BGR Group Principal Joseph Lai writes about how a second Trump presidency could impact the environment for business.
Category: Commerce
Analysis: The Farm Bill’s Progress
The Farm Bill is Moving. Buckle Up.
By Jennifer Lukawski
Co-Lead of BGR’s Sustainability, Nutrition, and Commodities Working Group
After more than a year of hearings and listening sessions, House Agriculture Committee Chairman Glenn T. Thompson (R-PA) has released a title-by-title overview of his draft farm bill and scheduled a markup of the legislation for May 23rd. The announcement marks a major milestone; however, the road to a new farm bill is going to be a bumpy one.
While draft text is not yet available, according to a high-level summary of Chairman Thompson’s proposal, the committee seeks to increase farm safety net programs, enhance crop insurance, and expand conservation programs. Nutrition funding would not be cut, but changes to how the benefits are calculated will be included.
In response to the overview’s release, Ranking Member David Scott (D-VA) quickly rejected the proposal, arguing it contains “poison pill policies” that will doom its chances of becoming law. The farm bill has traditionally been a bipartisan effort, and while Chairman Thompson expects to pick up some Democratic support in committee, a fully bipartisan product is currently elusive, and the level and nature of concessions necessary to garner significant Democratic support is unclear for the moment.
Not to be outdone, Senate Agriculture Chairwoman Debbie Stabenow (D-MI) soon thereafter released her own vision for reauthorizing agriculture and nutrition policies, vowing to reject the House GOP’s proposed changes to nutrition and climate program funding. Similar to the House bill, the “Rural Prosperity and Food Security Act” similarly aims to expand crop insurance and conservation programs, but also makes greenhouse gas reductions a major focus of the proposal and protects USDA’s recent changes to the Thrifty Food Plan to raise SNAP benefits.
In response to Chairman Stabenow’s proposal, Ranking Member John Boozman (R-AR) issued a statement welcoming the release of the committee’s Democratic priorities and said Republican senators will release their farm bill framework after the House considers its bill. A markup date in the Senate has not yet been scheduled.
The pressure has been on for House and Senate authorizers to show their respective cards on their plans to rewrite this massive law impacting not just farmers but all Americans. The farm bill sets farm, conservation, forestry, and nutrition policy and authorizes various agricultural programs. Last December, Congress approved a one-year extension of current law, setting a new September 30th deadline to allow additional time for committee negotiations to continue. Farmers and ranchers have since grown increasingly concerned about the delay, calling for urgency in passing a modernized farm bill that reflects the changes the agriculture industry has undergone over the last five years. It is one of the few remaining must-pass bills this Congress and is a big ticket one, at that.
A massive undertaking, the renewal of the farm bill has been delayed because of the Speaker battle last fall, the drawn-out FY24 appropriations process, a lack of funding options to expand farmers’ safety net, and long-standing disagreements over competing policy priorities. The latest hangup is the much-
anticipated CBO score which will be necessary to move forward. Despite the delays, House and Senate authorizers seem ready to move this process to the next crucial step in what will continue to be a complicated process that will begin, initially, as a partisan exercise.
Here is a deeper dive on the major policy issues that will require careful navigating for the bill to progress its way through Congress and to the President for his signature:
Nutrition Assistance
The nutrition title is by far the largest and costliest title in the farm bill. The Congressional Budget Office baseline projection from May of 2023 shows that nutrition programs will comprise more than 80 percent of the farm bill’s spending, with a price tag of more than $1.2 trillion over 10 years. Most of this is attributable to the soaring cost of the Supplemental Nutrition Assistance Program (SNAP). Funding for SNAP has nearly doubled since the last farm bill was enacted, from $65 billion annually in 2018 to an estimated $127 billion in 2023 (some of which is attributable to high inflation and pandemic-era spending).
SNAP has always been a partisan battle line, with most Republicans typically seeking to rein in increases in both SNAP’s spending and enrollment, and most Democrats trying to expand them. SNAP benefits are calculated based on the USDA’s Thrifty Food Plan, which serves as the basis for setting benefit levels for SNAP. Each year, these benefit levels are adjusted for inflation.
