Congress Returns: Same Issues, Less Time for Action

Posted on 09/07/2019 9:01 PM

FY 2020 budget/spending | USMCA | Biodiesel tax extender | Disaster aid

Those outside the nation's capital ask, “Does it really make a difference now that lawmakers are returning from a six-week summer recess?” Not much is the usual response they hear. Lawmakers will focus on a few things, including (1) budget/spending for fiscal year 2020, which begins Oct. 1; (2) a possible vote on the USMCA; and (3) possibly including some tax extenders to a must-pass measure because no tax-related measure could clear on its own.

 

Lawmakers return from a lengthy summer recess amid pressure to pass bills to fund the government in fiscal 2020.

On the ag-related front, Thursday brings USDA updates on supply and demand. On the policy front, Monday should finally bring word from USDA on disaster program details, while it looks like another delay for President Donald Trump announcing a biofuel boost package after a White House meeting Friday could not get a consensus agreement (for details, see Policy Updates, link).  

Key questions regarding the coming disaster relief package include:

  • Which producers will be eligible for an additional prevent-plant (PP) payment?
  • Do producers have to farm in a disaster declared county or is it broader?
  • What will the additional PP payment be?
  • Who will deliver PP: Crop Insurance or FSA?
  • Will USDA allow any disaster aid to flow thru block grants? How many?
  • What will block grants cover in terms of lost production and region?
  • Will the disaster program honor the rule that raises the pay limit in the event that more than a certain percentage of income is derived from farming?

    Link to article answering some of the above questions.

Democrats want the Senate to vote on House-passed bills on gun-background checks. But any House-passed measure would face hurdles in the Senate and a bill would only move in that chamber if President Donald Trump signs off on any bill written by Senate leaders. Otherwise, Majority Leader Mitch McConnell is cool to pushing any gun measure.

Republicans want to get a vote on the U.S.-Mexico-Canada Agreement (USMCA), but House Democrats are not satisfied their concerns have been met. A working group appointed by House Speaker Nancy Pelosi (D-Calif.) and led by Ways and Means Chairman Richard Neal (D-Mass.) is expected to meet this month after giving the U.S. Trade Representative’s Office draft proposals to address four areas House Democrats say need to be fixed. Staff from the U.S. Trade Representative’s Office and the Ways and Means Committee worked through the August recess to overcome Democrats’ objections.

House Democrats insist there will be no action until the administration has addressed their concerns about labor rights, environmental protection, a 10-year guarantee of monopoly pricing for biologic drugs and strong measures to enforce provisions in the proposed USMCA. The working group is expected in September and possibly October to negotiate with U.S. Trade Representative Bob Lighthizer for changes to USMCA. Some Democrats, including Pelosi, have called for changes to the negotiated text itself.

Meanwhile, congressional Republicans will likely soon call on Pelosi to tell the administration to send implementing legislation for the agreement to the House, which triggers a 90-day clock for action under expedited procedures that bar amendments.

The House will consider three bills that would block oil and gas drilling in the Arctic National Wildlife Refuge, the Atlantic and Pacific Coasts and the Eastern Gulf of Mexico. But even if they pass, they face significant hurdles in the Senate.  

Biodiesel proponents are still pushing an extension to the lapsed tax incentive program. House Ways and Means Chairman Richard Neal (D-Mass.) is pushing tax and retirement legislation. Currently, there are four big bills totaling 259 pages and $260 billion in new spending and tax cuts, focusing on retirement savings (HR 1994), tax extenders (HR 3301), expansions of tax credits for the working poor and child care (HR 3300) and preventing widespread failures of union pension plans (HR 397). Some Democrats also want to revisit rules cracking down on efforts to circumvent the 2017 law’s cap on state and local tax deductions, which they say disproportionately hurt constituents in high-tax areas with a higher cost of living.

Looking for a ride. Tax legislation sponsors are looking to fiscal year 2020 spending to hitch a ride for their favored proposals. Hitching a ride on a spending bill is also the aim of Senate Finance Chairman Chuck Grassley (R-Iowa), who hopes to renew expired tax breaks, known as tax extenders. A continuing resolution is a possibility. “If there isn’t a 100% funding of government on September 30, then whatever there is” that follows could be a vehicle for tax extenders, Grassley said before the summer recess.

The $33 billion House package of tax extenders, which would renew the provisions through 2020, is paid for by ending the 2017 tax overhaul’s doubling of the estate tax exemption three years early. But that is “a nonstarter,” said Senate Finance Committee member Pat Roberts (R-Kan.).

