Biden Links Traditional Infrastructure Bill with Social Policy & Climate Change Measure

USTR Tai to reveal U.S./China trade policy ideas in Monday speech

Washington Focus

The Senate is working Saturday afternoon and approved a 30-day extension of surface transportation programs (House passed the extension late Friday). The chamber will also resume consideration of Paloma Adams-Allen to be deputy administrator of the U.S. Agency for International Development.

The House isn’t in session and will next convene Tuesday morning. Leaders scheduled the next two weeks as committee work weeks but said that members would be given 72 hours’ notice if they needed to return to act on “significant legislation.”

President Joe Biden met behind closed doors at the Capitol with rank-and-file House Democrats on Friday to rally their support and serve as a referee on lingering issues and self-imposed deadlines that have not been met.

Biden urged Dems to compromise on a $2-trillion price tag for the social policy and climate change (Build Back Better/BBB) package rather than the initial $3.5 trillion level pushed by party progressives (liberals). Biden told Democrats in the private meeting that in his aides’ talks with the senators, they had discussed spending as much as $2.3 trillion.

Biden also said the vote on the around $1 trillion bipartisan infrastructure (BIF) plan would not take place solo but is linked with the BBB vote. That took some pressure off House Speaker Nancy Pelosi (D-Calif.) who previously had been trying to deal with both groups, unsuccessfully. The president told Democrats: “Even a smaller bill can make historic investments.”

Timeline. “It doesn’t matter whether it is six minutes, six days or six weeks. We’re going to get it done,” Biden said as he left the meeting. That reinforced the fact that self-imposed deadlines have not been met, and there really is no date-certain for the two spending packages. (It’s not six minutes and not likely six days.) Biden acknowledged the BIF package “ain’t going to happen” until Democrats reached agreement over their second tax-and-spending bill. That measure remains shrouded in uncertainty, amid doubters among centrists including Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.). Manchin has said he could support $1.5 trillion on the social policy and climate change bill, while Sinema hasn’t publicly declared what she would support.

Meanwhile, in a "Dear Colleague" letter released on Saturday, Pelosi said that “more time was needed” to pass the BIF bill along with the larger BBB package. The Speaker said she wants to pass the bipartisan bill by Oct. 31, when the 30-day reauthorization of federal highway programs expires. “There is an October 31st Surface Transportation Authorization deadline, after last night’s passage of a critical 30-day extension,” Pelosi wrote. “We must pass well before then – the sooner the better, to get the jobs out there.”

Now what? “Let’s try to figure out what we are for in reconciliation … and then we can move ahead,” Biden told Democrats. “There’s a lot of different ways that you could continue all the programs, and even somewhat robustly, but through [delayed] timing, phasing out and means-testing, get the price tag” centrists seek, said Sen. Tim Kaine (D-Va.) in talking about going from $3.5 trillion to around $2 trillion. “Depending on the particular line item, we’ll probably do all of those things.”

Pelosi comments. “While great progress has been made in the negotiations to develop a House, Senate and White House agreement on the Build Back Better Act, more time is needed,” Pelosi wrote in a letter to her colleagues. “Clearly, the bipartisan infrastructure bill will pass once we have agreement on the reconciliation bill.”

Not all House Democrats were happy following Biden’s appearance. “It’s a disappointment to me,” said Rep. Jim Costa (D-Calif.) “He negotiated the bipartisan infrastructure package, and I would have thought that he would have put that as high a priority as the reconciliation package. And he spent most of the time on the reconciliation package.”

Some real deadlines ahead. Congress needs to avert the risk of a sovereign default this month and then that of a partial gov’t shutdown in December as the latest stopgap spending measure runs through Dec. 3. Meanwhile, White House press secretary Jen Psaki suggested that President Biden might back Treasury Secretary Janet Yellen's endorsement of eliminating the debt ceiling entirely to avoid future credit crises.

Did Biden take any lawmaker questions on Friday? According to Politico, even though Biden himself offered to take questions from members, "his staff jumped in" and in the end he did not take any questions.

The House passed a stopgap measure to extend federal highway programs that expired on Friday by a vote of 365 to 51. The BIF bill contains longer authorizations of those programs, but when the new fiscal year began on Friday without its passage, they became temporarily frozen and about 3,700 workers were furloughed. The extension bill (HR 5434) authorizes highway and transit programs through Oct. 31.

The Senate Saturday afternoon passed the extension measure.

The Department of Transportation said that the administration was working to be able to swiftly reauthorize the frozen programs, and that payments to reimburse state and transit agencies for existing grants could allow work to continue uninterrupted.

U.S./China trade policy. U.S. Trade Representative Katherine Tai will finally release more information about the Biden trade policy approach with China during a speech on Monday. It comes after her office has been engaged in what she's dubbed a "top-to-bottom review" of U.S. trade policy with China. Tai will appear at the Center for Strategic and International Studies (CSIS) and deliver remarks on the Biden administration’s trade agenda with China. According to CSIS, Tai will “deliver a speech outlining the Biden/Harris Administration’s approach to the bilateral trade relationship with China.”

