Trump FY 2020 Budget Proposals Begin Spending Debate as Dems Balk

Posted on 03/11/2019 4:10 AM

Lighthizer to testify on WTO, China, other trade issues | Biodiesel tax incentive


Budget issues will be the focus this week as President Donald Trump today releases proposals which lawmakers, especially in the Democratic-controlled House, will not approve. More budget details will be released next week.
     Trade policy again will be a key topic, with U.S. Trade Representative Bob Lighthizer appearing Tuesday before the Senate Finance panel on WTO issues. Panel members will seek his updates on other trade policy items, including ongoing U.S./China talks, the timeline for lifting U.S. metal tariffs on Canada and Mexico, the coming push to approve the USMCA, and recent talks with the EU and upcoming talks with Japan on new trade agreements.
     A House Ways & Means subcommittee hearing will focus on getting lapsed tax incentives extended, including the $1 per gallon biodiesel tax incentive.
     USDA agencies will provide more on 2018 Farm Bill implementation, including an update on hemp, one of the most popular farm bill topics in the ag sector.
     Both chambers are scheduled for recess March 18-22.

 

Get ready for a mostly non-event on Monday when President Trump releases his fiscal year 2020 budget proposals, most of which will be dead before arrival on Capitol Hill. This year's Trump requests seek to eliminate deficits in 15 years. "I don't think good growth policies have to obsess necessarily about the budget deficits," National Economic Council Director Larry Kudlow said on Fox News Sunday. The budget still calls for spending cuts totaling $2.7 trillion over 10 years, and includes some structural changes, such as requiring colleges and universities to foot some of the bill for federal student loans.

Trump's budget blueprint will be a guide to his agenda and a look at the budget fights in the coming year.

Given the 35-day shutdown, the White House is a month behind schedule in getting the budget out, which has already pushed back the appropriations process on Capitol Hill. The administration will release just the main budget volume today, including the president’s budget message, an overview and summary tables. The rest of the budget materials will be released next week.

Trump’s budget sets high expectations for economic growth. The proposal assumes the U.S. economy will keep expanding as briskly as it did last year, according to a preview. The White House forecasts the economy will grow about 3% annually over the next decade, though it expects a bigger near-term boost, with output rising 3.2% this year before declining to 3.1% in 2020, 3.0% in 2021 and 2.8% in 2026. The forecast for this year is nearly a full percentage point higher than the 2.3% forecast by the Federal Reserve and well above what most industry economists expect. Kevin Hassett, chairman of the White House Council of Economic Advisers, said on Sunday that administration economists expected continued boosts to growth this year from the $1.5 trillion in tax cuts that Trump signed in 2017, including further increases in labor force participation by older workers. “We have the same forecast we had last year,” Hassett said, “because we got last year precisely correct.”

Trump will request $8.6 billion in border-barrier funding in his budget proposal, an administration official said, according to Reuters who first reported it, reportedly $5 billion from Homeland Security and $3.6 billion from Defense. The additional money is 6% more than what the president has garnered by invoking emergency powers, and six times more than what he has received from Congress over the last two fiscal years. The additional border funding request would be used to build or replace barriers along 722 miles of the border, not its entire length. To date, just 111 miles of barrier have been constructed, or are in some phase of being built. In fiscal 2017, $341 million in funding was allocated for 40 miles of wall, and in 2018, another $1.375 billion was directed to 82 miles. Kudlow said the White House isn’t backing down from its push to build a border wall. Asked if there would be another spending fight over wall funding, Kudlow said, “Well, I suppose there will be.”

Democrats respond. House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.) warned of a shutdown "repeat" in reacting to reports of Trump's border proposal. “President Trump hurt millions of Americans and caused widespread chaos when he recklessly shut down the government to try to get his expensive and ineffective wall, which he promised would be paid for by Mexico,” Pelosi and Schumer said in a joint statement Sunday. “Congress refused to fund his wall, and he was forced to admit defeat and reopen the government. The same thing will repeat itself if he tries this again. We hope he learned his lesson.”

