House Clears Ag Worker Reform Bill that Faces Major Hurdles in Senate, White House

Posted on 12/12/2019 5:34 AM

Trump meeting today on Dec. 15 tariff decision | MFP 2 payments | Biodiesel tax incentive

In today's updates:

* House clears ag worker reform bill that faces big hurdles in Senate, White House
* Trump expected to meet with advisers today about new Dec. 15 tariffs on China
* Sen. Grassley upbeat about Phase 1 accord
* Jamie Dimon expects U.S./China Phase 1 trade deal, but problems after that
* Fed chairman talks China and USMCA
* Charts show no MFP 2 payment bias toward southern states
* MPF 2 payments as of Dec. 9 totaled $10.470 billion
* Negotiators could reach agreement on full-year funding bill by the end of today
* House Dems scale back tax package giving up to tax incentive extender supporters
* House Dems ask GAO to investigate Perdue’s decision to move research agencies
* Aramco valuation hits $2 trillion target
* Fed will be on the sidelines in 2020

Markets: The Thomson Reuters Equal-Weighted Commodity Index (CCI) has broken out after bottoming back in August, just as the U.S. dollar peaked.
CCI Index
Which direction will corn futures take? Front-month CBOT corn contract has been consolidating over the past six months.
corn chart
Kansas City wheat
is trading at an extreme discount to the Chicago soft red winter wheat contract.
Wheat chart
Time magazine named Greta Thunberg, the 16-year-old climate activist, as its person of the year. “When asked what she thought about Time, Thunberg said, ‘We probably have about five, six years left,’” Seth Meyers said.


House clears ag labor reform bill, but odds low for Senate passage and White House support is not likely unless major changes in Senate version. The House voted 260-165 Wednesday to send to the Senate legislation that would allow undocumented farmworkers to earn legal status and streamline the H-2A guest worker program. The measure faces an uphill battle in the Senate because of the provisions for undocumented agricultural workers and their families. Thirty-four Republicans — nine more than the 25 who cosponsored the bill (HR 5038) — joined 226 Democrats in passing the measure.

Of note, the passage count was not enough to override any presidential veto should the legislation, however unlikely, get to President Trump's desk.

The House rejected a Republican motion to recommit the bill with instructions with a vote of 193-230 along party lines. The chamber voted 216-164 to table a motion to reconsider the vote on passage.

House Speaker Nancy Pelosi (D-Calif.) made comments about the bill on the House floor, noting the legislation “honors workers’ dignity and supports the farm economy with strong, smart reforms.”

Opponents of the bill stressed it unnecessarily allows people who entered the U.S. illegally to become certified agricultural workers if they meet certain standards and gives them the potential to become U.S. citizens. Some labeled that amnesty for people who violated U.S. immigration laws.

Rep. Ken Buck (R-Colo.) urged language to allow agricultural employers to bring in temporary workers legally. He said the measure didn't include strong enough vetting procedures to ensure that criminals are prevented from attaining legal status and didn't ensure that once someone qualified for a certified agricultural worker status and a five-year visa that they would remain in agriculture. “This bill before us today is not the answer,” Buck said.

Importantly, the American Farm Bureau Federation issued a statement criticizing the bill. "It is deeply disappointing that the House blocked any possibility of improving the legislation designed to address the problem," said President Zippy Duvall. "Several amendments addressed our principal concerns but were blocked from consideration." Duvall said the group would try to get the Senate to pass legislation more to its liking. "Farmers need meaningful reform that addresses the concerns of both workers and growers," Duvall said.

Roger Johnson, outgoing president of the National Farmers Union, said the Senate should refine the House bill. “Our current farm labor system is badly broken," he said. "It’s a time-consuming, convoluted, and restrictive process for farmers and ranchers, who often don’t have the time to spare, and it’s a dead-end for farmworkers, who currently have no straightforward path for longer-term employment or legal status."