In a recent interview with Politico (link), Tai said the Biden administration wants to “build” on the existing tariffs imposed by the Trump administration and confront China for failing to live up to terms of the Phase 1 agreement between the two countries. “I think it’s going to be important to review China's performance with China, and that's going to be the critical first step in my mind,” Tai said relative to the Phase 1 deal. However, there is some chatter that one-third of the U.S. tariffs on Chinese goods may be removed.

On the hearing front, the House Agriculture Committee on Thursday will hold a hearing to “Review the State of the Livestock Industry.”

Details on expanding meat processing capacity. USDA Secretary Tom Vilsack on Monday will announce details of a loan guarantee program to expand meat processing capacity and reducing the impact of plant disruptions that depress livestock prices and cause spikes in retail meat prices.

Consumer Federation of America holds it Virtual National Food Policy Conference Tuesday and Wednesday.

Economic Reports for the Week

Key economic report comes Friday with the Employment data.

Tuesday, Oct. 5

Bureau of Economic Analysis reports light-vehicle sales for September. Cox Automotive forecasts a seasonally adjusted annual rate of 12.1 million vehicles sold, one million fewer than in August. If the estimate proves correct, it would be the slowest pace of auto sales since May of 2020 and down 26% from last September. Car sales have been hampered by a lack of new-vehicle inventory.
Institute for Supply Management releases its Services Purchasing Managers’ Index for September. Consensus estimate is for a 59 reading, more than two points below the August figure.

Wednesday, Oct. 6

MBA Mortgage Applications
ADP releases its National Employment report for September. Economists forecast an increase of 475,000 jobs in private-sector employment, after adding 374,000 jobs in August.

Thursday, Oct. 7

Jobless Claims
Department of Labor reports initial jobless claims for the week ending on Oct. 2. For September, jobless claims averaged 340,000 a week, the lowest since the onset of the pandemic, but still elevated compared with prepandemic levels.
Fed Balance Sheet
Money Supply

Friday, Oct. 8

Bureau of Labor Statistics releases the jobs report for September. The economy is forecasted to have added 425,000 positions, after a 235,000 increase in August. The unemployment rate is expected to tick lower to 5.1% from 5.2%. There is still a shortfall of roughly 5.3 million jobs since the beginning of the pandemic.

Key USDA & international Ag & Energy Reports and Events

The United Nations’ monthly FAO food price index is released Thursday, while China’s CNGOIC will publish supply-demand reports on corn, soybeans, and other commodities Friday. Focus will also be on the Moscow Golden Autumn Agriculture conference during the week. On the energy front, several conferences are on tap this week and on Monday, OPEC+ meets virtually to review plans to revive output by a further 400,000 b/d.

Monday, Oct. 4

Ag reports and events:

Export Inspections
Crop Progress
Dairy Products
Holiday: China

Energy reports and events:

OPEC+ meets virtually to review plans to revive output by a further 400,000 b/d
Energy Intelligence Forum, 1st day of 4, with speakers including Adnoc CEO Sultan Al Jaber, Vitol CEO Russell Hardy, among others

Tuesday, Oct. 5

Ag reports and events:

U.S. Purdue Agriculture Sentiment
EU weekly grain, oilseed import and export data
Moscow Golden Autumn Agriculture conference (Oct. 5-8)
Malaysia Oct. 1-5 palm oil exports
Holiday: China

Energy reports and events:

API weekly U.S. oil inventory report
Saudi Aramco to release official selling prices for November crude oil sales
Energy Intelligence Forum, 2nd day, with speakers including Saudi Aramco CEO Amin Nasser, TotalEnergies CEO Patrick Poyanne, among others
Energy Trading Week in London, first day of 2
FT Energy Transition Strategies Summit

Wednesday, Oct. 6

Ag reports and events:

Broiler Hatchery
Livestock and Meat International Trade Data
U.S. Agricultural Trade Data Update
Agricultural Technology and Food Salon, a virtual event by IFIC (Oct. 6-7)
Holiday: China

Energy reports and events:

EIA weekly U.S. oil inventory report
U.S. weekly ethanol inventories
Genscape weekly crude inventory report for Europe’s ARA region
FT Energy Transition Strategies Summit, 1st day of 2
Energy Intelligence Forum, 3rd day, with speakers including OPEC Secretary General Mohammad Barkindo, Shell CEO Ben van Beurden, among others
Energy Trading Week, final day

Thursday, Oct. 7

Ag reports and events:

Weekly Export Sales
FAO Food Price Index & cereals supply/demand brief
Brazil’s Conab report on yield, area and output of corn and soybeans
Port of Rouen data on French grain exports
Holiday: China

Energy reports and events:

EIA natural gas storage change
Russian weekly refinery outage data from ministry
Insights Global weekly oil product inventories in Europe’s ARA region
FT Energy Transition Strategies Summit, final day
Energy Intelligence Forum, final day, with speakers from Baker Hughes, Repsol, among others

Biden Links Traditional Infrastructure Bill with Social Policy & Climate Change Measure

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