Inside Washington: How quickly will things change in Washington?

Our projections for regulatory reform, tax changes, infrastructure funding, farm bill and trade.

A new direction is what president-elect Donald Trump promised America. The question now remains how much will change and how fast that change will occur.

“For those of you who have gotten used to stalemate, I would predict a change of scenery," Jeff Harrison, an agricultural lobbyist for Combest, Sell & Associates, challenged. “Politicians make promises every election season, and voters often numb to them going unfulfilled, but one gets the unmistakable impression that Trump backers took very much to heart the promises he made, and one also gets the sense that he is going to move heaven and earth to try and honor them.”

Harrison said the new Grand Old Party (GOP) majority in the White House, Senate and House will create an avenue for many potential changes ahead. “Hang onto your Make America Great Again hats, because there is a lot to do, a pathway to do it and a whole lot of pent-up demand amongst GOP lawmakers to make it happen,” he said.

Regulatory reform

A common rallying cry for farmers was Trump’s promise to roll back unnecessary regulations, including the waters of the U.S. (WOTUS) rule and climate regulations. The American Feed Industry Assn. (AFIA) said based on pre-election discussions with the Trump camp, the "president-elect plans to embark on a regulation revolution come Jan. 23 (2017)," AFIA chief executive officer Joel Newman said. Many of the regulations recently mandated have not been in the best interests of the industry or animal agriculture, "many times inflicting excruciating costs on our members and consumers, without corresponding benefits," he said.

Jon Doggett, National Corn Growers Assn. executive vice president, said what's interesting is that the anti-establishment candidate helped get nearly all incumbents re-elected. And even though it’s easy for Trump supporters to say the vote confirms the pathway to more change, a significant portion of the population voted another way. “This is not a mandate from the voters to undue things like WOTUS,” he noted.

Although Trump could rescind the WOTUS rule, Doggett said agricultural groups still have a desire to see more clarity from past court cases. This could be done by Congress making some strategic amendments to the Clean Water Act to provide additional clarity, or it can be accomplished by the Environmental Protection Agency fashioning a new rule.

Tax reform

Trump and congressional Republicans are eager to conquer tax reform, and Harrison said this may certainly be one of those areas where their philosophical interests converge nicely with popular opinion — “although with the caveat that bringing down rates on a budget neutral basis means closing a lot of ‘loopholes’ that don't look like loopholes to those who are using them.”

Trump promised that he would end the estate tax, or "death tax" – something many in agriculture have long called for from legislators. Trump also said he would simplify taxes for everyone and streamline deductions, offering the biggest tax reform since the Ronald Reagan Administration. He also plans to dramatically reduce the income tax and simplify the income tax from seven brackets to three.

Infrastructure

Mike Steenhoek, executive director of the Soy Transportation Coalition, noted that it will be important for the Trump Administration to present a tangible “win” in the initial days of the new presidency to assure the American public that it has the capacity to govern effectively.

“So many of the other issues featured throughout his campaign – immigration, Obamacare repeal, Supreme Court appointments, tax reform, etc. – are highly divisive and will encounter strong opposition from congressional Democrats,” Steenhoek said. “Transportation infrastructure enjoys considerably more bipartisan support and may be an area in which the new President and Congress are able to get something done.”

Steenhoek said he expects an “aggressive infrastructure plan” to be unveiled in the early stages of his presidency. Reports indicate that House minority leader Nancy Pelosi (D., Cal.) agrees with president-elect Trump that investing in infrastructure is an important priority. “We can work together to quickly pass a robust infrastructure jobs bill,” she said.

Congressional Republicans have already expressed a willingness to use additional revenues generated by the growth resulting from tax reform on infrastructure, Harrison added.

Farm bill

Harrison said when it comes to the next farm bill rewrite, it may well be delayed and extended in favor of tackling bigger stuff, or conversely, its passage may be hastened as part of a broader legislative agenda that could involve both roses and thorns.

He has also stated that he would defer to the congressional agriculture committees on farm policy details. Trump’s top agricultural adviser, Sam Clovis, has said Trump is in favor of keeping the nutrition programs together with the commodity supports, a departure from some of the more conservative House members.

The next farm bill will be written as many Democrat members face re-election, Harrison noted. Senate Agriculture Committee minority leader Debbie Stabenow (D., Mich.) will not only need to partner with chairman Pat Roberts (R., Kan.) on the development and passage of the next farm bill, Harrison said, but she must do so in a politically charged environment as seven of the nine Democrats on the Senate Agriculture Committee face re-election in 2018, including Stabenow.

Doggett anticipates that work on the next farm bill is likely to pick up in late 2017 to early 2018. “I don’t see it accelerated much before that,” he said.

Trade

If there’s one wild card in the upcoming agenda outcomes, it is trade. “Reconciling differences over how to proceed on a U.S. trade agenda will be a difficult needle to thread, since the states that gave Mr. Trump his margin of victory are comprised significantly of voters who strongly believe their families and communities have suffered terribly on account of trade agreements,” Harrison said. The Trans-Pacific Partnership with Asia-Pacific countries and Transatlantic Trade & Investment Partnership with Europe will be the most immediately affected.
 
Bill Lapp, president of Advanced Economic Solutions, said the impact of impeding trade could be dramatic, and the largest risk is Trump’s promise to broadly interfere with trade – via tariffs on imports from China and Mexico, renegotiating the North American Free Trade Agreement and his demands of “fair trade.”

“It is difficult to discern rhetoric from reality,” Lapp said. “However, if these promises are carried out to some degree, they would carry the greatest risk for U.S. food business, both in terms of increasing costs and creating supply disruptions.” He noted that fruits and vegetables seem to be the first place such problems would show up.

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