Surprised? Congress Again Woefully Tardy in Getting Spending Bill Completed

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Are the Russians coming? | Another House farm bill hearing | More Covid aid

 


Washington Focus


 

Both the House and Senate are in but as usual, the pace of important legislation is slow at best. This includes the inability of both chambers to ink a spending agreement for a fiscal year (FY 2022) that started Oct. 1. The latest continuing resolution (CR) runs through Feb. 18 and the tardy appropriators will very likely need another stopgap spending bill to make decisions that most should have been made months ago.

     Lawmakers will need to do another CR because House members want to take off next week! Rep. Jim Clyburn (D-S.C.), the majority whip, signaled lawmakers were prepared to fall back on a CR to keep the government funded. “We are hopeful that something will come forward [this] week in the form of an omnibus. But if not, we will respond appropriately when we get to that point,” he said Friday.

     Republicans presented a formal offer to Democrats last Wednesday for FY 2022 spending.

     Meanwhile, the White House is expected to soon ask Congress for more Covid-related spending, and that could muck up the spending process further. Jeff Zients, the White House coronavirus response coordinator, said that while the U.S. has enough money to fund immediate needs, it wants to stay ahead of the virus. “We are looking at a future where we will likely need funding for treatments and pills; we’ll need funding to continue to expand testing,” he said, as well as to “continue to lead that effort to vaccinate the world.” A group of Democrats has called for $17 billion for global vaccination and treatments to be included in the fiscal 2022 spending bill.

     Bottom line: The House could take up a three-week stopgap funding extension through March 11 as soon as Tuesday. (Fiscal Year 2023 starts Oct. 1… just saying.) Regarding the ag sector, authority for USDA’s livestock mandating reporting (LMR) system would expire Feb. 18 if not extended by a new CR, which it will contain an LMR extension. Ditto for an increase in fruit and vegetable allotments for participants in the Women, Infants and Children (WIC) nutrition assistance program.

No controversial votes on nominees or sensitive legislation will occur in the Senate until after Sen. Ben Ray Luján (D-N.M.) recovers after suffering a stroke. That could take until the middle if not the end of March. This threatens to impede the agenda of Democrats, who control the Senate by the slimmest of margins.

     President Biden has vowed that he will name a Supreme Court successor for Justice Stephen G. Breyer by the end of February. Although Luján is not a member of the Senate Judiciary Committee, which considers Supreme Court nominations before a full vote in the Senate, a prolonged absence could still derail the nomination process if Republicans are united in opposition to the nominee. However, several Republican senators will likely vote for the eventual nominee provided no major negative developments surface.

Manchin again dubs BBB dead but offers a key requirement for a revised approach. Centrist Sen. Joe Manchin (D-W.Va.) again signaled that Build Back Better (BBB) is dead. “As it has been presented over, what, the last seven, eight, nine months, that bill no longer exists,” he said on CNN’s State of the Union with Jake Tapper. But Manchin laid down a demand for what he’ll need to be willing to pass certain elements of BBB in a smaller package: Regular order. That means several months of hearings and markups.  

     Manchin appeared on the program with Sen. Lisa Murkowski (R-Alaska). They are friends and they talked about how they got the bipartisan infrastructure framework (BIF) deal passed, and their ongoing work to overhaul the Electoral Count Act — which Manchin said will “absolutely” pass. (Manchin has endorsed Murkowski for re-election, and Murkowski said she will back Manchin if he runs again in 2024.)

Another farm bill hearing takes place Tuesday. A House Ag panel subcommittee will hold a hearing on farm policy with USDA Undersecretary for Farm Production and Conservation Robert Bonnie, a chief architect of USDA’s climate-smart efforts. Given what unfolded in the initial farm bill session on reviewing conservation programs, Bonnie’s appearance will likely be as contentious, especially on the topic of inserting more climate-related activities into U.S. farm policy.

