The Week Ahead: Focus on Tax Bill Conference, Stopgap Funding, Employment Report

Posted on 12/03/2017 6:19 AM

Nomination hearing Tuesday on Powell to head Federal Reserve



House members will return to Washington on Monday, a day earlier than planned, to vote to proceed to conference on tax policy overhaul. House Speaker Paul Ryan (R-Wis.) said early Saturday that the House would move “quickly” to a conference committee. Senate Majority Leader Mitch McConnell (R-Ky.) made similar remarks. Other key issues in Washington include the need for a stopgap funding measure beyond the current deadline of Dec. 8, and Friday's Employment report. Link to details on Senate-passed tax reform bill and what's ahead.

Now it’s time to take the best of both the House and Senate bills, make them even stronger in a conference committee,” Rep. Kevin Brady (R-Texas), chairman of the Ways and Means Committee, said in a news release on Saturday, “and finalize one piece of legislation that will dramatically improve the lives of Americans for generations to come.”

President Trump signaled some give in coming tax reform conference talks. Trump, after insisting for weeks that the top corporate rate be cut to 20%, signaled on Saturday that it could wind up being a little higher — 22%. “It could be 22 when it comes out, but it could also be 20,” he told reporters outside the White House. “We’ll see what ultimately comes out.” Such an increase would give Republicans extra revenue — $200 billion — to pay for other tax cuts in the overhaul, potentially easing its path to final passage.

While a House-Senate conference is likely, if the House were to simply approve the Senate bill, it would head to Trump straight away.

Next big focus for the White House and Congress: welfare reform. House Speaker Ryan and other Republicans are beginning to note that next year they will move on to changes in Medicare and Social Security. President Trump told a Missouri rally last week, “We’re going to go into welfare reform.” Ryan said at a town hall-style meeting last month that Congress had to spur growth and cut entitlements to reduce the national debt. The Republican tax plan, he said “grows the economy.” But, he added, “we’ve got a lot of work to do in cutting spending.”

But Trump spent his campaign promising not to cut Medicare and Social Security.

The Congressional Budget Office (CBO) projects that spending on Social Security, Medicare and Medicaid will cost the federal government $28.6 trillion through 2027. The tax cut, estimated at nearly $1.5 trillion, adds to the problem.

Don't fear PAYGO. Ryan and McConnell released a statement Friday saying that the so-called pay-go cuts “will not happen” because Congress would waive the law, as it has in the past. But they will need Democratic votes to do that — the tax bill will trigger pay-as-you-go requirements that Congress cut spending.

House appropriators on Saturday morning introduced a two-week spending stopgap that would keep the government running until Dec. 22 and also help states temporarily bolster funding for the Children’s Health Insurance Program. The continuing resolution (CR) is needed because the current stopgap expires this coming Friday, Dec. 8. The House Rules Committee is scheduled to meet Tuesday afternoon to consider the stopgap as an emergency measure.

The temporary spending bill also includes a technical fix to the children's program that helps states continue administering it in the absence of an overdue reauthorization, which lawmakers have insisted is needed by the end of 2017.

Lawmakers have been working with the White House to negotiate a budget deal that would lift the austere discretionary spending limits in law (that both Republicans and Democrats agree are too low. But the two parties disagree on whether increases for defense spending should match those for non-defense, with Republicans generally favoring defense increases without increasing other programs. Democrats have insisted so-called parity should be applied to increases for the two types of discretionary spending.

Lawmakers are considering two stopgaps to tie spending over into 2018. Top appropriators acknowledge that while they don’t prefer a fiscal 2018 appropriations wrap-up in the new year, the December holidays and a crush of other legislative issues, led by a tax overhaul, likely means work will continue past Christmas.

GOP Senate leader predicts no government shutdown. Senate Majority Leader Mitch McConnell (R-Ky.) said Sunday that there will not be a government shutdown over the Deferred Action for Childhood Arrivals (DACA) program, arguing “there is no crisis.” McConnell told ABC’s “This Week” that, “Look, there’s not going to be a government shutdown. It’s just not going to happen.”

McConnell argued that since President Trump has given Congress until March to work on a fix to DACA, there is no emergency that would require a shutdown. “I don’t think the Democrats would be very smart to say, ‘We want to shut down the government over a non-emergency that we can address any time between now and March,’” McConnell said. “That’s a very untenable position.” He added, “I can’t imagine that they want to shut down the government over an issue that’s not an emergency.”

