Biden Does a Walk Back in Infrastructure Compromise Shuffle

More direct aid to dairy producers coming ‘soon’

Washington Focus

President Joe Biden and USDA Secretary Tom Vilsack will visit Wisconsin Tuesday. The topics will likely include the recent bipartisan infrastructure agreement (see next item for more on that topic) and additional pandemic aid USDA will be providing dairy farmers.

     The coming dairy aid includes an idea that payments should be targeted to producers who were impacted by lower Class I prices and the record high price of cheese stimulated by massive government purchases. Vilsack commented on this topic recently when he said, “We are creating a program to help reduce the differential that occurred between Class I and Class III milk pricing because of the disproportionate number of purchases of cheese during the Food Box effort. That distorted the market, and it caused a lot of harm to smaller producers. We’re putting resources in to reimburse those producers for some of the loss they incurred.” Although the likely aid changed several times last week, it ranges from $750 million to $1 billion.

So, President Biden knows about working with the Senate? That clearly was not the initial conclusion one reached after his missteps and walking back comments late last week that got Republicans more than upset about an infrastructure bill compromise they thought they agreed to.

     The talk and walk back. When Biden went off script during a news conference on Thursday, he suggested to centrist senators and Republicans that he would go so far as to veto their bipartisan plan if a larger bill did not materialize. The president declared that he would not approve the compromise bill without the partisan one to follow spending around $3 trillion more on “social” infrastructure and other far-left spending (called investments by Democrats).

     What Biden said and eventually walked back: “If this is the only thing that comes to me, I’m not signing it,” he said, answering a question about the timing of his legislative agenda. “I’m not just signing the bipartisan bill and forgetting about the rest.”

     Sen. Susan Collins (R-Maine) said centrist senators and Republicans “never had an inkling that there would be any kind of linkage,” and added “We always knew that there’d be another bill, but not that the success of the infrastructure package was going to be in any way dependent on the other bill.” Collins made those comments to the New York Times.

     Then White House officials went into damage control mode, as top advisers called senators from both parties. But that was not enough for now wary Republicans who wanted a statement. And on Saturday, Biden conceded that he had misspoken. Biden admitted that his comments on Thursday left “the impression that I was issuing a veto threat on the very plan I had just agreed to.” That was “certainly not my intent,” he added.

     But it may well be House and Senate Democratic leadership who will now determine the final outcome. On Thursday morning, as Biden and the lawmakers prepared to make their deal public, Senate Majority leader Chuck Schumer (D-N.Y.) took to the Senate floor to defuse far-left Democrats’ concerns by underscoring the plan that he and House Speaker Nancy Pelosi (D-Calif.) had worked out with the president.

     And just what is the deal Schumer and Pelosi worked out with Biden? “These two efforts are tied together. Let me make that clear,” Schumer said. “Speaker Pelosi agrees that we cannot do one without the other. All parties understand that we won’t get enough votes to pass either unless we have enough votes to pass both.” Biden, in his initial prepared remarks Thursday in the East Room, soon after celebrating with the senators in the White House driveway, echoed that strategy. “I’m going to work closely with Speaker Pelosi and Leader Schumer to make sure that both move through the legislative process promptly and in tandem,” he said. “Let me emphasize that — and in tandem.”

     During the news conference in the East Room, a reporter sought clarification: “Mr. President, you said you want both of these measures to come to you ‘in tandem.’ Did you receive any assurances that that would happen?” Biden said he expected that Congress would work on passage of both the bipartisan infrastructure measure and the bigger Democratic bill at the same time, echoing Schumer’s earlier comments. But then he went even further again. “But if only one comes to me, I’m not — and if this is the only thing that comes to me, I’m not signing it,” he said. “It’s in tandem.”

     Senators were preparing to leave Washington on Thursday afternoon for a two-week recess for Fourth of July, and it took a while for Biden’s comments to get to them. But when they did, well let’s just say there was anger as Republicans in particular interpreted Biden’s comments as an implicit veto threat.