In 2021, the Biden administration made sweeping changes to the TFP by permanently updating the program’s cost levels and market baskets. The reevaluated plan, however, did not apply previous, longstanding administration policy that imposed cost-neutrality. The result was a 25 percent increase in SNAP benefits, the largest expansion of supplemental nutrition assistance in the program’s 45-year history. The USDA cites language in the Agricultural Improvement Act of 2018 (“the 2018 Farm Bill”) and President Biden’s Executive Order 14002 as authority to disregard the cost-neutral framework. However, Republicans have taken strong issue with this interpretation, arguing the update ignores past precedent, was done without the input of Congress, and without regard to its budgetary impact. Chairman Thompson has insisted that the next arm bill restore past precedent by placing new guardrails on the way SNAP payments are determined to ensure budget neutrality. Such a proposal would reduce future outlays by $30 billion. While current beneficiaries would not be impacted, Democratic members are calling this a cut and making it clear that any reductions in SNAP spending would cross a red line for them. Given fighting over SNAP benefits delayed passage in the House for two years during the last farm bill re-write, this will be the largest hurdle for Congress to clear and likely increases the odds of a short-term extension into a lame duck session or potentially 2025.
Climate Funding
A major part of President Biden’s environmental agenda was enacted in the partisan 2022 Inflation Reduction Act, which provided $19.5 billion to the Department of Agriculture for “climate-smart” agriculture and forestry initiatives that prioritize greenhouse gas-reducing and carbon sequestering activities. The Biden administration hailed this as a historic win to address his climate change priorities and saw it as a pathway for a more climate-focused farm bill.
House and Senate Agriculture Committee Republicans have been pushing back, saying the new program excludes farmers and ranchers who need money to help fund conservation, natural resource, and wildlife habitat solutions that are not prescribed by the USDA but that offer flexibility to best meet their needs at the local level. Democrats have made it clear, however, that any attempt by Republicans to redirect IRA money earmarked for conservation and environmental programs would be a non-starter. In fact, Chairwoman Stabenow (D-MI) said she would prefer punting on the farm bill rather than strike a deal with Republicans that would limit climate-smart agriculture funding, or the SNAP program for that matter.
Both Chairman Thompson and Chairwoman Stabenow seek to bring the Inflation Reduction Act conservation funding into the Farm Bill to permanently expand the baseline and increase conservation programs by 25 percent. But the House summary stops short of pledging not to remove climate guardrails from the IRA funding. Instead, committee Republicans aim to protect voluntary, locally-led incentives that previously guided farm conservation programs.
Farm Income Safety Net
Set by Congress, reference prices are the trigger for crop subsidy payments covered by the Agriculture Risk Coverage and Price Loss Coverage programs. Through this reference price support, farmers can receive payments to make up the difference when market prices fall below the determined threshold. Arguing that the current reference price formula does not adequately cover their needs, many farmers have been advocating for higher reference prices to make up for increased production expenses that cut into their bottom line. Deficit hawks in Congress and conservative organizations are expressing opposition to such an effort, arguing that increasing reference prices is far too costly, interferes with a free market, and turns what is supposed to be a safety program into an entitlement. They also argue that since payments are linked to production, that the largest producers get the bulk of funding at the expense of small- and medium-sized producers.
The reality is that raising reference prices will not be cheap or easy, particularly since the Congressional Budget Office is having a hard time projecting future crop prices, making it difficult to estimate the cost of any increase. Then there is the question or how to pay for it. There are limits on expanding the farm bill’s baseline or increasing funding for certain programs.
Authorizers will have to get creative with how to find new funding beyond the current farm bill baseline, and both Republicans and Democrats will have to agree on where those funds are pulled from. An increase in reference prices would be an expensive step that could potentially add billions of dollars to the cost of crop support. Yet Chairman Thompson thinks an agreement can be had, saying he has found a way to fully fund farm safety net programs without touching the IRA or SNAP programs.
What to Expect
History tells us that drafting, debating, and voting on such a massive bill – not to mention producing an eventual bipartisan agreement — will take a significant amount of time and intense negotiations. There are as many as 60-80 House Republicans who are expected to oppose any farm bill, making Chairman Thompson’s job all the more challenging as he launches the renewal process in the House. The markup process is expected to be contentious, and floor consideration could be especially messy. Regardless, the law’s reauthorization will by necessity require bipartisan support. Should Congress not reauthorize the bill by the September deadline, another extension will be necessary – pushing the bill’s consideration into the lame duck session or more likely into the next Congress, where the political dynamics could shift significantly after the November elections and where high profile, high-cost fights over the debt limit and expiring tax cuts will take center stage.