Friday's Employment report is the focus this week. Given the tight labor markets, the jobs data could feature yet another downturn in the unemployment rate with attention also on the wage situation. But the latter may still not show much upward movement as employers have signaled they are using other means than higher wages to attract and retain workers. Key U.S. economic reports this week include:

Monday, Dec. 4:

  • Factory Orders

Tuesday, Dec. 5:

  • International Trade
  • PMI Services Index
  • ISM Non-Mfg Index

Wednesday, Dec. 6:

  • MBA Mortgage Applications
  • ADP Employment
  • Productivity and Costs

Thursday, Dec. 7:

  • Jobless claims
  • Challenger Job-Cut Report
  • Consumer Credit

Friday, Dec. 8:

  • Employment
  • Wholesale Trade
  • Consumer Sentiment

Mostly quiet on the Fed front. The only official on the schedule to appear in public is New York Fed President William Dudley on Thursday, but his remarks will not focus on the U.S. economy or monetary policy. The pre-Federal Open Market Committee (FOMC) meeting blackout period started Saturday, Dec. 2.

USDA's Crop Progress report will resume next year. Key reports this week are Monday's Export Inspections and Thursday's Weekly Export Sales. USDA reports on tap this week include:

Monday, Dec. 4:

  • Export Inspections
  • Amber Waves Magazine

Tuesday, Dec. 5:

  • U.S. Bioenergy
  • Latest U.S. Agricultural Trade Data
  • Dairy Products
  • North American Potatoes

Wednesday, Dec. 6:

  • Livestock and Meat International Trade Data
  • Aquaculture Data
  • U.S. Agricultural Trade Data Update
  • Broiler Hatchery

Thursday, Dec. 7:

  • Weekly Export Sales
  • Milk Cost of Production

Friday, Dec. 8:

  • Fresh Deciduous Fruit: World Markets and Trade
  • Peanut Prices

Other reports and events on tap this week include:

Monday, Dec. 4:

  • President Trump travels to Utah to announce shrinking of two national monuments in the state.
  • U.S. Secretary of State Rex Tillerson arrives in Brussels where he’ll meet with NATO Secretary General Jens Stoltenberg and attend the two-day NATO foreign ministers meeting before traveling to Vienna and Paris.
  • U.S.-EU trade. European Parliament members and U.S. lawmakers discuss issues including trade during the 81st EU-US Inter-Parliamentary Meeting taking place Dec. 4-5 in Washington. Commerce Secretary Wilbur Ross will join the exchange during a working lunch in Congress where he will deliver keynote remarks. Officials from the Office of the U.S. Trade Representative, the Department of State, and the National Security Council will also participate.
  • NGFA Country Elevator Conference & Trade Show, through Dec. 5.
  • Seed industry annual meeting, CSS 2017 & Seed Expo, through Thursday, Chicago.
  • Association of American Pesticide Control Officials'  State FIFRA Issues Research and Evaluation Group meeting, through Tuesday, EPA-Potomac Yards.

Tuesday, Dec. 5:

  • Biodiesel duties. The International Trade Commission will vote on whether to pave the way for anti-subsidy duties on biodiesel from Argentina and Indonesia. Imports of biodiesel from Argentina rose to $1.2 billion in 2016, while those from Indonesia were $268 million. The anti-dumping investigations are proceeding on a different schedule.
  • Powell nomination. Senate Banking Committee will meet in executive session to consider Fed chair nominee Jerome Powell and mark up S 2155, a bipartisan measure that would seek to ease regulatory burdens on banks.
  • Opioid crisis. Senate Labor-HHS Appropriations Subcommittee hearing on the opioid crisis.
  • Nominations. Senate Energy and Natural Resources Committee hearing on the nominations of Timothy Petty to be an assistant interior secretary for water and science and Linda Capuano to be administrator of the Energy Information Administration.
  • President Trump has lunch with Republican senators, then in the evening he and wife Melania will host the Congressional Ball.

Wednesday, Dec. 6:

  • Trade and tax issues. European parliament members hold a joint session with the House Ways and Means Committee on trade and tax issues. The European delegation will also meet with Sens. Ron Johnson (R-Wis.), Chris Murphy (D-Conn.), and Senate Agriculture Committee Chairman Pat Roberts (R-Kan.).
  • Immigration. Ninth Circuit Court of Appeals will hear oral arguments on Trump administration’s immigration ban.
  • Nomination. Senate Environment and Public Works Committee hearing on the nomination of R.D. James to be assistant secretary of the Army for public works.
  • RFS, WOTUS. American Enterprise Institute forum, “Agriculture and the environment in 2018: Conservation programs, the Waters of the United States, and the Renewable Fuel Standard.”
  • Future of Agriculture. Resources for the Future and the National Museum of Natural History forum, “The Future of Agriculture: Rebounding Nature,” National Museum of Natural History.
  • Bank of Canada announces its key policy interest rate.
  • European Commission President Juncker presents a plan expected to contain details for transforming bailout fund ESM into a European monetary fund and creating a European finance minister post.
  • President Trump hosts a Cabinet meeting and has lunch with VP Mike Pence.

Thursday, Dec. 7:

  • EPA. House Energy and Commerce subcommittee hearing with EPA Administrator Scott Pruitt.
  • Interior Department. House Natural Resources subcommittee oversight hearing on the Interior Department.
  • European Central Bank holds a news conference on Basel banking reforms.
     

 

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