     On Saturday, Biden finally acknowledged his mistake as lawmakers and aides signaled they would move forward with writing text and securing support. “The bottom line is this,” Biden said. “I gave my word to support the infrastructure plan, and that’s what I intend to do. I intend to pursue the passage of that plan, which Democrats and Republicans agreed to on Thursday, with vigor. It would be good for the economy, good for our country, good for our people. I fully stand behind it without reservation or hesitation.”

     This quote says it all: “Usually you get one day of celebration before the first bump appears,” Sen. Mark Warner (D-Va.) said Friday morning in a tone of resignation. “We got two hours.”

     Now what? As noted, the bottom line will in large part be determined by Schumer and finally by Pelosi, who may not even bring infrastructure up if she is not guaranteed the second big spending (investment) measure will pass. Pelosi said last week she wouldn’t bring up the bipartisan infrastructure bill unless the antipoverty package had passed the Senate. And of course centrist Democrats, especially in the Senate, will decide the fate of the “second bill.”

     Sen. Joe Manchin (D-W.Va.) on Sunday said there is “absolutely” an infrastructure deal in Congress that will clear hurdles and be signed by President Joe Biden. “I sure believe there is,” Manchin said on a segment of ABC News’ This Week when asked if he believed there’s a compromise that would survive a vote in the Senate. “On the deal, absolutely, this is the largest infrastructure package in the history of the United States of America, and President Biden ... is anxious for this bill to be passed and for him to sign it, and I look forward to being there when he does,” he added. Manchin indicated that he hopes his “colleagues” would look at the potential legislation in a “positive light… I could tell you there’s so much good being done, and I would hope that all of my colleagues would look at it in the most positive light,” he said. “They have a chance now to review it. It's got more in there for clean infrastructure, clean technology ... more money for bridges and roads.” And in key remarks on Sunday, Manchin signaled he might be willing to support a broader spending package of $2 trillion beyond the infrastructure proposal. Manchin said that he would support a reconciliation bill that included raising the corporate tax rate to 25% and taxes on capital gains to 28%. “I want to make sure we pay for it. I do not want to add more debt on. So if that’s $1 trillion, or $1.5, or $2 trillion, wherever that comes out to be over a 10-year period, that’s what I would be voting for,” he said.

     Some Republicans were content with Biden’s latest statement. “I am glad they have now been delinked and it’s very clear that we can move forward with a bipartisan bill,” said Sen. Rob Portman (R-Ohio), on ABC’s This Week. He added: “We were glad to see them disconnected.” Said Sen. Mitt Romney (R-Utah) on CNN’s State of the Union: “I do trust the president.”

     But not all Republicans were pleased. Sen. John Barrasso (R-Wyo.), the chairman of the Senate Republican Conference, said Republicans would need more reassurance from the president that the bill wouldn’t be handcuffed to the larger antipoverty package. “Look, I’m a doctor, and I will tell you, you can get whiplash by trying to follow Joe Biden on this,” Barrasso said on Fox News’ Sunday Morning Futures.

     Far-left Rep. Alexandria Ocasio-Cortez (D- N.Y.) said on NBC’s Meet the Press that House Democrats are committed to making sure that Democrats pass the broader antipoverty plan, which expands child care, Medicare, affordable housing and other programs. Democrats hope to pay for the continuing programs by boosting taxes on businesses and upper-income households, a red line for Republicans. “It’s very important for the president to know that House progressives (far-left liberals) and I believe the Democratic caucus is here to make sure he doesn’t fail,” she said. The president shouldn’t be limited by Republicans, she said, in light of the Democratic majority.

     Bottom line: Infrastructure reform has as many twists and turns as there are roads and bridges in the country… with just as many potholes and other problems.