The House bill would:

  • Offer five-year work visas to undocumented applicants employed in agriculture for 180 days over the last two years. Spouses and minor children could qualify for dependent worker visas good for the same length of time.
  • Allow holders of the five-year visas to gain permanent legal status if they meet certain requirements, such as paying a $1,000 fine and demonstrating a 10-year work history in agriculture before the bill becomes law. They would then have to work an additional four years in agriculture after it becomes law. Those with less than a 10-year agricultural work record before the law took effect would have to work an additional eight years to qualify for legal permanent resident status.
  • Direct the Homeland Security and Labor departments and state work agencies to develop a single online portal through which farmers can submit applications for workers.
  • Allow employers planning to apply for temporary foreign workers to first seek local workers by filing job postings on an electronic registry rather than in newspapers or other print publications.
  • Set specific H-2A minimum wage levels by job categories rather than setting a single broad agricultural minimum wage for employers using H-2A labor.
  • Allow agricultural employers to file a single H-2A application, even if they need workers for different tasks, rather than having to file separate applications.
  • Set a one-year wage freeze for 2020 and limit from 2021 through 2029 wage increases to 3.25% and wage decreases to 1.5%.
  • Make it mandatory for agricultural employers to use E-Verify, the web-based system that allows businesses to confirm whether their workers are legally eligible to work in the United States. E-Verify use would be phased in.

U.S./China trade policy update:

  • Trump likely to meet with advisers today about new Dec. 15 tariffs on China. President Donald Trump is likely to meet with his top trade and economic advisers on Thursday to discuss whether to impose planned Dec. 15 tariffs on nearly $160 billion in Chinese consumer goods, two sources familiar with the plans told Reuters. The meeting is expected to include U.S. Trade Representative Bob Lighthizer, Treasury Secretary Steven Mnuchin, and White House advisers Larry Kudlow and Peter Navarro. One person briefed on the situation told Reuters on Tuesday a decision to move ahead with the Dec. 15 tariffs could scuttle talks to end the 17-month-long trade war between the world's two largest economies for the remainder of Trump's term.
    New tariffs on China

    Tariffs on China
  • Either way we’re going to be in a great place ... The president loves them (the tariffs),” Navarro told Fox Business Network during an interview Tuesday. “If we get a great deal, we’ll be in a good place as well. But it will be the president’s decision. It will come soon.” This is a refrain trade policy activist Navarro has used in the past, right before President Trump has halted a threatened move on China. (Note: Navarro has reprised his alter ego, Ron Vara, to make the case for keeping pressure on China with more tariffs. The alias, who appeared in some of Navarro’s previous books, has “written” a new memo citing media commentary that supports keeping tariffs. Navarro confirmed to the New York Times that he sent out the memo — link.)
  • China says the two sides are in close communication as the Dec. 15 date draws near. "The two sides' economic and trade teams are maintaining close communication," Commerce Ministry spokesman Gao Feng, said at a regular briefing.
  • Senate Finance Chairman Chuck Grassley (R-Iowa) thinks Trump won’t put more tariffs on China. He said he had a “positive conversation” with an undisclosed person on Monday that indicated the announcement of a deal could happen “soon.”
  • JPMorgan Chase & Co.’s Jamie Dimon expects to see a Phase 1 trade deal, but warned that an additional wave of tariffs from the Trump administration would hit markets and U.S. growth. President Trump is weighing putting new tariffs on $160 billion of imported Chinese consumer items including toys and smartphones on Sunday, which the JPMorgan CEO said would further weigh on gross domestic product. He spoke at an event in Washington for the Business Roundtable, a Washington trade group that represents the CEOs of the largest U.S. companies. “I think there will be a phase-one deal, personally,” Dimon told reporters. He also warned that if that did not happen and the tariffs went ahead Dec. 15, “it will be a negative in the marketplace and small-negative” for U.S. and global growth. “People expect this phase-one deal to take place and tariffs not to go up.”
  • Higher hurdles after any Phase 1 accord. Even if a Phase 1 deal is reached, Dimon forecast that negotiations between Washington and Beijing for a more complete trade agreement will only get more difficult. “It will be very hard to have a real negotiated deal after that,” he said.
  • Fed chairman talks China and USMCA. Asked if U.S./China trade talks or USMCA was “bigger,” Fed Chairman Jerome Powell on Wednesday replied, “I think you can see that what has been moving… one way to look at it, what has been moving financial markets, it has been news about the negotiations with China, not so much USMCA. I think the difference between NAFTA and USMCA is smaller than the difference between current arrangements with China and what is being negotiated.”