Grassley and Finance ranking member Ron Wyden (D-Ore.) have introduced their own extender bill (S 617) which would renew lapsed provisions through 2019. But it isn’t offset and hasn’t advanced yet in that chamber because of the constitutional requirement that tax bills start in the House. Grassley and Wyden created five bipartisan Finance panel task forces to examine the more than 40 expired or expiring tax breaks. Those task forces began publishing reports in August. Grassley says the next step is to craft legislation based on the proposals received by the task forces, the areas of consensus among committee members and “continued bipartisan discussions.”

Outlook: The only measures that at least stand a chance of passage are retirement savings and tax extenders bills, which enjoy bipartisan support. But any such passage will wait until after a likely continuing resolution bill and a final budget measure gets considered late this year.

Economic updates for the week include:

Monday:
— Federal Reserve reports consumer credit data for July. At the end of June, total outstanding consumer credit topped $4.1 trillion for the first time.

Tuesday:
— National Federation of Independent Business Small Business Optimism Index for August. Economists forecast a 103.5 reading, down from July’s 104.7.
— Bureau of Labor Statistics (BLS) releases its Job Openings and Labor Turnover Summary (JOLTS) for July. Consensus estimates are that there were 7.4 million open jobs on the last business day of July, up from 7.3 million in June.

Wednesday:
— BLS releases the Producer Price Index for August. Expectations are for a 0.1% rise after a 0.2% gain in July. The core PPI, which excludes volatile food and energy, is seen increasing 0.2% after declining 0.1% in July.
— Atlanta Fed Business Inflation Expectations

Thursday:
— The initial job-less claims report is expected to show an increase to a seasonally adjusted 217,000 for the week ended Sept. 7, after rising 217,000 in the week ended Aug. 31.
— The CPI for August is likely to show a 0.1% rise, after increasing 0.3% in July. The core CPI is likely to have risen 0.2% in August.
— Treasury Department releases its monthly budget statement for August. Consensus estimates are for a $161 billion deficit, an increase from July’s shortfall of $120 billion. The Congressional Budget Office recently projected a $960 billion deficit for fiscal 2019, which ends in September. That would be the largest since 2012.
— European Central Bank (ECB) announces its monetary-policy decision. The market expects the ECB to cut its deposit rate from the current negative 0.4%. Futures markets predict a 50% chance of a 10-basis-point reduction, to negative 0.5%, and a 50% chance of a 20-bps cut, to negative 0.6%.

Friday:
— Census Bureau reports retail sales for August. Economists forecast a 0.1% gain, after a 0.7% jump in July — the largest rise since March.
— University of Michigan reports its Consumer Sentiment Index for September. Expectations are for a rebound to a 91 reading from August’s 89.8 figure. The August data was the weakest since late 2016.
— Import & Export Prices
— Business Inventories

Key U.S. and international agriculture and energy-related reports and events on tap:

Monday, Sept. 9

Ag reports and events:

  • Export Inspections
  • Crop Progress
  • Holiday: Malaysia, Pakistan
  • Platts Miami Sugar Conference, day 1
  • EU weekly grain, oilseed import and export data
  • China soybean import data for August (released Sunday)

Energy reports and events:

  • World Energy Council in Abu Dhabi (Sept. 9-12)

Tuesday, Sept. 10

Ag reports and events:

  • Cash Rents: County
  • Platts Miami Sugar Conference, day 2
  • Holiday: India, Pakistan, Bangladesh
  • Brazil crop agency Conab’s 12th report on grain crop
  • Unica’s bi-weekly Brazil Center-South sugar output data
  • ABARES Crop Report
  • Malaysia’s Sept 1-10 palm exports data
  • Malaysian Palm Oil Board data on August palm oil stocks, exports, production
  • Japan milling wheat tender
  • French agriculture ministry grain output estimates for 2019

Energy reports and events:

  • API weekly U.S. oil inventory report
  • EIA Short Term Energy Outlook
  • Peters & Co. energy conference in Toronto (Sept. 10-12)

Wednesday, Sept. 11

Ag reports and events:

  • Broiler Hatchery
  • Potatoes
  • Dalian commodity exchange international corn conference
  • FranceAgrimer crop estimates and press conference

Energy reports and events:

  • U.S. weekly ethanol inventories
  • EIA weekly U.S. oil inventory report
  • OPEC monthly report with estimates of world demand and production
  • OPEC+ Joint Technical Committee meets in Abu Dhabi

Thursday, Sept. 12

Ag reports and events:

  • Weekly Export Sales
  • WASDE
  • Meat Price Spreads
  • Crop Production
  • Cotton Ginnings
  • Cotton: World Markets and Trade
  • Grains: World Markets and Trade
  • Oilseeds: World Markets and Trade
  • World Agricultural Production
  • China agriculture outlook committee monthly forecast on supply/demand of soybean, corn, cotton, sugar
  • Port of Rouen data on French grain exports
  • Japan milling wheat tender result

Energy reports and events:

  • EIA natural gas storage change
  • IEA monthly report including estimates of world demand and OPEC output
  • Morgan Stanley Power & Utility Summit in London

Friday, Sept. 13

Ag reports and events:

  • CFTC weekly commitments of traders report on various U.S. futures and options contracts.
  • Peanut Prices
  • Feed Grains Database
  • Dairy Data
  • Wheat data
  • Raisins: World Markets and Trade
  • Peanut Stocks and Processing
  • Holiday: China
  • FranceAgriMer weekly crop conditions

Energy reports and events:

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

Other reports and events this week include:

Monday, Sept. 9

  • Congress. House and Senate return from their August congressional break.
  • SEC Chairman Jay Clayton speaks at Economic Club of New York luncheon.
  • President Donald Trump presents the Medal of Valor and Heroic Commendations at the White House East Room. He then travels to North Carolina where he will host a "Keep America Great" campaign rally. in Fayetteville.
  • NASDA annual meeting. National Association of State Departments of Agriculture (NASDA) will hold their annual meeting in New Mexico, with remarks from USDA Secretary Sonny Perdue, FDA Deputy Commissioner Frank Yiannas and others.
  • Rural health care. Health and Human Services Department’s Health Resources and Services Administration meeting of the National Advisory Committee on Rural Health and Human Services on current delivery of health care and human services in rural areas, Sept. 9-11.
  • CFTC. Commodity Futures Trading Commission (CFTC) meeting by teleconference of the Market Risk Advisory Committee. The meeting includes an update from the Interest Rate Benchmark Reform Subcommittee (Subcommittee) and vote on a recommendation of the Subcommittee; and to discuss other issues involving the transition from the London Inter-bank Offered Rate to risk-free reference rates, including central counterparty adjustments to discounting/price alignment interest and the clearing treatment for certain physically settled swaptions.
  • Agricultural outlook. Organization for Economic Co-Operation and Development (OECD) presentation of a report titled "Agricultural Policy Monitoring and Evaluation 2019" and a book titled "OECD-FAO (Food and Agriculture Organization) Agricultural Outlook 2019-2028."
  • NFU flyin. National Farmers Union members from across the country will gather in Washington, DC, for their 2019 Fall Legislative Fly-In, including meetings with USDA officials and visits with lawmakers on the Hill, runs through Sept. 11.

Tuesday, Sept. 10

  • President Trump hosts the emir of Kuwait.
  • A North Carolina congressional district holds first nationally significant special election of the 2020 campaign. Republican Dan Bishop, a state senator, and Democrat Dan McCready, a solar-energy businessman, are competing in the election after the original contest last November in the state’s 9th district was voided because of evidence of ballot fraud. A special election in another N.C. congressional district will determine who will replace the late Walter Jones, who died in February.
  • Global terror threats. House Homeland Security Committee hearing on "Global Terrorism: Threats to the Homeland, Part I."
  • Clean energy. House Small Business Committee hearing on "Growing the Clean Energy Economy."
  • Amazon preservation. House Foreign Affairs Western Hemisphere, Civilian Security and Trade Subcommittee hearing on "Preserving the Amazon: A Shared Moral Imperative."
  • Climate change and manufacturing. House Select Climate Crisis Committee hearing on "Solving the Climate Crisis: Manufacturing Jobs for America's Workers."
  • PFAS. House Reform and Oversight Environment Subcommittee hearing on "The Devil They Knew: PFAS (Perfluorooctanoic acid) Contamination and the Need for Corporate Accountability, Part III.”
  • Housing finance. Senate Banking, Housing and Urban Affairs Committee hearing on "Housing Finance Reform: Next Steps." HUD Secretary Ben Carson to testify.
  • FY 2020 appropriations: Labor, HHS, Education. Senate Appropriations Labor, Health and Human Services, Education and Related Agencies Subcommittee markup of legislation making appropriations for the Department of Labor, Department of Health and Human Services, Department of Education, and Related Agencies for Fiscal Year 2020.
  • FY 2020 appropriations: Defense. Senate Appropriations Defense Subcommittee markup of legislation making appropriations for the Defense Department for Fiscal Year 2020.
  • Securing Internet architecture. House Armed Services Committee Intelligence and Emerging Threats and Capabilities Subcommittee and House Oversight and Reform Committee National Security Subcommittee joint hearing on "Securing the Nation's Internet Architecture."
  • Clean energy. Politico discussion on "Reinventing American Energy: Clean Energy's Future in Congress."
  • U.S.-Mexico. Business Council for International Understanding (BCIU) briefing with U.S. Ambassador to Mexico Christopher Landau.
  • Combatting recession. Brookings Institution discussion on "Law and macroeconomics: Using regulations to combat recessions."
  • Trump trade policy. Johns Hopkins University Paul H. Nitze School of Advanced International Studies (SAIS) lecture on "Is Trump's Trade Policy Historically Unprecedented?"