The House will take up a surface transportation bill-plus this week. It will consider a $715 billion package combining surface transportation reauthorization with wastewater and drinking water infrastructure legislation, according to the heads of two committees. The package will include the House Transportation and Infrastructure Committee-approved $547 billion surface transportation bill (HR 3684) and $51 billion wastewater bill (HR 1915), with the Energy and Commerce Committee-approved $117 billion drinking water bill (HR 3291).

Hearings and Events This Week

Monday, June 28

• Federal Reserve Vice Chair for Supervision Randal Quarles will discuss central bank digital currency at the 2021 Utah Bankers Association Annual Convention.
• FY 2022 appropriations: Interior/Environment. House Interior/Environment Appropriations Subcommittee meeting to consider its fiscal year (FY) 2022 bill.
• FY 2022 House State-Foreign Operations appropriations. House Appropriations subcommittee meeting to consider its FY 2022 bill.
• Prop 12 decision, SCOTUS. The Supreme Court could announce whether it will consider a petition from the North American Meat Institute in a lawsuit challenging California’s Proposition 12, which would impose animal confinement standards on farms that sell products into the state. The court considered the petition in a conference Thursday.

Tuesday, June 29

• President Biden and USDA Sec. Vilsack visit Wisconsin. As noted, Biden will focus on the recent infrastructure comprise with a bipartisan group of senators, while Vilsack is expected to announce more aid to dairy producers.
• Credit reporting. House Financial Services Committee hearing titled "A Biased, Broken System: Examining Proposals to Overhaul Credit Reporting to Achieve Equity." Democrats will discuss a proposal to establish a public credit registry within the Consumer Financial Protection Bureau.
• Financial stability. XA task force from the Hutchins Center at Brookings and the Initiative on Global Markets at the Chicago Booth School of Business will release a report on financial stability, focused on the large and growing nonbank sector. The report recommends using stress testing outside the banking system.
• Wildland fires. House Science, Space and Technology Committee hearing titled "The State of Federal Wildland Fire Science: Examining Opportunities for Further Research and Coordination.”   
• Aspen Ideas Fest will take place digitally through Thursday. It will feature several energy-relevant speakers, including Transportation Secretary Pete Buttigieg and General Motors Co. Chief Executive Mary Barra, who plans to make an announcement as part of her discussion of GM's climate prioritization and new advancements, titled "The Road to Zero Emissions."

Wednesday, June 30

• Transportation and climate change. House Select Committee on the Climate Crisis hearing titled "Transportation Investments for Solving the Climate Crisis.” Session will "explore how investments in transportation infrastructure can curb harmful pollution, increase climate resilience, redress historical inequities, and increase community quality of life."
• Supply chain recovery. House Agriculture subcommittee hearing, “Supply Chain Recovery and Resiliency: Small Producers and Local Agricultural Markets.”
• Farmers and climate change. Foreign policy webinar: “Farmers on the Frontier of Climate Change.”
• FY 2022 appropriations: House Homeland Security Appropriations. Subcommittee meeting to consider its FY 2022 bill.
• FY 2022 Ag appropriations. House Appropriations Committee meeting to consider its FY 2022 Agriculture spending bill.
• UN Food Systems Summit. U.S. national dialogue in preparation for the United Nations Food System Summit, an initiative to develop global recommendations to meet sustainability development goals, including eliminating hunger and addressing climate change. USDA has been conducting a “national food system dialogue,” a series of three sessions that launched Jan. 13, continued May 19 and ends with Wednesday’s meeting.

Thursday, July 1

• Organization of the Petroleum Exporting Countries and its allies hold a meeting to increasing its collective oil production by roughly 500,000 barrels per day. The boost would represent a small addition to global supplies as OPEC+ begins to cautiously readjust its output after the coronavirus pandemic curbed demand for the fuel over a year ago. But demand has since bounced back, giving OPEC+ the ability to essentially control oil prices through changes to how much its members produce. Prices have roughly doubled since October, with WTI prices hitting nearly $72 per barrel earlier this week.
   