Remember when Senate Ag Committee Democrats charged via a paper that MFP 2 payouts were slanted to southern states? Take a look at the following charts:

MFP top states

MFP Southern states

MPF 2 payments as of Dec. 9 totaled $10.470 billion. The top five states were Iowa, Illinois, Minnesota, Texas, and Kansas.

Congress and the Trump administration could reach agreement on full-year spending bill as soon as today, predicted House Appropriations Chairwoman Nita Lowey (D-N.Y.). Lawmakers only have until a temporary spending bill expires on Dec. 20 at midnight to fund the government. If the more upbeat forecast does not pan out, another stopgap spending bill will be the likely result.

In the Senate, Majority Leader Mitch McConnell (R-Ky.) was "upbeat" about Congress possibly passing a couple of spending packages next week during a meeting with committee chairmen on Wednesday, according to Senate Appropriations Chairman Richard Shelby (R-Ala.). Negotiators are trying to narrow the scope of discussions down to just a few items before a meeting today, Shelby said.

Tax incentive extender proponents not giving up. House Ways and Means Committee Democrats on Wednesday discussed paring back their ambitions on a package of refundable tax credits for low-income individuals and families, amid wide and vocal opposition from Republicans. Result: a "skinny" bill that would meld the collection of about 30 temporary tax break renewals and extensions, known as extenders, with disaster relief provisions intended to help victims of California wildfires, Midwest flooding (including sugar beet issues) and more.

The latest package would renew tax breaks that lapsed in 2018, such as credits for biodiesel and railroad track improvements and deductions for tuition expenses, and extend breaks that are expiring at the end of this year, including credits for employer-paid family and medical leave and excise tax cuts for craft distillers.

It is murky as to how long the extensions and renewals would be, but at least through the end of 2020, sources signal. Those extenders and the disaster relief provisions were included in a $42 billion tax package (HR 3301) that House Ways and Means approved in June.

In the past, the cost of any tax incentive extenders' package has doomed legislative efforts.

Other items of note:

  • Investigation-happy House Democrats are asking for GAO to investigate USDA Secretary Sonny Perdue’s decision to move two research agencies from D.C. to Kansas City. Lawmakers want to know more about the full cost-benefit analysis behind the relocation.
  • Aramco valuation hits $2 trillion target. The oil giant’s share price jumped on its second day of trading to reach Saudi Crown Prince Mohammed bin Salman’s valuation target.

Markets. The Dow on Wednesday rose 29.58 points, 0.1%, to 27,911.30. The S&P 500 ended up 9.11 points, 0.3%, at 3,141.63. The Nasdaq added 37.87 points, 0.4%, to 8,654.05.

Fed will be on the sidelines in 2020. The Federal Reserve on Wednesday kept interest rates steady and indicated no intention of raising them throughout 2020. Thirteen of the FOMC's 17 members anticipate no change in interest rates next year. Focus will now turn mostly on company fundamentals and the fundamentals of the economy. The Federal Reserve held interest rates steady at a range of 1.5% to 1.75%. The decision comes after three consecutive quarter-point rate cuts at the Fed’s previous policy meetings. Fed Chairman Jerome Powell said for the Fed to change its interest-rate stance, “we would want to see a material reassessment to the outlook.” FOMC members expect the U.S. economy to grow by 2% to 2.2% next year, about equal with where 2019's growth is likely to come in. That forecast is up from the 1.8% to 2.1% expected growth in September.


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