The plan is expected to call for up to $750 billion for defense programs and major cuts to nondefense programs, including agriculture (crop insurance, etc.) and renewable energy funding, which Democrats say they will oppose as Congress looks to negotiate a new deal to increase caps for both spending categories. The defense spending increase would be $35 billion above last year. A year ago, Trump proposed a 33% cut in federally subsidized crop insurance, along with rolling back funding for agricultural research and rural economic development. The White House proposed America’s Harvest Box of processed and canned foods for SNAP households that would replace half of the benefits they use to buy food. The “Harvest Box” was the focus of a proposed $213 billion in SNAP cuts, 30% of funding for the coming decade. None of the ideas gained traction on Capitol Hill.

Returning to the budget caps set in 2011 would mean a cut of $55 billion to domestic spending. And it’s possible the White House could propose additional cuts on top of that. Kudlow told CNBC on Friday to expect a "path towards lower deficits as a share of GDP" and a 5% reduction in domestic spending "across the board."

USDA Secretary Sonny Perdue recently suggested cuts to agriculture could go beyond the 5% mark. Meanwhile, The Trump administration's budget request will again propose to cut the budget of the Energy Department's Office of Energy Efficiency and Renewable Energy for FY 2020, recommending a 70% cut to its $2.3 billion budget, to $700 million, according to a department official familiar with the plan.

"I don't know how it impacts the caps deal but I think it impacts the ultimate budget decision — it just slows it down," Sen. Roy Blunt (R-Mo.) said of the president's likely 5% proposed discretionary cut in his fiscal 2020 budget blueprint.

In Congress, the House will consider HConRes 24, expressing the sense of Congress that the coming report by Special Counsel Robert Mueller should be available to the public and Congress.

The Senate will vote to overturn President Trump’s national border emergency declaration. The House voted Feb. 26 to block the declaration. President Trump has said he would veto the measure if it gets to the White House and it appears Congress does not have the votes to override the expected veto.

Trade policy again will be a focus throughout the week. Talks between U.S. and Chinese negotiators will continue via video calls, with expectations that officials from both countries will likely remark on various elements of the ongoing discussions, as they did over the weekend (see Policy Updates for the latest developments).

U.S. Trade Representative Bob Lighthizer testifies Tuesday before a Senate Finance subcommittee, with the focus on the World Trade Organization (WTO). But lawmakers will very likely ask for his updates on talks with China, the timeline for getting the U.S.-Mexico-Canada Agreement (USMCA) through Congress, and recent talks with the EU and forthcoming talks with Japan on new trade agreements. Several lawmakers will likely ask him when the U.S. metal tariffs will be lifted on Canada and Mexico as that will be a requirement for those countries to lift their countermeasures against U.S. products. Mexico has threatened additional measures against the U.S., including corn and poultry shipments, if the metal tariffs are not lifted soon. The White House continues to talk with Canada and Mexico on metal quotas.

Regarding the WTO, China contends that it is still a developing country and therefore should not have to operate under the same trade rules as the West. Commerce Minister Zhong Shan said at a news conference on Saturday that any reform of the WTO, which the Trump administration has sought to overhaul, should respect the different needs of developing countries.

Lapsed tax extenders, including the biodiesel program, will be the topic Tuesday before a House Ways and Means subcommittee responsible for tax policy.

Major economic updates for the week include:

Monday:
— Census Bureau reports Retail Sales data for January. Economists forecast a flat reading after a 1.2% decline in December. Excluding autos, retail sales are seen rising 0.2% after falling 1.8% in December.

Tuesday:
— National Federation of Independent Business releases its Small Business Optimism Index for February. Consensus estimates are for a 102.3 reading, down from January’s 101.2.
— The BLS releases its Consumer Price Index for February. Expectations are for a 0.2% gain after a flat reading in January. The core CPI is seen rising 0.2%, equal with January’s uptick.
— The U.K.’s House of Commons will vote on Prime Minister Theresa May’s revised Brexit deal, with the deadline for the Britain’s exit looming. A rejection of May’s divorce deal would likely mean a delay in the U.K.’s exit from the EU, now scheduled for March 29, in order to avoid the country breaking from its biggest trading partner without new economic agreements in place.