BGR Tax Talk
Bipartisanship seems to be breaking out in Washington thanks to taxes. Earlier this week, Senate Finance Committee Chairman Ron Wyden (D-OR) and House Ways and Means Chairman Jason Smith (R-MO) announced a significant bipartisan, bicameral agreement on business and individual tax relief. Dive deeper into the recent bill, hear from BGR experts Steven Pfrang and Joel Bailey, and learn about what’s next in BGR’s latest product: BGR Tax Talk.
BGR Views: Meet Syd Terry
BGR welcomes our newest team member Syd Terry and he discuses BGR’s Quarterly Outlook and projections for the next few weeks and months in Congress.
BGR Group Welcomes Syd Terry, Former Chief of Staff to Key House Progressive Leader
WASHINGTON, D.C. (September 6, 2023) – BGR Group, Washington, D.C.’s premier bipartisan lobbying and public relations firm, today announced that Syd Terry, former chief of staff to Representative Jan Schakowsky (D-IL), has joined the firm as a Vice President in the Commerce and Infrastructure Practice. Syd will focus on issues related to telecommunications, consumer protections, and competition policy both on Capitol Hill and in the administration, including the Federal Trade Commission (FTC).
“Syd will be an incredible asset to BGR and our clients,” Commerce and Infrastructure Practice Co-Head Justin Rzepka said. “His time on Capitol Hill with Representative Schakowsky and the Energy and Commerce Committee provides him with extensive experience in several key issue areas ranging from consumer rights to trade. We are thrilled to have Syd join the team.”
In his time with Representative Schakowsky, who serves as Chief Deputy Whip and Ranking Member of the House Energy and Commerce Subcommittee on Innovation, Data, and Commerce, Syd led all legislative, policy, communications, and constituent services strategies for her including her work as a Member on House Budget Committee. He first joined Rep. Schakowsky’s office in 2019 as Legislative Director and led her policy work related to the House Energy & Commerce Subcommittee on Consumer Protection and Commerce. In that role he coordinated policy relating to interstate and foreign commerce, including all trade matters within the jurisdiction of the full committee, consumer protection, regulation of commercial practices, and consumer product safety.
As part of Rep. Schakowsky’s staff, Syd played a key role in the negotiation of the INFORM Consumer Act, the first FTC rulemaking bill signed into law this century, which was supported by the National Association of Manufacturers (NAM), the U.S. Chamber of Commerce, AFL-CIO, Consumer Reports, RILA, and the Coalition to Protect America’s Small Sellers (PASS Coalition). He was also Rep. Schakowsky’s lead staffer in her capacity as one of Speaker Pelosi’s appointees to the U.S.-Mexico-Canada Agreement (USMCA) trade negotiations.
Syd started his Capitol Hill career with Senators Ken Salazar (D-CO) and Carl Levin (D-MI). He also worked on the campaigns of Sen. Michael Bennet (D-CO) and then Rep. Mark Pocan (D-WI), who was elected to the House in 2012 and later served as Co-Chair of the Progressive Caucus. Syd joined Pocan’s Congressional office where he served as a Senior Legislative Assistant. In this capacity, he served as the primary labor, energy, and environmental policy staffer for a member of the House Appropriations Committee.
BGR Deep Dives: Debt Limit State of Play
In a BGR Deep Dive, BGR Financial Services and Commerce and Infrastructure Vice President Steven Pfrang examines the latest on the debt ceiling debate.
Key Takeaways from House TikTok Hearing
By Alex Bedwell
March 24, 2023
The House Energy and Commerce Committee held a hearing focused on TikTok this week. The company’s CEO Shuo Chew testified and received difficult questions from members on both sides of the aisle. Here are some key takeaways from the hearing.
Will TikTok Be Banned?