     In a related development, USDA Secretary Tom Vilsack is giving a speech on Monday that will be an update on USDA’s plan to support climate-smart commodities. Recall that Vilsack is tapping the Commodity Credit Corporation (CCC) for $1 billion to fund projects aimed at measuring the impact of climate-related agriculture practices on greenhouse gas emissions and making the commodities marketable as low-carbon. Vilsack and some farm-state lawmakers keep saying carbon mitigation could be the next “revenue stream” for agriculture. That is why some say the farm sector is supportive of a revised BBB (whatever it is called) that is expected to have at least $400 billion in carbon-mitigation funding, with billions directed at agriculture conservation program funding.

Nellie Liang, the Treasury Department's undersecretary for domestic finance, will go before the House Financial Services Committee on Tuesday morning to discuss digital assets and the future of finance. It will include a discussion of the President's Working Group on Financial Markets' report on stablecoins, a document released in November that asked Congress to create new rules for stablecoins. The report specifically cited risks related to bank runs, consumer abuses and payment issues — all issues cited in the House panel's memorandum for the hearing.

The Senate Agriculture Committee will hold a hearing on digital assets on Wednesday morning. The panel oversees the Commodity Futures Trading Commission (CFTC), but it is unclear to what degree the agency will have jurisdiction overregulating digital assets. CFTC Chair Rostin Behnam will testify at the hearing, after Sens. Debbie Stabenow (D-Mich.) and John Boozman (R-Ark.) — the panel's chair and ranking member, respectively — requested information earlier this year from the agency.

Fueling the Climate Crisis: Examining Big Oil's Climate Pledges is the title of a Tuesday morning hearing before the House Oversight and Reform Committee. The committee invited the board members of Exxon Mobil Corp., Chevron Corp., BP PLC and Shell Oil to attend the hearing and speak to whether their net-zero plans are consistent with the goals of the Paris Climate Agreement. But the representatives declined to testify, though two of the companies said their board members could possibly appear later. The panel scheduled a new hearing for March 8 to give the board members more time to prepare to testify and will instead have climate experts — Tracey Lewis of Public Citizen, Dr. Michael E. Mann of Penn State University and Mark van Baal of Follow This — analyze the plans of the oil majors during this week's meeting.

Nominations: The Senate Homeland Security and Governmental Affairs Committee will vote Wednesday Feb. 9 on the nominations of Shalanda D. Young to be director of the Office of Management and Budget and Nani A. Coloretti to be the agency's deputy director.

Monday is the deadline for public comment on the Biden administration’s plan to return to the pre-2015 definition of waters of the United States (WOTUS) regarding those areas regulated under the Clean Water Act. The Supreme Court is considering a lawsuit over the government’s CWA jurisdiction.

     Some 50 Republicans submitted a letter appealing to the EPA and Army Corps of Engineers to drop the plan to rewrite the WOTUS rule. “Proceeding with the rulemaking at this time, despite the pending litigation and potentially influential ruling, will only deepen uncertainty within the regulated community,” the senators’ letter notes (link to letter).

Other ag-related events on tap this week include:

  • Tuesday, Feb. 8: National Council of Farmer Cooperatives annual meeting, through Thursday, Scottsdale, Ariz.
  • Wednesday, Feb. 9: Senate Energy and Natural Resources subcommittee hearing on implementation of the Great American Outdoors Act.
  • Feb. 9-11: Crop Insurance and Reinsurance Bureau (CIRB) annual meeting, Indian Wells, California.
  • Friday, Feb. 11: National Cotton Council annual meeting, though Sunday, in Houston.