Wednesday:
— Census Bureau reports construction data for January. Consensus estimates are for a 0.3% gain after a 0.6% fall in December.
— Bureau of Labor Statistics releases its Producer Price Index for February. Economists forecast a 0.2% rise, after a 0.1% decline in January.
— Census Bureau releases its Durable Goods Report for January. New orders are expected to fall 0.7% after jumping 1.2% in December.

Thursday:
— Census Bureau releases New Home Sales data for January. Expectations are for an annual rate of 615,000, down from December’s 621,000.
Initial claims for state unemployment benefits likely rose to 225,000 in the week ended March 9, the Labor Department is expected to report.
— BLS releases export and import price data for February. Export prices are seen falling 0.1% after a 0.6% decline in January. Import prices are expected to gain 0.3% after dropping 0.5% in January.

Friday:
— BLS releases its Job Openings and Labor Turnover Survey for January. Economists forecast a 7.3 million reading, roughly even with December’s.
— University of Michigan releases its Consumer Sentiment Index for March. Consensus estimates are for a 95.8 reading, ahead of February’s 93.8.
— The Federal Reserve is expected to say manufacturing production rose 0.5% in February after falling 0.9% in January.
Bank of Japan announces its monetary policy decision. The central bank is widely expected to leave its key interest rate at negative 0.1%.

Fed speakers on tap:

Monday:
— Federal Reserve Chairman Jerome “Jay” Powell gives opening remarks at the National Community Reinvestment Coalition's Just Economy Conference, Washington, D.C.

Tuesday:
— Governor Lael Brainard speaks on Community Reinvestment Act Modernization at the National Community Reinvestment Coalition's Just Economy Conference, Washington, D.C.

Key USDA and international agriculture and energy-related reports and events on tap:

Monday, Mar. 11

Ag reports and events:

  • Export Inspections
  • Feed Grains Database
  • Dairy Data (Dairy Monthly Tables)
  • Wheat data
  • AmSpec and SGS data on Malaysia’s Jan. 1-10 palm oil exports,
  • Malaysian Palm Oil Board Feb. output, export, stockpile data
  • Expoagro, Argentina’s biggest farming expo, near Buenos Aires, first day of four
  • EU weekly grain, oilseed import and export data
  • Unica may issue Brazil sugar cane crush this week

Energy reports and events:

  • IEA releases its Oil 2019 report
  • IHS Markit CERAWeek Conf. in Houston (March 11-15)

Tuesday, Mar. 12

Ag reports and events:

  • Cotton and Wool Outlook
  • Oil Crops Outlook
  • Feed Outlook
  • Rice Outlook
  • Wheat Outlook
  • Citrus Fruits Final Estimates
  • Milk Production
  • Noncitrus Fruits and Nuts Final Estimates
  • Potatoes & Sweet Potatoes Final Est
  • Conab Brazil March soybean and corn production, yield and planted area

Energy reports and events:

  • API weekly U.S. oil inventory report
  • EIA’s short-term energy outlook

Wednesday, Mar. 13

Ag reports and events:

  • Broiler Hatchery
  • Meat Price Spreads
  • Feed Grains: Yearbook Tables
  • Season Average Price Forecast
  • U.S. and Canadian Cattle and Sheep
  • U.S. and Canadian Hogs
  • FranceAgriMer updates crop supply and demand estimates
  • Datagro conference on sugar and ethanol markets in Ribeirao Preto, Sao Paulo state, Brazil. Includes speakers from Federation of Sugarcane Planters (Feplana), Cane Planters Organization of South-Central region (Orplana), Unica, Sucden, govt officials
  • Malaysian Palm Oil Council market forum on palm oil

Energy reports and events:

  • U.S. weekly ethanol inventories
  • EIA weekly U.S. oil inventory report

Thursday, Mar. 14

Ag reports and events:

  • Weekly Export Sales
  • Livestock, Dairy, and Poultry Outlook
  • Food Dollar Series
  • Sugar Outlook
  • Dairy Products
  • Hop Stocks
  • Pecan Production
  • Price Reactions after USDA Crop Reports
  • Price Reactions After USDA Livestock Reports
  • Turkey Hatchery
  • EU weekly grain, oilseed import and export data
  • Buenos Aires Grain Exchange weekly crop report
  • Port of Rouen data on French grain exports

Energy reports and events:

  • EIA natural gas storage change
  • OPEC monthly oil market report, including demand forecasts and February production data

Friday, Mar. 15

Ag reports and events:

  • CFTC weekly commitments of traders report on various U.S. futures and options contracts.
  • Peanut Prices
  • Cotton System — Annual
  • Fats & Oils — Annual
  • Grain Crushings — Annual
  • Poultry Slaughter
  • FranceAgriMer weekly update on French crop conditions
  • Malaysia April 2019 crude palm oil export tax
  • AmSpec, Intertek and SGS data on Malaysia’s Jan. 1-15 palm oil exports

Energy reports and events:

  • Baker Hughes weekly U.S. oil/gas rig counts
  • IEA monthly Oil Market Report, including demand forecasts and OPEC February production estimates

Other reports and events this week include:

Monday, Mar. 11

  • President Trump submits FY 2020 budget proposals to Congress. This begins the hearings in Congress by various panels on the proposals.
  • Nominations. Senate Homeland Security and Governmental Affairs Committee considers nominations of Ronald Vitiello to be an assistant secretary, and Joseph Cuffari to be inspector general, at the Homeland Security Dept.
  • Ag research. Council for Agricultural Science and Technology seminar on “Enabling Open-source Data Networks in Public Agricultural Research.”

Tuesday, Mar. 12

  • Trump FY 2020 budget. Russell Vought, acting director of Office of Management and Budget, testifies at House Budget Committee hearing on resident Trump’s FY 2020 budget request.
  • Trump FY 2020 budget: HHS. Health and Human Services Sec. Alex Azar testifies at House Energy and Commerce Subcommittee hearing on the president's FY 2020 budget.
  • USDA inspector general. House Agriculture Appropriations Subcommittee hearing with USDA’s inspector general.
  • Lapsed tax extenders. House Ways and Means subcommittee responsible for tax policy hearing on temporary tax breaks, known as extenders, including the lapsed biodiesel tax incentive.
  • Trade policy: WTO. U.S. Trade Representative Bob Lighthizer testifies at Senate Finance Committee hearing on examining “The Road Ahead for the World Trade Organization.”
  • Argentina energy policy. Inter-American Dialogue forum on energy policy in Argentina with Energy Secretary Gustavo Lopetegui.
  • State of wildlife. House Natural Resources subcommittee hearing.
  • Consumer Financial Protection Bureau (CFPB) Director Kathleen Kraninger testifies at Senate Banking, Housing, and Urban Affairs panel hearing to review the CFPB’s semi-annual report to Congress.
  • Chemical safety. House Homeland Security Committee hearing on “Securing Our Nation’s Chemical Facilities: Stakeholders Perspectives on Improving the CFATS Program.”
  • Financial crimes. Sigal Mandelker, undersecretary at the Treasury Dept, testifies at House Appropriations Subcommittee hearing into “The Treasury’s Role in Combating Financial Crimes.”
  • Banking. House Financial Services Committee hearing on: “Holding Megabanks Accountable: An Examination of Wells Fargo’s Pattern of Consumer Abuses.”
  • Postal Service sustainability. Senate Homeland Security and Governmental Affairs panel hearing to examine recommendations from president’s task force on the U.S. Postal Service, focusing on a path to sustainability.
  • Nominations. Senate Foreign Relations Committee hearing to assess the nominations of Michael Fitzpatrick to be ambassador to Ecuador and Ronald Johnson to be ambassador El Salvador.
  • Internet. House Energy and Commerce Subcommittee hearing on “Legislating to Safeguard the Free and Open Internet.”
  • Rural broadband. Senate Commerce, Science, and Transportation Subcommittee hearing focusing on the Federal Communications Commission’s order to improve the quality and expand availability of rural broadband.
  • BLM, Forest Service oversight. House Natural Resources subcommittee hearing on the policies and priorities of the Bureau of Land Management, Forest Service and power marketing administrations.
  • Bioeconomy. House Science, Space and Technology subcommittee hearing, “Engineering Our Way to a Sustainable Bioeconomy.”
  • Trade programs. House Small Business subcommittee hearing on the Small Business Administration’s State Trade Expansion Program.
  • Food waste. International Food Policy Research Institute co-sponsors forum, “Reducing Food Loss and Waste — Making it Personal,” Embassy of Denmark.