Wednesday, Sept. 11

  • American roads. House Transportation and Infrastructure Highways and Transit Subcommittee hearing on "Pricing and Technology Strategies to Address Congestion on and Financing of America's Roads."
  • Broadband. House Energy & Commerce Communications and Technology Subcommittee hearing on "Legislating to Connect America: Improving the Nation's Broadband Maps."
  • Climate change & macroeconomy. House Financial Services National Security, International Development, and Monetary Policy on "Examining the Macroeconomic Impacts of a Changing Climate."
  • Infrastructure & energy legislation. Senate Energy & Natural Resources Energy Subcommittee hearing on (S 607) the "Timely Review of Infrastructure Act"; (S 1739) the "Department of Energy National Labs Jobs ACCESS Act"; (S 1821) the "Marine Energy Research and Development Act"; (S2094) the "Enhancing State Energy Security Planning and Emergency Preparedness Act"; (S 2095) the "Enhancing Grid Security Through Public-Private Partnerships Act"; (S 2137) the "Energy Savings and Industrial Competitiveness Act"; (S 2300) the "Clean Industrial Technology Act"; (S 2368) the "Nuclear Energy Renewal Act"; and (S 2393) the "Clean Energy Jobs Act."
  • Europe. Commission on Security and Cooperation in Europe (CSCE) holds a hearing on "The State of Diversity and Inclusion in Europe: Race, Rights and Politics."
  • U.S.-China relations. U.S. Institute of Peace (USIP) discussion on "Forty Years On: What's Next for U.S.-China Relations?"

Thursday, Sept. 12

  • Democratic presidential candidate debate will be held in Houston, and will be broadcast on ABC and Univision. The moderators will be George Stephanopoulos, David Muir, Linsey Davis and Jorge Ramos. Only 10 candidates made the cut, meaning they will all fit on one stage under rules set by the DNC.
  • Financial services threats. House Financial Services Task Force on Artificial Intelligence Subcommittee hearing on "The Future of Identity in Financial Services: Threats, Challenges, and Opportunities."
  • FY 2020 appropriations. Senate Appropriations Committee markup of FY 2020 appropriations for the Department of Defense; Energy and Water Development; Department of State, Foreign Operations, and Related Programs; Department of Labor, Department of Health and Human Services, Department of Education, and Related Agencies.
  • Farm Credit Administration meeting of the board. Agenda includes: Approval of Minutes from August 8, 2019; Quarterly Report on Economic Conditions and FCS Conditions; and Office of Examination Quarterly Report.
  • International fruit & vegetable regulations. U.S. Codex office meeting to discuss agenda items and draft U.S. positions to be discussed at the 21st Session of the Codex Committee on Fresh Fruits and Vegetables (CCFFV) of the Codex Alimentarius Commission, in Monterrey, Nuevo Leon, Mexico, Oct. 7-11, 2019.
  • Pork issues. National Pork Producers Council (NPPC) media briefing on "U.S. pork's priority public policy positions."
  • Climate change. Senate Democrats' Special Committee on the Climate Crisis hearing on "The Fight to Save Winter: Pro Athletes for Climate Action," focusing on how climate change impacts winter sports and outdoor recreation.
  • Food security. Food Tank briefing on "Food Security is National Security."
  • Trade policy & economics. National Economists Club (NEC) holds a luncheon discussion on "Trade Policy for International Economics."

Friday, Sept. 13

  • Census. Bureau of the Census meeting of the Census Scientific Advisory Committee to address policy, research, and technical issues relating to a full range of Census Bureau programs and activities, including communications, decennial, demographic, economic, field operations, geographic, information technology, and statistics, Sept. 12-13.
  • Exchange rates. Center for Strategic and International Studies (CSIS) discussion on "Global Imbalances: The Role of Exchange Rates and Other Policies in External Adjustments."

 

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