During the hearing on Thursday, members of the committee expressed their firm belief that TikTok could be exploited by the Chinese Communist Party, leaving the future of the app in the U.S. uncertain. The Biden administration had already threatened a national ban, and the U.S. government had banned TikTok on government devices. The committee’s conviction was reinforced by a Wall Street Journal report, released just hours before the hearing, which stated that the Chinese government would not approve a TikTok sale. Lawmakers outside the committee are also not convinced, but a national ban would face significant legal and public opinion challenges. Previous attempts to ban TikTok were blocked in court due to free speech concerns, and millions of its users in the U.S. are unlikely to want to give up the fast-growing and popular apps.
Doubts regarding the feasibility of ‘Project Texas’
To address concerns about Chinese influence, TikTok has announced a new plan called Project Texas, which involves moving all data from U.S. users to servers located within the U.S. As part of the plan, the tech company Oracle would have access to TikTok’s source code and act as a third-party monitor. TikTok aims to complete the project by the end of the year, but some lawmakers doubt this is possible due to the large amount of source code that needs to be reviewed. Congressman Jay Obernolte (R-CA), who is also a software engineer, expressed concern that Project Texas may not have the technical capability to provide the necessary assurances.
China’s Relationship with TikTok
At the hearing, lawmakers repeatedly questioned Chew about China’s alleged influence over TikTok, citing it as a potential national security concern. Both House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-WA) and Ranking Member Frank Pallone (D-NJ) referred to TikTok’s parent company, ByteDance, as a “Beijing communist-based parent company.” Chew maintained that the Chinese government does not control ByteDance and that there is no evidence that the government has accessed or requested access to U.S. user data. He also stated that TikTok does not remove or promote content at the request of the Chinese government. However, some legislators pointed out that Chinese engineers may still have access to some U.S. data due to the company’s reliance on “global interoperability.” Despite these concerns, Chew denied that TikTok posed a national security threat, stating that many of the risks are theoretical and hypothetical.
Content Moderation
Lawmakers also addressed broader social media concerns during the hearing, focusing on TikTok’s ability to moderate harmful messaging, misinformation, and inappropriate content. Several legislators presented TikTok videos that promoted self-harm or suicide. Chew said that TikTok employs 40,000 moderators to monitor harmful content and utilizes an algorithm to identify controversial material. Additionally, the company plans to have “third-party validators” assess its algorithms and grant researchers access to study and monitor the content. However, Chew acknowledged that TikTok is not perfect in its moderation efforts, stating that the company works hard to improve its methods.
Kids’ Safety and Mental Health
Another frequent focus of the hearing was the safety of TikTok’s younger users, considering the app has exploded in popularity with this age group in recent years. According to the Pew Research Center, most teenagers in the United States use TikTok. Specifically, 67% of individuals aged 13 to 17 have used the app, and 16% of that age group use it “almost constantly.” Lawmakers cited reports that drug-related content has spread on the app, allowing teens to purchase dangerous substances easily online. Chew said such content violates TikTok policy and that they are removed when identified. Others cited self-harm and eating disorder content, which have been spreading on the platform. TikTok is also facing lawsuits over deadly “challenges” that have gone viral on the app.
President Biden’s Veto of Anti-ESG Resolution
WASHINGTON, March 20 – President Joe Biden issued his first veto on Monday on legislation that would have reversed the Department of Labor’s rule on fiduciary duties involving environmental, social, and governance (ESG) factors in investment decisions. Biden, in a message to the House of Representatives, says “there is extensive evidence showing that environmental, social, and governance factors can have a material impact on markets, industries, and businesses.”
The legislation, H.J. Res. 30, would have overturned the rule through the Congressional Review Act (CRA), which gives Congress the power to repeal a final rule issued by a federal agency within 60 days of its going into effect. The rule itself, titled “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” clarifies that retirement plan managers can incorporate climate and social considerations into their investment decisions by considering participants’ preferences. The rule undoes a previous President Trump-era rule that let investment managers consider purely financial factors in their decision-making process.
The bill passed the House 216 – 204 with all Republicans present voting yes and all Democrats present voting no, except for moderate Rep. Jared Golden (D-ME), whose district voted for President Trump both in 2016 and 2020. The bill then narrowly passed the Senate 50 – 46 with Senators Joe Manchin (D-WV) and Jon Tester (D-MT) voting for the bill (and Manchin strongly criticized the President’s veto). Issues concerning ESG have been top of mind for Republicans, with this resolution being one of their first major efforts against the concept at the federal level.
