The Week Ahead: Senate Returns with Focus on Disaster Aid, Immigration Issues and FY 2018 Budget

Posted on 12/31/2017 4:14 PM

Iran, Russia, China issues cast geopolitical uncertainties as new year unfolds  



The Senate returns Jan. 3, but House members are taking an extended holiday break until Jan. 8.

Lingering issues confront Congress and the White House — Link to report on 2018 policy and market issues.

Initial focus will be whether or not bipartisan solutions can be found on immigration issues, disaster aid and a fiscal year 2018 budget.

U.S. government funding runs through Jan. 19. Discussions this week will be on another extension or an omnibus, as well as what issues may ride with that approach.

DACA confab. On Wednesday, senior congressional leaders from both parties will meet at the Capitol with White House budget (OMB) director Mick Mulvaney and legislative-affairs director Marc Short to renew talks on the Deferred Action for Childhood Arrivals (DACA) program, which expires on March 5. In September, President Trump decided to sunset the program — started under President Barack Obama — that protects 700,000 young immigrants, often called “dreamers,” from deportation.

The disaster bill has already been approved by the House, including language that would authorize safety net language for cotton and dairy producers. The House version contains $81 billion in disaster assistance and would make cotton eligible for the Price Loss Coverage and the Ag Risk Coverage programs, and lift a cap on the Livestock Gross Margin (LGM) insurance program to improve the safety net for dairy producers. Sen. Debbie Stabenow (D-Mich.), ranking Democrat on the Senate Agriculture Committee, said the House bill’s farm policy provisions did not go far enough. raised objections to the farm bill provisions in the House’s supplemental package. Stabenow also she objected to expanding a program for preventing duplicative benefits in the Supplemental Nutrition Assistance Program (SNAP/food stamps), which would save an estimated $579 million.

On the trade policy front, U.S. and South Korean negotiators will meet Jan. 5 in Washington in a prelude to official renegotiation talks on the 2012 Korea-U.S. (KORUS) trade agreement. The U.S. Trade Representative's office said the meeting will focus on potential amendments and modifications to the trade pact.

The key economic event comes Friday with the jobs report. As of November, the unemployment rate was holding at 4.1%, its lowest level in 17 years. Job gains were solid, though pay raises remained tepid. Economists are expecting no change in the jobless rate and 180,000 new nonfarm jobs in December, with average hourly earnings set to rise 0.3% on the month. The list of economic reports this week:

Tuesday, Jan. 2

  • PMI Manufacturing Index
  • ISM Manufacturing Report

Wednesday, Jan. 3

  • Construction Spending
  • FOMC Minutes
  • Car Sales

Thursday, Jan. 4

  • Challenger Job-Cut Report
  • PMI Service Index
  • ISM Non-Mfg. Report

Friday, Jan. 5

  • Employment Situation
  • International Trade
  • Factory Orders

The Federal Reserve on Wednesday releases minutes from its Dec. 12-13 policy meeting, when officials voted to raise short-term interest rates for the third time in 2017. Two voting members of the rate-setting Federal Open Market Committee opposed the move, and the minutes may show if other participants shared their concern about persistently soft inflation. The minutes also could shed light on how U.S. central bank officials saw the Republican tax overhaul affecting the economy in 2018 and beyond.

Fed speakers. St. Louis Fed President James Bullard on Thursday gives the keynote address at a seminar commemorating the contributions of Allan Meltzer to academics and public policy. On Friday, Philadelphia Fed president gives a speech on the economy and monetary policy at the American Economic Association’s annual meeting.

USDA will release its Weekly Export Sales Report on Friday rather than the usual Thursday, due to Monday’s New Year holiday. USDA reports on tap this week include:

Tuesday, Jan. 2:

  • Export Inspections
  • Cotton System
  • Fats & Oils
  • Grain Crushings

Wednesday, Jan. 3

  • State Stories

Thursday, Jan. 4

  • Broiler Hatchery
  • Dairy Products

Friday, Jan. 5

  • Weekly Export Sales
  • U.S. Bioenergy Statistics
  • Latest U.S. Agricultural Trade Data
  • Peanut Prices

On the geopolitical front, several market- and policy-important topics are in focus:

  • China/North Korea/Trade policy: South Korea seized a second ship suspected of providing oil to North Korea, a topic already the focus of Tweets from President Trump, who during a recent interview with a New York Times reporter for the first time explicitly that he had gone soft on trade with China in the hopes that Beijing would help put pressure on North Korea to stop its nuclear weapons program.
  • Russia: Former Trump campaign foreign policy adviser George, according to a New York Times report, "stayed influential throughout the campaign." Per the NYT, the reason behind the FBI opening an investigation into Trump's Russia ties was what Papadopoulos told an Australian diplomat about Russia's dirt on Hillary Clinton. Meanwhile, Reuters reported that "Russian tankers have supplied fuel to North Korea on at least three occasions in recent months by transferring cargoes at sea, ... providing an economic lifeline to the secretive Communist state.”
  • Iran: President Trump early Sunday warned Iran that the U.S. is watching for human rights violations as anti-government protests flare across the country.

Key reports and events on tap this week include:

Tuesday, Jan. 2:

  • Market closures: Markets are closed for a second day in Japan, Russia, and Switzerland in observance of New Year’s Day.
  • Sen. Al Franken’s (D-Minn.) last day as a senator.
  • Canada takes over the G7 presidency. Gender equality and women’s empowerment, climate change, and economic growth will be among the themes guiding the presidency, said Prime Minister Justin Trudeau.

Wednesday, Jan. 3:

  • Congressional leaders of both parties meet with White House Chief of Staff John Kelly to discuss the spending bill, immigration and other matters.
  • Tina Smith, Sen. Franken’s replacement appointed by Minn. Democratic Gov. Mark Dayton, is sworn in.
  • Democrat Doug Jones, winner of Alabama special election, sworn into the Senate. Senate balance of power 51-49 for Republicans; Republican Vice President Mike Pence breaks ties.
  • Federal Open Market Committee releases the minutes from its December policy meeting.

Thursday, Jan. 4:

  • Budget deficits. Marc Goldwein, senior vice president for Committee for a Responsible Federal Budget, speaks at National Economists Club event on "The Return of Trillion Dollar Deficits";
  • U.S.-China. Heritage Foundation holds event on "The Power Clash Between the U.S. and China in the Pacific.”

Friday, Jan. 5:

  • KORUS. U.S., South Korea trade officials launch first negotiations to amend their bilateral agreement; first round of talks in Washington.

Saturday and Sunday, Jan. 6-7:

  • President Trump to meet with House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell at Camp David to line up legislative priorities for 2018, ahead of the November midterm elections.

 

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