Wednesday, Mar. 13

  • Trump FY 2020 budget. House Budget Committee hearing on the president's budget request.
  • Nomination, CFTC. Senate Agriculture Committee hearing to consider nomination of Heath Tarbert to be chairman of the Commodity Futures Trading Commission (CFTC).
  • U.S./China. Senate Foreign Relations Committee hearing, “A New Approach for an Era of U.S.-China Competition.”
  • Flood insurance. House Financial Services Committee hearing on “Preparing for the Storm: Reauthorization of the National Flood Insurance Program.”
  • EPA. House Energy and Commerce Subcommittee hearing on “Mismanaging Chemical Risks: EPA’s Failure to Protect Workers.”
  • Financial crimes. House Financial Services Committee hearing on “Promoting Corporate Transparency: Examining Legislative Proposals to Detect and Deter Financial Crime.”
  • Prescription drugs. House Energy and Commerce Subcommittee hearing on “Lowering the Cost of Prescription Drugs: Reducing Barriers to Market Competition.”
  • Trade policy: WTO. Stephen Vaughn, general counsel for the U.S. Trade Representative, gives a keynote for Hudson Institute event entitled "Can the U.S. and Allies Agree on WTO Reform?"
  • National monuments. House Natural Resources Committee hearing, “Forgotten Voices: The Inadequate Review and Improper Alteration of Our National Monuments.”
  • 2018 Farm Bill: Hemp. USDA’s Agricultural Marketing Service webinar on industrial hemp and implementation of the 2018 Farm Bill.
  • 2018 Farm Bill: Nutrition. USDA Food and Nutrition Service webinar on implementation of the 2018 Farm Bill.
  • Rural America. House Small Business Committee hearing, “Flipping the Switch on Rural Digital Entrepreneurship.”

Thursday, Mar. 14

  • President Trump meets Ireland Prime Minister Leo Varadkar and attends the "Friends of Ireland" luncheon in the Capitol. He and First Lady Melania Trump will attend the Shamrock Bowl Presentation by Varadkar.
  • National Ag Day forum at the National Press Club. Deputy USDA Sec. Steve Censky will be the keynote speaker and will moderate a panel on young farmers.
  • 2018 Farm Bill: Rural development. USDA Rural Development holds webinar on farm bill implementation.
  • Treasury Sec. Steven Mnuchin testifies at House Ways and Means Committee hearing on President Trump's FY 2020 budget request.
  • Trump FY 2020 budget. Senate Finance hearing with Treasury Secretary Steven Mnuchin.
  • Banking. Senate Banking, Housing, and Urban Affairs Committee hearing on “Financial Stability Oversight Council Nonbank Designations.”
  • Defense spending. NATO releases estimates of 2018 defense spending by member countries.
  • Investors. House Financial Services Committee hearing on “Putting Investors First? Examining the SEC’s Best Interest Rule.”
  • Consumer Federation of America National Food Policy Conference, through Friday.

Friday, Mar. 15

  • Consumer Federation of America National Food Policy Conference.

 

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