On the geopolitical front, Russian President Vladimir Putin has now assembled 70% of the military personnel and weapons on Ukraine's borders that he would need for a full-scale invasion of the country, according to two U.S. officials familiar with the latest estimates. The officials, who discussed internal assessments of the Russian buildup, sketched out a series of indicators suggesting Putin intends an invasion in coming weeks, although the size and scale are unclear. They stressed that a diplomatic solution appears to remain possible. As of Friday, the officials said, the Russian army has put in place near Ukraine a total of 83 “battalion tactical groups,” each of which is roughly equivalent in size to an American battalion of between 750 and 1,000 soldiers. That is an increase from 60 battalion tactical groups in position just two weeks ago, they said. An additional 14 battalion tactical groups are on their way to the border area from other parts of Russia, the officials said. Two officials said the U.S. assesses that Russia would want between 110 and 130 battalion tactical groups for use in a full-scale invasion, but Putin could decide on a more limited incursion, according to the Associated Press.

     "Russia is close to completing preparations for what appears to be a large-scale invasion of Ukraine that could leave up to 50,000 civilians killed or wounded," the Washington Post reports (link) from U.S. intelligence. The invasion could "decapitate the government in Kyiv within two days, and launch a humanitarian crisis with up to 5 million refugees fleeing the resulting chaos."

     National security adviser Jake Sullivan on the timing of a potential Russian invasion of Ukraine, on Fox News Sunday: “We are in the window. Any day now, Russia could take military action against Ukraine, or it could be a couple of weeks from now, or Russia could choose to take the diplomatic path instead.” On negotiations with Russia, on NBC’s Meet the Press, Sullivan said: “We're prepared to sit down with the Russians, alongside our allies in NATO and other partners in Europe, to talk about issues of mutual concern in European security. … But what we're not prepared to negotiate are the fundamental principles of security that include an open door to NATO for countries who can meet the requirements.” On the Nord Stream 2 pipeline: “If Russia invades Ukraine, one way or another, Nord Stream 2 will not move forward. And Russia understands that.” And on China’s role in the Russian tensions: “We believe that Beijing will end up owning some of the costs of a Russian invasion of Ukraine, and that they should calculate that as they consider their engagements with the Russian government in the next couple of weeks.”

     Some reports note Putin needs more time to move military units into place. Others say he has decided to wait until Feb. 20, the end of the Winter Olympics, to avoid offending China’s Xi Jinping. Or he’s simply decided to negotiate to find out what price he can command for standing down.

     “European officials tend to be more skeptical that Mr. Putin would try to take the country in a large-scale invasion,” according to a New York Times article (link). “Some believe that he would seek to take the Donbas region of eastern Ukraine, where a grinding proxy war has been underway since 2014.”

     Meanwhile, French President Emmanuel Macron will travel to Moscow to have a one-on-one meeting with Russian leader Vladimir Putin to discuss the ongoing tension at the Ukrainian border. He will also travel to Kyiv this week. Macron has spoken five times with Putin and Ukrainian President Volodymyr Zelensky since December 2021. German Chancellor Olaf Scholz is scheduled to visit the two countries the following week.
 


Economic Reports for the Week



Key economic report this week comes Thursday with a read on consumer price inflation that has the potential to rattle the markets if it is believed to reset the FOMC rate hike plan. Economists forecast a 7.3% increase in CPI, which would mark the highest rate of inflation since 1981.
 

Monday, Feb. 7

  • Federal Reserve reports consumer credit data for December. Consumer credit is expected to rise at a seasonally adjusted annual rate of 4.3%, after jumping 11% in November. After falling slightly in 2020 due to the pandemic-induced lockdowns, total consumer debt has returned to its long-term upward trend and currently stands at $4.41 trillion.   

