Policy Updates: GOP House Leaders Pushing Stopgap Spending Measure Through Feb. 16

Posted on 01/17/2018 7:07 AM

Grassley talks E15, Northey | Trump on U.S.-China trade

— Stopgap spending plan pushed by House GOP leaders. House Republicans pushed a plan Tuesday night that would extend current funding for the fourth time, to Feb. 16, to avoid a government shutdown Saturday. GOP leaders introduced a bill that would extend funding through Feb. 16, while renewing for six years the Children's Health Insurance Program (CHIP) and further delaying some taxes that were set to take effect under the 2010 Affordable Care. The House could vote on the measure as early as Thursday, with a Senate vote coming Friday, the day current funding is set to expire.

CHIP insures about 9 million children from families too wealthy to qualify for Medicaid but too poor to afford private insurance. The package suspends for two years a medical device tax and the so-called Cadillac tax on high-cost employer-sponsored health plans. It also suspends for one year a fee on health insurance providers, though the provision wouldn't kick in until 2019.

In the Senate, at least nine Democrats would have to vote for the measure to get it passed under Senate rules requiring a 60-vote threshold. GOP leaders are betting enough Democratic support will be with them, as was the case on all previous continuing resolutions last year. There are 10 Democratic senators facing re-election this year in states won by President Donald Trump.

— Sen. Grassley: Year-round E15 about only solution on RIN issue. Allowing sales of E15 (15% ethanol/85% gasoline) year-round is potentially something EPA could do via regulation that could be a potential solution to the situation with Renewable Identification Numbers (RINs), according to a key lawmaker. There remains "some hope" that EPA could make year-round E15 a reality via regulation, Sen. Chuck Grassley (R-Iowa) said. "It's about the only real solution to both helping E15 and getting around the RIN issue," he added.

EPA has historically said they view the law as preventing them from granting a year-round Reid Vapor Pressure (waiver that would allow sales of E15 throughout the year. Lawmakers backing some refiners have been pushing for reducing or putting a cap on RIN prices, something Grassley said was not a solution.

Sen. Ted Cruz (R-Texas) has floated the idea of capping RINs at 10 cents each and placed a hold on USDA undersecretary nominee Bill Northey in the wake of Grassley and other biofuel-backing lawmakers getting several commitments from EPA on biofuels late last year. Included in that list was exploring the issue of year-round E15 sales. But so far, there's little or no movement from Cruz on his position, Grassley said, noting the two spoke on the Senate floor last week. "He thinks that it can be negotiated, but I think that putting a cap on RINs makes negotiation a dead end," Grassley said.

— Brazil talks of lifting import duties on U.S. ethanol, likely linked with beef trade. Brazil is looking at removing the 20% import duty on imports of U.S. ethanol, with Brazilian Ag Minister Blairo Maggi essentially linking that decision to the having banned imports of fresh Brazilian beef. The U.S. took the move following a food safety scandal and inspection issues with the imports. "There is on the part of the U.S. a big demand to withdraw this (ethanol tariff) and we also have this problem with beef," Maggi said. "Obviously one thing influences and contaminates the other." Maggi indicated he thought the U.S. ban on fresh beef imports from Brazil could be lifted by April, saying the country had submitted all the requested materials and were awaiting a decision from the U.S. side.

— Argentina cuts port docking costs. The maximum rate paid for port docking and undocking services at Argentine ports would be cut by up to 40%, according to a plan published in the official Argentine government gazette. Maximum rates will decline between 20% and 40% under the new rules. "This will improve logistics costs and market transparency," said Jorge Metz, national undersecretary of ports and waterways in the Transportation Ministry. "It is one more step that will allow the port sector to keep growing." The move had been signaled in November.

— Other items of note:

  • Nestlé, a Swiss food company, said it was selling its American confectionery business to Italy’s Ferrero for $2.8 billion. The acquisition will make Ferrero the third-largest sweets brand in America and globally. For Nestlé, the sale is part of its move, in America, into healthier products. Other suitors for the business, which includes Butterfinger and Nerds, had included Hershey.
  • Congress today will present the Congressional Gold Medal to former Senate Majority Leader Bob Dole (R-Kan.) in recognition of his service to the nation as a soldier, legislator and statesman.
  • U.S.-China trade. President Trump told Chinese President Xi Jinping that the growing U.S. trade deficit with China isn’t sustainable, the White House said in a statement Tuesday. Trump spoke with Xi on Monday to discuss trade, as well as the talks between Pyongyang and Seoul, according to the statement. Both leaders expressed hope that the negotiations “might prompt a change in North Korea’s destructive behavior,” the White House said. Trump reiterated his stance of exerting “maximum pressure” to compel North Korea to abandon its nuclear program. The president also “expressed disappointment” that the U.S. trade deficit has continued to grow.
  • Iowa Gazette: Sen. Ernst says USTR Lighthizer supported NAFTA withdrawal, but USTR office denies. In a White House meeting late last year between Trump, U.S. Trade Representative (USTR) Robert Lighthizer and a group of senators, Lighthizer told attendees that he supported a withdrawal from NAFTA, Sen. Joni Ernst (R-Iowa) told members of the Iowa Corn Growers, according to a report by the Iowa Gazette. Lighthizer was responding to a question the president posed to everyone at the meeting regarding whether they supported pulling out of the deal, and Lighthizer was the only one to answer in the affirmative, Ernst said. USTR, however, disputed Ernst’s account of the meeting, saying Lighthizer took no position on the question of withdrawing from NAFTA during the meeting. Link.
  • Top NAFTA trade officials to meet in Switzerland. The sixth round of NAFTA 2.0 talks will kick off January 23 in Montreal without the top negotiators from all three countries, the U.S., Canada and Mexico. But they will meet in Davos, Switzerland, at the World Economic Forum. U.S. Trade Representative Robert Lighthizer, Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland are scheduled to be at the Davos event which starts Jan. 23, with a statement from Alex Lawrence, a spokesman for Freeland, saying she expected to raise the NAFTA situation informally on the sidelines of the Davos meeting. However, all three officials will be in Montreal for a trilateral meeting Jan. 28, according to Lawrence.
  • U.S. Senate Banking Committee will hold a vote today on the nominations of Jerome “Jay” Powell as Fed Chair and the reappointment of Randal Quarles to a 14-year term as a governor of the Federal Reserve Board. Following the U.S. tax overhaul, Cleveland Fed President Loretta Mester will discuss the central bank's best path forward during a lecture at Rutgers University, while Chicago and Dallas Fed Presidents Charles Evans and Robert Kaplan will participate in a moderated discussion in Palm Beach, Florida.

— Markets. The Dow on Tuesday lost 10.33 points, 0.04%, at 25,792.86. The Nasdaq dropped back 37.38 points, 0.51%, at 7,223.69. The S&P 500 fell 9.82 points, 0.35%, at 2,776.42.

Dallas Fed's Kaplan sees three rate hikes, maybe more in 2018. Tax reform put into place late 2017 did not shift the views of Dallas Fed President Robert Kaplan in terms of how many Fed rate increases he expects in 2018, but he told the Wall Street Journal it firmed up his view that three will be needed this year. "The economy is going to be strong this year,” Kaplan said. Unemployment should fall into the three-percent rage by year-end and inflation should firm up. The tax cuts, he said, support the Fed's current forecast of three rate increases this year. “I feel strongly and I have a lot of conviction that the base case should be three moves for this year, and if I’m wrong, it could even potentially be more than that,” he said.



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