Buttigieg: Time’s Running Out for Infrastructure Deal

Jobs report Friday may be key signal of Fed policy ahead

Washington Focus

The House and Senate are in recess in observance of Memorial Day. 

President Joe Biden and congressional Democratic leaders missed several Memorial Day “deadlines” — not so unusual in Washington, D.C. Included in this list:

• Infrastructure bill. Compromises and counterproposals have been made, with perhaps more ahead. But Biden and congressional Democrats have a shorter and shorter timeline on leaving the bipartisan talks and just going it alone (perhaps one more week, some say). Biden’s latest offer is $1.7 trillion, a decline from his starting point of $2.25 trillion. Last Thursday, Senate Republicans released their counterproposal to the American Jobs Plan, a $928 billion plan that included $4 billion for EV charging stations as part of the broader $506 billion for roads, bridges and other major infrastructure projects. If there is an eventual accord, contacts signal a likely price tag of around $1.2 trillion.
  
  But as was the case over previous attempts on this topic. major disagreements remain on how to fund effort. Republicans want to tap at least two sources to help pay for rebuilding roads and bridges: repurposed, unspent funds from the $1.9 trillion Covid-19 relief law from earlier this year; as well as user fees on electric vehicles. The Biden administration has proposed funding the measure through tax increases on corporations, including by raising the corporate rate to 28% from 21%, a plan strongly opposed by Republicans.
  
  Transportation Secretary Pete Buttigieg on Sunday said the Biden administration is “getting pretty close to a fish-or-cut-bait moment” when discussing negotiations between the White House and Senate Republicans on an infrastructure package. When asked by host Jake Tapper on CNN’s State of the Union if Democrats would “go it alone” on infrastructure if there is not an agreement next week, Buttigieg said that while negotiations have been "healthy," the process “can’t go on forever… I think we are getting pretty close to a fish-or-cut-bait moment. But I will tell you that, on the fishing side of things, the negotiations have been healthy. There's a lot of conversations going on among members of Congress who have come forward with a lot of different ideas, in addition to the discussions that we have had with the group led by Sen. [Shelley Moore] Capito [R-W.Va.]. So, we believe in this process, but also very much agree that this can't go on forever,” Buttigieg said. “This can't go on, in terms of the condition of our infrastructure. Therefore, the negotiations can't go on forever either,” he added. Buttigieg said that when Congress returns from recess, the negotiations “need a clear direction.”
  
  Sen. Capito said on Sunday that she believes Democrats and Republicans could still reach "real compromise" on the proposed spending plan. While appearing on Fox News Sunday, Capito was asked if a deal could be reached, with the Fox News host noting the stark differences in the White House's American Jobs Plan and the counteroffer that GOP lawmakers made this past week, which was about $1 trillion less. "I think we can get to real compromise, absolutely, because we're both still in the game," Capito said. "I think — the president told me himself let's get this done. We realize this is not easy. I think we bring every idea that's on the table into the negotiations to see how we can achieve this and get it across the threshold." Capito acknowledged the "human infrastructure, social infrastructure" items as "great things to talk about, things that we need to address," but argued they simply were not part of physical infrastructure and would not help in modernizing the U.S. transportation system, which she said should be the priority.
   
• U.S./China competitiveness legislation. Senate leader agreed to a deal on Friday to push back consideration of the bipartisan U.S./China tech competitiveness legislation (U.S. Innovation and Competition Act) until after lawmakers return from the Memorial Day recess. The agreement was struck after a long night Thursday of negotiations and objections Friday from Republican Sens. Ron Johnson (Wis.), Rand Paul (Ky.) and Mike Lee (Utah) to various amendments and other elements included in the bill. Next key “deadline” is June 8. The China-focused legislation is viewed as potentially the last bipartisan effort the Senate can make happen this year.
  
  The innovation measure currently includes a controversial amendment dealing with online country-of-origin labeling (COOL). The U.S. supermarket industry has expressed concern about the amendment from Sens. Tammy Baldwin (D-Wis.) and Rick Scott (R-Fla.). The Food Industry Association said in a letter to the Senate Agriculture Committee that the amendment, added in another committee, would impose “time-consuming and costly new obligations” for food retailers. The amendment would require online retail products to provide country of origin information as part of the “internet website description of a product.”  Link to more on the Baldwin/Scott amendment. Sen. John Boozman (R-Ark.) is trying to get food exempted from the Senate amendment. The sleeper issue of this is that if the amendment is successful and food is not exempted, it would bring the Energy and Commerce Committee and the FTC into this space relative to food, which before had been in the jurisdiction of the Ag Committees.