Economic Reports for the Week

Key report comes Friday via the Jobs update.

Monday, June 28

• Federal Reserve Bank of Dallas releases its Texas Manufacturing Outlook Survey for June. Consensus estimate is for a 32.5 reading, slightly lower than May’s 34.9. The index is near a three-year peak of 37.3, reached in April, indicating strength in the region’s manufacturing sector.

Tuesday, June 29

• Conference Board releases its Consumer Confidence Index for June. Expectations are for a 117.8 reading, roughly even with the May data. The index has rebounded strongly this year but remains well below prepandemic levels.
• S&P CoreLogic releases its Case-Shiller National Home Price index for April. Economists forecast a 14.2% year-over-year increase, after a 13.2% gain in March, which was the largest jump since December 2005.

Wednesday, June 30

• MBA Mortgage Applications
• ADP releases its National Employment Report for June. Economists forecast a 450,0000 gain in private-sector employment, after adding 978,000 jobs in May. The May rise was the largest since June of last year.
• Institute for Supply Management releases its Chicago Purchasing Managers’ Index for June. The consensus call is for a 70 reading, lower than May’s 75.2, which was a 47-year high for the index.
• National Association of Realtors reports its Pending Home Sales Index for May. Sales are projected to drop 1% month over month, after falling 4.4% in April. Supply constraints, especially at the lower end of the housing market, have been cited by the NAR for slowing sales.

Thursday, July 1

• Jobless Claims
• Fed Balance Sheet
• Money Supply

Friday, July 2

• Bureau of Labor Statistics releases the jobs report for June. Expectations are for a rise of 625,000 in nonfarm payrolls, after a 559,000 gain in May. The unemployment rate is seen continuing to edge lower to 5.6% from 5.8%.

Key USDA & international Ag & Energy Reports and Events 

Wednesday is the key USDA report day with Acreage and Grain Stocks reports.

Monday, June 28

     Ag reports and events:

• Export Inspections
• Crop Progress
• Peanut Stocks & Processing
• EU weekly grain, oilseed import and export data
   

Tuesday, June 29

     Ag reports and events:

• Livestock and Meat Domestic Data
• Egg Products
• StatsCanada data on seeded area for wheat, durum, canola, barley and soybeans

     Energy reports and events:

• API weekly U.S. oil inventory report
• OPEC+ Joint Technical Committee (JTC) experts meet virtually to analyze oil market data ahead of Thursday’s full meeting

Wednesday, June 30

     Ag reports and events:

• Broiler Hatchery
• Acreage
• Grain Stocks
• Rice Stocks
• Agricultural Prices
• Malaysia June 1-30 palm oil export data

     Energy reports and events:

• EIA weekly U.S. oil inventory report
• U.S. weekly ethanol inventories
• OPEC+ Joint Ministerial Monitoring Committee (JMMC), comprising of a few key ministers, meets virtually to begin analysis and discussions ahead of full OPEC+ meeting on Thursday
• ConocoPhillips investor meeting
• Genscape weekly crude inventory report for Europe’s ARA region
• August Brent crude futures expire on ICE Futures Europe exchange

Thursday, July 1

     Ag reports and events:

• Weekly Export Sales
• Cotton System
• Fats & Oils
• Grain Crushings
• World cotton outlook update from International Cotton Advisory Committee
• Port of Rouen data on French grain exports
• Holiday: Canada, Hong Kong

     Energy reports and events:

• EIA natural gas storage change
• OPEC+ group meets
• Russian weekly refinery outage data from ministry
• Insights Global weekly oil product inventories in Europe’s ARA region

Friday, July 2

     Ag reports and events:

• CFTC Commitments of Traders report
• Peanut Prices
• Dairy Products
• FranceAgriMer weekly update on crop conditions

     Energy reports and events:

• Baker Hughes weekly U.S. oil/gas rig counts
• U.S. Census crude export data
• ICE Futures Europe’s weekly commitment of traders report for week ended June 29