VP Pence says ‘good news’ coming on NAFTA 2.0
— Visceral, political House Ag panel markup likely to continue during House floor debate. Wednesday showed that GOP members of the House Ag panel had the votes to clear the controversial farm bill, despite not one Democratic panel member voting for it or even offering an amendment. While most if not all Democrats are expected to vote no during an expected May House debate, at the insistence of Democratic Leader Nancy Pelosi (D-Calif.), the key will be whether GOP leaders can must enough Republican votes to push the measure to victory.
House Ag Committee Republicans offered 20 amendments, while Democrats offered none. The committee adopted 18 amendments en bloc (link), and two amendments were voted on separately. One amendment would ban the killing of cats and dogs for meals. Another would prohibit states from enacting laws that set standards for agricultural production that exceed those of other states. The panel approved both by voice vote.
The Congressional Budget Office (CBO) estimated the bill would lower the deficit by a net $7 million over 10 years. The estimate doesn’t include the cost of extending the programs — about $790 billion over a decade — as they are assumed to continue under CBO’s baseline projections.
In the Senate, the Ag panel is expected to markup in May what will likely be a far different farm bill measure. Major differences between the two bills would be settled in conference, with House Democrats already saying they will side with the Senate. Both Republicans and Democrats on the Senate Ag panel say they will produce a bipartisan bill.
— Conaway expresses frustration that Democrats offered no amendments to the farm bill. “I’m disappointed that they did not take the opportunity… to engage,” Conaway (R-Texas) said. They instead “chose to go to the sidelines and in my view abrogated their responsibility to legislate,” Conaway said.
Expecting amendments from both parties during coming House floor debate, Conaway said they will be on ‘All of the critical issues, those I agree with and those I disagree with.”
Conaway said he feels “great” about the bill’s prospects, saying that he got it out of committee faster than did former chairmen Frank Lucas (R-Okla.) and Collin Peterson (D-Minn.). “There’s time between now and then for the Democrats to decide they want to try to work with us on the bill,” Conaway said.
Conaway revealed he would like to get the bill to the floor in the coming weeks, “as quickly in May as I can.” Pressed about which week in May the bill could move to the floor, Conaway noted that the must-pass National Defense Authorization Act will be taking up time on the floor in coming weeks. "We're going to work with leadership," he said. "I've also got to find 215 other votes," he added. "Part of this process on timing on the floor will be dictated by how well I'm able to sell this to my colleagues."
Conaway noted he would need votes from the House Freedom Caucus, whose chairman Mark Meadows (R-N.C.) signaled he didn’t expect to oppose the bill. “I see no compelling reason at this point that would suggest I would be a ‘no,’” Meadows said, but added he would like to see more done about its work requirements to ensure there are “no unintended consequences.” The caucus, a group of conservative and libertarian House Republicans, has not yet announced an official position on the bill, but Conaway said he has spoken to them regarding the measure.
Peterson continued on the attack, as he told Bloomberg Government that he thinks the full House will pass the bill, but isn’t concerned because none of the changes to SNAP “will fly” in the Senate. “I think they’re going to put the heat on people to make them vote for this,” Peterson said. “It’s not going to make a difference because it’s not going to become law. They’re not going to accept this.”
Democrats focus on House food stamp language. Rep. Sean Patrick Maloney (D-N.Y.) asked repeatedly why the committee had decided to exempt the elderly from having to show a bill to prove heating and cooling costs as part of determining their amount of SNAP benefits. The change could reduce SNAP benefits for some households. Maloney pressed Conaway to explain the logic behind exempting the elderly and not disabled people from the documentation requirement. Rep. G.T. Thompson (R-Pa.), chairman of the House Agriculture Nutrition Subcommittee, said the reason elderly participants were exempted is because Democrats had requested that before bipartisan talks broke down. “Why exempt the elderly but not the disabled?” Maloney asked. Conaway acknowledged that not exempting the disabled from the documentation requirement may have been “an oversight,” but could potentially be fixed. He also said issues like that could have already been addressed if Democrats hadn’t left the negotiating table weeks ago.
— House Speaker Paul Ryan (R-Wis.) considers the farm bill part of his welfare overhaul agenda, stating the bill would help move Americans out of poverty and into the workforce. “For too long, vague and unenforceable requirements have discouraged work and left many good jobs unfilled,” he said in a statement, adding the the government's approach needs to be modernized.
House Minority Leader Nancy Pelosi (D-Calif.) criticized the bill as “radical“ and “harmful… The Republican bill fails America’s farmers at a time of great challenge and economic uncertainty,” she said, citing President Donald Trump’s trade agenda. Regarding food stamps, Pelosi argued that taxpayers’ money would be wasted on “vast, untested and unworkable bureaucracies“ that will exacerbate hunger and poverty. Sources say Peterson dramatically turned against the House farm bill when Pelosi talked with him about the matter around the time Democrats on the Ag panel issued a letter saying they would no longer participate in farm bill negotiations with Conaway.