Senate Majority Leader Charles E. Schumer (D-N.Y.) has three potential ways to getting things done in the Senate: negotiations aimed at getting to 60 votes, which essentially means finding 10 Republicans; bypassing the 60-vote requirement by using the complicated and limiting procedures of budget reconciliation that allow budget measures to pass with a simple majority; or changing the rules to allow a majority to end debate.

Biden to name ambassador picks. The president is expected to unveil this week several ambassador sections, including Morgan Stanley executive Tom Nides in Israel, veteran diplomat R. Nicholas Burns in China, Los Angeles Mayor Eric Garcetti in India and former Interior Secretary Ken Salazar in Mexico.

Hearings and Events This Week

Monday, May 31

• Holiday. Memorial Day.  
   

Tuesday, June 1

• Biden to visit Tulsa, Okla., to mark 100th anniversary of massacre. The president's adds to lectures, music and other art events that are commemorating over several weeks the anniversary of the 1921 Tulsa Race Massacre.
• Federal Reserve: Economic Club of New York hosts Fed Governor Lael Brainard for a webinar.
• U.S./China tensions. Carnegie Endowment for International Peace virtual discussion on How Will the EU Navigate U.S.-China Tensions?
• Glickman book. Bipartisan Policy Center virtual book discussion on a book by former USDA Sec. Dan Glickman: Laughing at Myself: My Education in Congress, on the Farm, and at the Movies.

Wednesday, June 2

• Philadelphia Fed President Patrick Harker participates in a forum on racism and the economy, hosted by the Minneapolis Fed. He'll also speak at a virtual event hosted by Women in Housing and Finance.
• Federal Reserve. Chicago Fed President Charles Evans, Atlanta Fed President Raphael Bostic and Dallas Fed President Robert Kaplan also participate in the above forum on racism.
• Beginning farmer assistance. Meeting of USDA Office of Partnerships and Public Engagement.
• Broadband. Brookings Institution webinar on Can Biden's Broadband Infrastructure Plan Close the Digital Divide?
   

Thursday, June 3

• Federal Reserve. Fed Vice Chair for Supervision Randal Quarles speaks at a virtual SIFMA event. Philadelphia Fed President Patrick Harker discusses building an equitable workforce recovery at a virtual event.
• Trade policy. Meridian International Center virtual discussion with Mayur Patel, senior international trade counsel at the Senate Finance Committee, about the Senate trade agenda.
• U.S. economy. American Bankers Association virtual news conference on Bank Economist to Present Economic Forecast.
   

Friday, June 4

• Fed Chair Jerome Powell takes part in a Green Swan panel discussion on central banks and climate change with ECB's Lagarde, Bank of France Governor Francois Villeroy de Galhau and PBOC's Yi Gang.
• G7 finance ministers and central bank chiefs meet in London. U.S. Treasury Secretary Janet Yellen will attend, her first overseas trip since taking office. U.K. Chancellor Rishi Sunak will host, ahead of the main G7 summit next week. Through June 5.
   

Economic Reports for the Week

Economic reports due out include an update on construction spending, PMI prints and the May jobs report released Friday. Another economic release  of note coming this week is the Fed's Beige Book, out Wednesday afternoon.

Monday, May 31

• Organization for Economic Cooperation and Development releases its latest economic outlook. In its March interim report, the OECD projected a 5.6% growth rate for global gross domestic product in 2021, an upward revision of a full percentage point from the December 2020 forecast.
   

Tuesday, June 1

• Institute for Supply Management releases its Manufacturing Purchasing Managers’ Index for May. Consensus estimate is for a 60.8 reading, roughly even with the April data.
• Census Bureau reports construction spending for April. Expectations are for a 0.6% month-over-month rise to a seasonally adjusted annual rate of $1.52 trillion. Construction spending remains just below its all-time peak in January of this year.
• Federal Reserve: Economic Club of New York hosts Fed Governor Lael Brainard for a webinar.
   