House Republicans have plans to hold a vote on Thursday to override the veto. The effort will most likely fail, however, as a congressional override of a presidential veto requires a 2/3 majority of both houses of Congress. As such, Republicans would need 68 House Democrats to join in on the measure.
Resources:
Trump-Era Rule Limiting ESG Investing
Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights
Five Factors to Watch in the Reconciliation Process
By Justin Rzepka, BGR Commerce & Infrastructure Practice Co-Head
After a year of back and forth between Senate Democrats, they are on the precipice of advancing a $700 billion plus reconciliation package dubbed the “Inflation Reduction Act of 2022” and focused on climate, taxes, and health care subsidies. The reconciliation process allows for legislation to pass with a simple majority. All 50 Senators will need to be on board to move the package forward. Democrats in the House and Senate are walking an extreme tightrope to get this package to the President’s desk. Here are five factors to watch as the process moves forward.
PROCEDURAL DEADLINES AND HURDLES
The House approved a much larger budget reconciliation package earlier in the Congress but has not yet transmitted the vehicle to the Senate. House and Senate Democratic leaders will have to time this transmission carefully to ensure all 50 Senate Democrats are present, accounted for, and in favor of the package. If they are not, Republicans could call up the legislation and defeat it, essentially quashing it. The package must also go through a vote-a-rama, in which an unlimited amount of amendments can be offered and must be voted on. This process could take nearly a full day. With limited time before the August recess and a hard deadline of September 30th, the end of the fiscal year, Democrats surely want to start the process sooner rather than later.
ATTENDANCE WOES
As mentioned above, Senate Democrats will need all 50 of their members, plus the Vice President, present to vote for the package to proceed. This will be tricky. On Thursday, July 28, Senate Majority Whip Dick Durbin (D-IL) announced he had contracted COVID. Several other Senators, including Manchin, are just getting over the virus. In addition, Senator Patrick Leahy (D-VT) has been absent due to hip surgery. It is expected that he will be present for any must-have votes next week. However, just one absence for any reason could derail the entire process.
BYRD BATH
The legislative text is currently being reviewed by the Senate parliamentarian for potential budget violations. In a reconciliation package, all new spending must be offset with accompanying revenue and no extraneous provisions are allowed. The package laid out by Senate Majority Leader Chuck Schumer (D-NY) and Senator Joe Manchin includes $369 billion in new climate spending approximately $300 billion in deficit reduction through various changes to the tax code, allow Medicare to negotiate the cost of some prescription drugs, and provide subsidies for the Affordable Care Act. The parliamentarian must complete a full review, also known as a Byrd Bath after the former Senator Robert Byrd (D-WV), before the package can move forward. This process could take several days.
WHERE IS SINEMA?
Arizona Senator Kyrsten Sinema (D-AZ) has been one of two Democratic holdouts during the year long reconciliation negotiation. She made clear earlier in the process that she would not support tax increases in a reconciliation package. The proposed package from Senators Manchin and Schumer includes significant tax increases. Senator Sinema has yet to announce her position on the package and her staff indicated she would not reveal a position until the parliamentarian had completed the Byrd Bath review.
GETTING THROUGH THE HOUSE
Should the package get through the Senate, it will then head to the U.S. House for approval. The House will need to return from its August recess to consider the package, likely into the week of August 8th. The Democratic majority currently has a margin of just 4 votes. This margin is set to shrink by one to 3 following a special election for an open House seat in Minnesota on August 9th in which the GOP is favored. Just as Senate Democrats struggled with internal conflicts over the package, House Democrats did too. Many Progressive Democrats are likely unhappy that the package is limited in scope compared to what they had originally pursued. Some northeastern Democrats are surely unhappy that the package does not include State and Local Tax relief for high income states. If and when this package reaches the House floor, Speaker Nancy Pelosi (D-CA) will need to mollify any internal concerns to get it through the chamber.