Stabenow enters the farm bill fray. Senate Agriculture ranking member Debbie Stabenow (D-Mich.) said the partisan path House Republican leaders have taken on the farm bill makes it impossible for Congress to pass a farm bill after they advanced a measure out of committee today on a party-line vote. “Unfortunately, the Republican leadership of the House Agriculture Committee has abandoned this coalition and has chosen a partisan path that makes it impossible to pass a five-year farm bill,” she said in a statement, adding that she and Chairman Pat Roberts (R-Kan.) are still committed to a joint process.
— Farm groups uneasy, but glad to see process move forward. The American Soybean Association, which in recent years has tended to favor the Senate and/or Democratic approach to farm bill measures, said it’s “concerned by the absence of bipartisan support for the current bill, and encouraged the House and committee leadership” to work toward legislation that can receive the broad support that farm bills traditionally require.”
Zippy Duvall, president of the American Farm Bureau Federation, said the committee action was “great news for farmers and ranchers.” But he added, “We look forward to working with members of both the House and Senate to complete work on a bipartisan, bicameral bill that can be signed into law by the president before the current law expires.”
— Democrats reject Trump tariff farmer payment possibility. Rep. Collin Peterson (D-Minn.), ranking member on the House Ag Committee, led the charge against Democrats voting against the farm bill during Wednesday’s panel session. Now he is spearheading objection by Democrats to the Trump administration’s plan to use USDA’s existing spending authority to make one-time payments to compensate farmers for China’s retaliatory tariffs.
In a letter to the White House and USDA Secretary Sonny Perdue, the Democrats said the Trump administration should instead support putting more money into farm bill programs. “We urge you to consider long-term ways that your administration could ensure an adequate safety net …. and provide a more lasting solution to this new market reality,” the lawmakers wrote. Link to letter.
— What Trump wants to get back into TPP. Usually reliable sources say President Trump wants the 10 members of the revised TPP (CPTPP) to commit to bilateral trade agreement talks with the United States, in return for the U.S. coming back to the Asia-Pacific trade accord. That could allow a “win-win” for all parties concerned.
TPP re-entry review is underway. Last week, Trump dispatched White House National Economic Council Director Larry Kudlow and U.S. Trade Representative Robert Lighthizer to begin work on a potential U.S. re-entry into TPP. But late Tuesday evening, Trump posted tweets on the topic, saying, “While Japan and South Korea would like us to go back into TPP, I don’t like the deal for the United States. Too many contingencies and no way to get out if it doesn’t work.”
USDA Secretary Sonny Perdue isn’t giving up hope that President Trump will rejoin the TPP. “I never discount the tweets,” Perdue told the House Ag Appropriations Subcommittee during a Wednesday hearing. “Again, the president can tweet what he wants but I also heard him direct (Lighthizer and Kudlow) to do that.”
— U.S. and Japan agree to begin talks on a set of "free, fair and reciprocal trade deals" to promote economic development in the Indo-Pacific, Japanese Prime Minister Shinzo Abe said Wednesday after he failed to secure exemptions for steel and aluminum tariffs imposed in March by President Donald Trump.
"In order to benefit both Japan and the U.S., we'll further expand both trade and investment between the two countries," Abe said during a joint news conference with Trump after their summit meeting in Mar-a-Lago. "Building upon that foundation, we'll aim to realize economic development in the free and open Indo-Pacific region, based on fair rules. To make that happen at this time, President Trump and I agreed to start talks for free, fair and reciprocal deals."
Abe did not say Japan was going to start talks on a bilateral free trade agreement with the U.S., emphasizing that Tokyo still believes that the Trans-Pacific Partnership (TPP) is the best choice for both countries. Trump withdrew from that pact on his third day in office.
— EPA official says working on E15. EPA Assistant Administrator for Air Bill Wehrum told a meeting of the Renewable Fuels Association (RFA) that the agency is working on a proposed rule for a waiver for gasoline blended with 15% ethanol. President Donald Trump last week announced plans for E15 sales.
However, EPA spokeswoman Liz Bowman said the agency had not decided on its next steps. EPA officials have told lawmakers and others that there is no consensus on the regulatory path forward on the E15 RVP waiver.
— Other items of note:
Trump says he’d walk out on Kim Jong Un if meeting ‘is not fruitful’. President Donald Trump said there would be a “bright path” available to North Korea if it successfully shut down its nuclear weapons program, but he vowed he would walk out of a planned meeting with North Korean leader Kim Jong Un if he felt it wasn’t yielding results. Trump’s remarks, made at a news conference at his Florida resort Mar-a-Lago with Japanese Prime Minister Shinzo Abe, came as U.S. officials have been negotiating the terms of a North Korea summit with Kim that the president said he expects to happen “in the coming weeks.” CIA Director Mike Pompeo traveled to North Korea earlier this month to meet with Kim to discuss the details and logistics.
