.

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Washington Insider: Plenty of Blame in Spending Fight

There are plenty of fiscal and policy cliffs surrounding the coming budget fights, so efforts by the press to lay blame for "partisan brinkmanship" such as derailed funding bills in 2013 and led to a partial government shutdown are not very enlightening, observers say.

To no one's surprise, the president is telling the press that he won't sign appropriations bills written by congressional Republicans that violate his guidelines. This is leading to accusations that he could doom the fiscal 2016 appropriations season to a series of continuing resolutions before it even begins. In this case, the president appears to be aiming at Republicans who are eager to step up defense spending but who want to hold domestic programs to an earlier spending deal.

The president was quite specific in his comments during a recent interview. He promised to reject any fiscal 2016 spending bill that imposes strict spending limits for non-defense programs as defined by the 2011 deficit reduction law. The president, however, notably stopped short of explicitly promising to veto the measures.

"We are not going to have a situation where, for example, our education spending goes back to its lowest level since the year 2000 –– since 15 years ago –– despite a larger population and more kids to educate.... We can't do that to our kids, and I'm not going to sign it," Obama said.

Press reports suggest that the president hopes to prompt another budget deal similar to the two-year agreement negotiated by then-House Budget Chairman Paul Ryan, R-Wis., and Senate Budget Chairwoman Patty Murray, D-Wash., in December 2013. And, there seems to be at least some support on both sides of the aisle for repeating such a deal. A bipartisan group of Senate Budget and Armed Services committee members are forging ahead with talks aimed at shielding defense spending in particular. The other components of such a deal are less clear and there is broad agreement that any agreement is likely months away.

In the meantime, the rhetoric involved is expected to continue to heat up. Congressional Quarterly reported Tuesday that Republicans are likely to call the president's comments hypocritical since they include a vow to reject bills with the spending limits he signed into law as part of the 2011 deal.

Some observers also suggest that Obama's comments could push Republicans to move quickly to pass and conference non-controversial appropriations bills in order to dare the White House to veto politically-popular measures written to the statutory caps.

Both the House and Senate budget resolutions adhere to statutory caps for discretionary programs for fiscal 2016, allocating $523 billion for defense and $493.5 billion for nondefense. However, both budgets would ignore the defense cap by increasing the war funding Overseas Contingency Operations account, which would not be subject to spending limits.

There is a chance, observers say, that this year's appropriations cycle may follow a trajectory similar to that of the fiscal 2014 spending battle when the president threatened to veto every funding bill that was marked up by the House. That, they say, reflected a larger disagreement over spending levels. The bill-writing process fell apart in the summer that year when House Republican leaders pulled a Transportation-HUD spending measure from the floor as GOP members called for greater funding for transport programs.

That collapse proved a harbinger for the shutdown two months later, and there are still debates over who was to blame.

That debate likely will be extended this year, as well. There are arguments on both sides and it seems increasingly clear that the public is fed up with the hard-nosed name calling. Some of the core issues, especially support for popular programs like defense and a few others is likely to be rewarded by special treatment — although the funding gimmicks now being considered likely won't pass many smell tests.

Still, the "who caused the trouble" argument some in the press are now wheeling out won't cut much ice, either. So, it looks like a year of many arguments and much, much detail — and little clarity –– but a debate that requires endless watching, Washington Insider believes.

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(GH/CZ)

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