Five Scenarios for USICA-COMPETES Legislation
By Jonathan Mantz, BGR Commerce Practice Co-Head
Overview
The United States Innovation and Competition Act (USICA) and America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science (America COMPETES) Act Conferees negotiations have encountered a serious roadblock. As members were discussing differences between the House and Senate versions of their respective bills, Senate Republican Leadership announced Republicans would not engage in ongoing negotiations for any China competition legislation if Senate Democratic Leadership attempted to revive the long-dormant Build Back Better package through reconciliation. There are still plenty of key differences between the House-passed America COMPETES Act and the Senate-passed USICA that have not been reconciled. The Biden administration continues to make a full-court push for the legislation, including a Senators’ Only classified briefing from Commerce Secretary Gina Raimondo, Director of National Intelligence Avril Haines and Deputy Defense Secretary Kathleen Hicks. Industry is also making clear that it is making adjustments on production based on what Congress does or does not do. Right now, we believe there are at least five potential outcomes on this critical legislation.
1 – Stalemate Due to Reconciliation Revival – On Tuesday, June 28, 2022, Senate Minority Leader Mitch McConnell (R-KY) stated, “Let me be perfectly clear: there will be no bipartisan USICA as long as Democrats are pursuing a partisan reconciliation bill.” Further, on July 11, McConnell added that reconciliation would “crowd out our [Republicans] ability to process the bipartisan USICA bill aimed at competing with China,” and “our side cannot agree to frantically steamroll through delicate bipartisan talks in order to meet an artificial timeline so our Democratic colleagues can clear the decks to ram through a party line tax hike.”
McConnell’s statements follow reports about Democrats working on revised plans for their budget reconciliation package that was paused due to inflationary concerns expressed by Senator Joe Manchin (D-WV). The Democratic Majority loses the ability to use the reconciliation process at the end of September and is making one last effort to move a slimmed down package. The White House quickly responded to McConnell’s statement, by expressing that he and Republicans are “holding a bipartisan bill hostage.” This legislation has been amongst a top priority for the Biden administration. Secretary of Commerce Gina Raimondo recently weighed in stating that Congress is “playing politics with national security by delaying the passage of legislation that will liberate billions of dollars for chipmakers to build more manufacturing facilities in the U.S. amid a global shortage.”
Democrats are not happy. “No one feels like they have a fire under their ass and get it done,” said Rep. Elissa Slotkin (D-Mich.). “But I would love for some of those leaders to come to my district and sit at that roundtable and have that conversation with people and explain why election-year politics is getting in the way of having some control over our economic security.” At this stage it appears that unless Republicans re-engage, negotiations will remain on hold.
2 – House Passes Senate-passed Bill – Given the compressed schedule and loaded agenda, there is a possibility the House could pass the Senate-passed USICA bill and abandon the conference process altogether. This would give Democrats and the White House a much-needed victory ahead of the midterm elections. However, it would require House Democrats to swallow trade-related provisions they have previously opposed. Senator McConnell suggested this as a path forward if conference negotiations remain stuck. On July 13, Speaker Pelosi and Majority Leader Hoyer confirmed they were not interested in passing the Senate’s USICA bill unchanged.
3 – CHIPS Moves Alone – One of the most sought-after provisions in this process is the CHIPS Act, which aims to increase American competitiveness by subsidizing new investment in domestic semiconductor manufacturing capacity. If the CHIPS Act language is stripped out and moves on its own, roughly $50 billion would be allocated for the Commerce Department to carry out the semiconductor incentive program. Other key provisions in the package are the trade titles, which are likely to be stripped out entirely given that the House and Senate conferees did not seem to agree to the other chambers proposed language. There is a possibility that negotiators attempt to attach provisions from package to the end of year government spending package. Majority Leader Schumer has suggested the Senate could move on this as soon as next week, but Senate Republicans made clear they would not agree to advance such a package if there is still a chance a reconciliation package is moving.
4 – Lame Duck Action – If nothing breaks loose before the midterm elections due to scheduling challenges and a lack of consensus on a path forward, the legislation could be revisited in a post-election legislative session.
5 – Pushed to New Congress – With many predicting the House will flip Republican in the midterms, the legislation could be revised significantly in a new Congress. Should that happen, House Republicans could re-write provisions of the package including to increase the number of tax incentives for semiconductor manufacturing.