Tuesday, Feb. 8

  • National Federation of Independent Business reports its Small Business Optimism Index for January. Consensus estimate is for a 98 reading, just below the December figure. 
  • International Trade in Goods and Services

Wednesday, Feb. 9

  • MBA Mortgage Applications
  • Wholesale Inventories (Preliminary)
  • Federal Reserve speakers: Michelle Bowman and Loretta Mester

Thursday, Feb. 10

  • Jobless Claims: Department of Labor reports initial jobless claims for the week ending on Feb. 5. After averaging a postpandemic low of just 201,200 a week in December, jobless claims have risen to 255,000 in January, in part due to the surge of Omicron cases.
  • Bureau of Labor Statistics reports the Consumer Price Index for January. Economists forecast a 7.3% year-over-year spike, after a 7% jump in November. The core CPI, which excludes volatile food and energy prices, is seen rising 5.9%, compared with 5.5% previously. Both estimates would surpass recent peaks and be the highest readings for their respective indexes since 1982.
  • Treasury Statement
  • Fed Balance Sheet
  • Money Supply  

Friday, Feb. 11

  • University of Michigan releases its Consumer Sentiment Survey for February. Consensus estimate is for a 67.5 reading, roughly even with the January figure. The January reading was the lowest for the survey since November of 2011, driven by consumers’ expectations of future inflation and rising housing costs.
     

Key USDA & international Ag & Energy Reports and Events 



Wednesday brings USDA’s monthly update on supply and demand. Statistics Canada’s stockpile data for crops such as wheat and canola and Malaysian numbers for palm oil reserves, exports and output will also be out during the week.

On the energy front, the U.S. Energy Information Administration releases its Short-Term Energy Outlook on Tuesday, while OPEC and the International Energy Agency issue their monthly market reports later in the week.
 

Monday, Feb. 7

     Ag reports and events:

  • Export Inspections
  • Amber Waves
  • Earnings: Tyson Foods
  • Holiday: New Zealand

Tuesday, Feb. 8

     Ag reports and events:

  • Statistics Canada releases wheat, durum, canola, soybeans and barley stockpile data
  • EU weekly grain, oilseed import and export data

     Energy reports and events:

  • API weekly U.S. oil inventory report
  • EIA Short-Term Energy Outlook
  • Earnings: BP, Pfizer, Sysco, DuPont, Harley-Davidson, Chipotle and Peloton

Wednesday, Feb. 9

     Ag reports and events:

  • Broiler Hatchery
  • Livestock and Meat International Trade Data
  • WASDE
  • Cotton Ginnings
  • Crop Production
  • Cotton: World Markets and Trade
  • Grain: World Markets and Trade
  • Oilseeds: World Markets and Trade
  • World Agricultural Production
  • U.S. Agricultural Trade Data Update
  • Earnings: Honda, CVS, Fox, Yum Brands, Pepsi, Disney, Uber, MGM and Mattel

     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

Thursday, Feb. 10

     Ag reports and events:

  • Weekly Export Sales
  • Feed Grains Database
  • Meat Price Spreads
  • Dairy Monthly Tables and Dairy Quarterly Data
  • Season Average Price Forecasts
  • Wheat Data
  • Malaysian Palm Oil Board’s data on palm oil reserves, output and exports
  • French agriculture ministry releases 2022 winter grain and rapeseed planting estimates
  • Brazil’s Conab report on yield, area and output of corn and soybeans
  • Brazil’s Unica releases sugar output and cane crush data (tentative)
  • IKAR grain conference in Moscow
  • Vietnam’s customs department to publish data on coffee, rice and rubber exports in January
  • Malaysia’s Feb. 1-10 palm oil exports
  • Earnings: Coca-Cola, Kellogg, Twitter, Zillow, Expedia, Affirm and Yelp

     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
  • OPEC Monthly Oil Market Report

Friday, Feb. 11

     Ag reports and events:

  • CFTC Commitments of Traders report
  • Peanut Prices
  • Cotton and Wool Outlook Tables
  • Oil Crops Outlook
  • Feed Outlook
  • Rice Outlook
  • Wheat Outlook
  • Catfish Production
  • March ICE white sugar contract expiry
  • Holiday: Japan

     Energy reports and events:

  • Baker Hughes weekly U.S. oil/gas rig counts
  • IEA monthly Oil Market Report
  • Earnings: Goodyear and Under Armour

 

 

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