Wednesday, June 2

• MBA Mortgage Applications
• Federal Reserve releases the beige book for the fourth of eight times this year. The report presents anecdotal data on the health of the economy collected by the 12 Federal Reserve Bank districts.
• Philadelphia Fed President Patrick Harker participates in a forum on racism and the economy, hosted by the Minneapolis Fed. He’ll also speak at a virtual event hosted by Women in Housing and Finance.
• Chicago Fed President Charles Evans, Atlanta Fed President Raphael Bostic and Dallas Fed President Robert Kaplan also participate in the above forum on racism.
• Bank for International Settlements, Bank of France, IMF and the Network for Greening the Financial System will co-sponsor the virtual Green Swan Conference -- coordinating finance on climate. Speakers include Fed Chair Jerome Powell, ECB President Christine Lagarde, former central bank governor Mark Carney, BIS Chair Jens Weidmann and People’s Bank of China Governor Yi Gang. Through June 4.
   

Thursday, June 3

• Jobless Claims
• ADP releases its National Employment report for May. Consensus estimate is for a 610,000 gain in nonfarm private-sector employment, following an increase of 742,000 in April.
• Bureau of Economic Analysis reports total light-vehicle sales for May. In April, they hit a seasonally adjusted annual rate of 18.5 million, the highest figure since July 2005.
• ISM releases its Services PMI for May. Consensus estimate is for a 63.2 reading, compared with April’s 62.7 figure.
• Fed Balance Sheet
• Money Supply
• Fed Vice Chair for Supervision Randal Quarles speaks at a virtual SIFMA event. Philadelphia Fed President Patrick Harker discusses building an equitable workforce recovery at a virtual event.
   

Friday, June 4

• Bureau of Labor Statistics releases the jobs report for May. Economists forecast a 700,000 rise in nonfarm payrolls, after a relatively modest 266,000 gain in April. The unemployment rate is expected to edge down to 5.9% from 6.1%. The April increase was a massive shortfall from the one million jump expected by some economists.
• Fed Chair Jerome Powell takes part in a Green Swan panel discussion on central banks and climate change with ECB’s Lagarde, Bank of France Governor Francois Villeroy de Galhau and PBOC’s Yi Gang.
• G7 finance ministers and central bank chiefs meet in London. U.S. Treasury Secretary Janet Yellen will attend, her first overseas trip since taking office. U.K. Chancellor Rishi Sunak will host, ahead of the main G7 summit next week. Through June 5.

Key USDA & international Ag & Energy Reports and Events 

Ag markets are in a holding pattern, waiting for USDA’s Acreage report at the end of the month, while others continue assessing Brazil’s safrinha corn crop hit by dry weather earlier. U.S. corn and soybean crops got planted at a rapid race so now the focus will be on the weekly crop development.

Monday, May 31

     Ag reports and events:

• EU weekly grain, oilseed import and export data
• Malaysia May palm oil export data
• Holiday: U.S., U.K.

Tuesday, June 1

     Ag reports and events:

• Export Inspections
• Crop Progress

• Cotton System
• Fats & Oils
• Grain Crushings
• International Cotton Advisory Committee updates world outlook for fiber market
• Purdue Agriculture Sentiment
• Atlantic hurricane season officially begins. Forecasters are expecting an active season, with as many as 20 named storms. Many areas pummeled by storms last year are still recovering from the devastation.
• Holiday: Indonesia

     Energy reports and events:

• OPEC and its allies will meet virtually for the cartel's 17th ministerial meeting
• International Energy Agency 2021 World Energy Investment report

Wednesday, June 2

     Ag reports and events:

• Broiler Hatchery

     Energy reports and events:

• Wells Fargo Energy Virtual Conference June, 1st day of 2
• Genscape weekly crude inventories in Europe’s ARA region
• API weekly report on U.S. oil inventories, supply and demand (delayed from Tuesday due to U.S. holiday)

Thursday, June 3

     Ag reports and events:

• FAO World Food Price Index
• Port of Rouen data on French grain exports
• Holiday: Brazil, Thailand
   

     Energy reports and events:

• EIA weekly U.S. oil inventory report
• U.S. weekly ethanol inventories
• EIA natural gas storage change
• Wells Fargo Energy Virtual Conference June, final day
• Russian weekly refinery outage data from ministry
• Insights Global weekly oil product inventories in Europe’s ARA region
   

Friday, June 4
 

     Ag reports and events:

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

     Energy reports and events:

• Baker Hughes weekly U.S. oil/gas rig counts