House Out Until Aug. 23; Senate in Recess Through Sept. 13

Biden and Pelosi must deal with centrists and far-left Democrats

Washington Focus

Centrist House Democrats threaten to block the budget resolution vote. In a letter to House Speaker Nancy Pelosi (D-Calif.), nine centrist Democrats said they “will not consider voting” for a budget framework mapping Democrats’ ambitious fiscal plans until the House approves a separate, Senate-passed package of road, broadband and other infrastructure projects and sends it to Biden. “We simply can’t afford months of unnecessary delays and risk squandering this once-in-a-century, bipartisan infrastructure package,” the centrists wrote. The Democrats who signed the letter were Reps. Josh Gottheimer of New Jersey, Carolyn Bourdeaux of Georgia, Jim Costa of California, Jared Golden of Maine, Ed Case of Hawaii, Kurt Schrader of Oregon and Filemon Vela, Henry Cuellar and Vicente Gonzalez, all of Texas.

Pelosi has repeatedly said her chamber won’t vote on the moderate-friendly infrastructure measure — with approximately $1 trillion in new and previously planned spending — until the Senate sends the House a companion $3.5-trillion bundle of social safety net and environmental initiatives favored by the most liberal Democrats and who Progressives have applied their own pressure, with many saying they will oppose the infrastructure measure until the Senate approves the larger social and environmental bill. That measure is unlikely to be ready before autumn. Pelosi told House Democrats on a call that her strategy reflected the reality of trying to pass both pieces of legislation. “This is the consensus,” Pelosi said, according to someone familiar with her comments. “The votes in the House and Senate depend on us having both bills.”

Not much wiggle room in either chamber for the Democrats who control the House by just a few votes, giving virtually every one of the party’s 220 members tremendous leverage. And the party runs the 50-50 Senate only with Vice President Kamala Harris’ tie-breaking vote. In the House, Democrats can afford no more than three defections on legislation opposed by all Republicans, who are expected to unanimously vote against the budget resolution. If the nine Democrats who signed the letter all voted against the budget framework, they could block its passage in the House. The Congressional Progressive Caucus said this week that a survey of its 96 members showed that a majority would withhold their support for the infrastructure bill until the Senate has passed the larger budget package.

The House will return to Washington on Aug. 23 to vote on the budget blueprint and perhaps other legislation, giving President Biden, Pelosi and other leaders time to decide their next move. Asked about the speaker’s next move, a senior House Democratic aide said the party doesn’t have enough votes to pass the bipartisan infrastructure bill this month. The aide contrasted the nine moderates who sent the letter with the dozens of the most liberal Democrats who would vote against that measure unless it comes after the Senate sends the House its $3.5-trillion social and environmental bill.

White House press secretary Jen Psaki expressed confidence in the legislative pathway for the proposals, saying that just as Senate Democrats had come together to advance the two plans, “we are confident that House Democrats will do the same… Both are essential, and we are working closely with Speaker Pelosi and the leadership to get both to the president’s desk,” Psaki said Friday.

The Senate approved the $1-trillion infrastructure bill Tuesday with a bipartisan vote of 69 to 30. The chamber hours later approved the budget blueprint on a party-line 50-49 roll call, signaling the partisan pathway that the subsequent $3.5-trillion social and environmental bill faces.

Hearings and Events This Week

The House is in recess but will return the week of August 23 to consider a budget resolution. The Senate is in recess through September 13.

Economic Reports for the Week

The retail sales report on Tuesday will be watched for any major changes in the relatively solid tone of the U.S. economy. Also on Tuesday, Federal Reserve Board Chairman Jay Powell hosts a virtual town hall with educators and students.

Monday, Aug. 16

Federal Reserve Bank of New York releases its Empire State Manufacturing Survey for August. The consensus estimate is for a 26.5 reading. That compares with a record high of 43.0 in July, when the general business conditions index rose 26 points.

Tuesday, Aug. 17

Federal Reserve releases capacity utilization in the industrial sector for July. Consensus calls for a 75.7% reading, little changed from June’s 75.4% reading. Industrial production is seen rising 0.5% from June’s 0.4% seasonally adjusted increase.
National Association of Home Builders releases its NAHB/ Wells Fargo Housing Market Index for August. Economists forecast an 80 reading, the same as in July. The index is down from its all-time high of 90 set in November.
Federal Reserve Board Chairman Jay Powell will host a virtual town hall with educators and students.
Census Bureau reports retail sales data for July. Expectations are for a 0.3% seasonally adjusted month-over-month decrease, following a 0.6% rise in June. Excluding autos, spending is seen rising 0.2%, compared with a 1.3% rise in the previous month.

Wednesday, Aug. 18

MBA Mortgage Applications
Federal Open Market Committee releases the minutes from its late-July monetary-policy meeting.
Census Bureau’s new residential construction report for July is expected to show the seasonally adjusted annual rate of housing starts at 1.610 million, down from June’s 1.643 million. Housing starts hit a postpandemic peak of 1.73 million in March.

Thursday, Aug. 19

Jobless Claims
Conference Board releases its Leading Economic Index for July. The LEI is expected to increase 0.7% month over month, after gaining 0.7% in June.
Fed Balance Sheet
Money Supply

Key USDA & international Ag & Energy Reports and Events

With USDA’s Crop Production and WASDE reports released last Thursday, the focus this week will be on the Pro Farmer Crop Tour.

Monday, Aug. 16

Ag reports and events:

Export Inspections
Crop Progress
Cotton and Wool Outlook
Oil Crops Outlook
Dairy Monthly Tables and Dairy Quarterly
Feed Outlook
Rice Outlook
Wheat Outlook
Holiday: Argentina