German Chancellor Angela Merkel will meet U.S. President Donald Trump in Washington on April 27. It will be Merkel’s second visit to the White House since Trump took office. The leaders will “address a broad range of geopolitical and economic challenges,” the White House said.
CIA nominee hearing in May. Senate Intelligence Chairman Richard Burr (R-N.C.) said that a confirmation hearing for CIA director nominee Gina Haspel has been put off till May to give more time to settle bipartisan concerns about Haspel’s record on interrogation practices.
Pence says to expect positive NAFTA news in coming weeks. Vice President Mike Pence is telling congressional Republicans to expect positive developments in the NAFTA renegotiation in the next couple of weeks, Sen. John Cornyn (R-Texas) said Wednesday. “We’re trying to get NAFTA taken care of, put to bed here in the next couple weeks,” Cornyn said. Meanwhile, NAFTA ministers are scheduled for two days of meetings. U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican Economy Secretary Ildefonso Guajardo will meet today and Friday in hopes of making progress toward a preliminary NAFTA deal in the coming weeks.
CSX Corp. is getting more profitable as it gets smaller, the Wall Street Journal reports. The freight railroad more than doubled its net profit in the first quarter to $695 million and showed big gains in service performance, only a few months after Chief Executive James Foote undertook an “apology tour” to sell CSX’s shipping customers on the turnaround efforts. The WSJ notes the results signal that CSX has its operations in order following snafus that came as the carrier implemented a plan by the late chief executive Hunter Harrison. CSX’s revenue inched up only slightly from a year ago in the first quarter as volumes declined. But the company slashed its operating ratio to 63.7% from 73.2%, and critical service measures for train velocity and dwell time showed big improvements. “For now, at least, running fewer trains means smoother operations and bigger profits,” the WSJ article concludes. Link.
USDA to detail distribution of $2.3 billion in disaster aid next week. USDA Sec. Sonny Perdue told Congress that USDA will announce next week how the $2.3 billion in disaster relief payments will be sent to farmers and ranchers who had damage from hurricanes and wildfires.
— Markets. The Dow on Wednesday ended down 38.56 points, 0.2%, at 24,748.07. The S&P 500 index advanced about 2.25 points, about 0.1%, at 2,708.64. Meanwhile, the Nasdaq Composite Index closed up 14.14 points, 0.2%, at 7,295.24.
Brent crude oil is up 0.5% at $73.84 per barrel, crossing $74 for the first time in four years. Meanwhile, aluminum is extending its recent gains, with prices touching an all-time high.
CEO Jeff Bezos finally put a subscriber number on Amazon.com's Prime membership program, and it's north of 100 million. In a shareholder letter, Bezos added that the company shipped more than five billion items via Prime last year, and 2017 was its biggest signup year yet. The company established the program, which offers free shipping and other perks, 13 years ago.
Trade worries clear in Fed's Beige Book. U.S. manufacturing, transportation and agriculture sectors are concerned over the impact that new tariffs and potential/proposed tariffs will have on areas of the U.S. economy, according to the Fed's Beige Book. The anecdotal recap of conditions in the 12 Federal Reserve Districts, issued two weeks before the conclusion of the next Federal Open Market Committee (FOMC) meeting, noted "widespread reports that steel prices rose, sometimes dramatically, due to the new tariff." Several Fed banks also noted the tariff situation as driving up steel prices, with some noting increased demand for steel and aluminum as users of the metals have sought to build stocks. The overall tone of the Beige Book was one of "modest to moderate" economic growth since the prior FOMC meeting, with little in the update to sway market expectations.
NY Fed's Dudley sticks with 'gradual' rate hikes for the Fed, suggests new inflation target. Signaling there is "some distance to go" before U.S. monetary policy gets tight, New York Fed President William Dudley said a gradual path of rate increases ahead remains appropriate. Dudley will retire later this year and suggested that the Fed may want to look at shifting its inflation target and use a range of perhaps 1.5% to 2.5% instead of the current 2% goal via the Personal Consumption Expenditures (PCE). “That is to say, even if the FOMC performs its job exceedingly well, very rarely will the inflation rate, as measured by the PCE price index, be precisely at 2%,” Dudley said. However, he said the Fed should only take such a step after inflation has reached the Fed's current goal as shifting could be viewed as "moving the goal posts" at this point.
Fed's Quarles does not see flattening yield curve signaling recession. The flattening of the yield curve is not a signal that the U.S. economy is about to head into recession, according to Fed Governor Randal Quarles. "I'm not viewing the current flattening of the yield curve as a particular signal towards a pending recession," Quarles said in remarks to the Bretton Woods Conference. The inversion of the yield curve – short-term rates rising above long-term rates – is viewed by some as a sign a severe downturn is at hand. Key is "what was driving" the narrowing of the yield curve, Quarles observed. "I think the flattening of the yield curve we are seeing now is more a result of expected lags in the adjustment of the longer-term rates once shorter-term rates start to rise," he stated. "If that is what is driving things going forward I don't think it is as likely that the inversion of the yield curve is...sort of an indicator of a recession to come."