AP: Gov’t on Track to Max Out $31.4 Trillion Borrowing Authority This Month, But…

What if we don’t get a farm bill in 2023?

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January 11, 2023 05:30 AM

What if we don’t get a farm bill in 2023?

In Today’s Digital Newspaper

An abbreviated report today as I am heading out for several speeches.

What if we don’t get a farm bill in 2023? That is the title of a short piece put out by my favorite university economists, Dr. Joe Outlaw and Dr. Bart Fischer. I have mentioned their work on AgriTalk and my podcast, Signal to Noise, and have received several inquiries about it. Here is a link to the article. “It may come as a surprise to many of our readers,” the two economists wrote, “that only about 5% of the [farm bill] funding is actually facing the threat of expiration (on Sept. 30, 2023).”

In a surprise development, the federal gov’t is on track to max out on its $31.4 trillion borrowing authority as soon as this month. That begins what will be one of the major battles for the new Congress. The Treasury Department projects when the U.S. gov’t won’t be able to borrow any more money to fund its operations. At that point, Treasury officials will deploy “extraordinary measures” to help stave off the debt-limit deadline — that is why AP says (link) the debt limit won’t be hit until the summer. Link to Treasury statement about those extraordinary measures from 2021. Link to CRS report.

World Bank sharply lowered its global growth projection. The forecast for this year is 1.7%, down from an estimate of 3% growth in June, marking the third-weakest pace in nearly three decades — behind the 2009 and 2020 downturns — and only narrowly keeps the global economy out of a recession. The bank noted high inflation, rising interest rates, lower investment, Russia’s invasion of Ukraine and China’s pandemic-related disruptions and real-estate sector stress as threats to growth worldwide.

World Bank forecasts U.S. gross domestic product in 2023 will increase 0.5% from the prior year, and expects no growth for the Eurozone. The bank predicts China’s GDP will increase 4.3% in 2023 from the prior year, an uptick from an estimate of 2.7% growth last year. Emerging market and developing economies are projected to expand 3.4%, a steady rate of growth from 2022’s expansion. Russian GDP is forecast to contract 3.3% after falling 3.5% in 2022, as sanctions continue to weigh on spending and investment, the bank said.

North American Leaders’ Summit announced commitments to build the semiconductor industry in the region, hit their climate goals and tackle the flow of fentanyl into the U.S. President Joe Biden met earlier this week in Mexico City with Mexico President Andrés Manuel López Obrador and Canadian Prime Minister Justin Trudeau. They agreed to organize a semiconductor forum with industry representatives and gov’t officials in early 2023 and coordinate on semiconductor supply chain needs and investments. Semiconductor companies building new manufacturing facilities in the U.S. would like to put parts of their supply chain in Mexico. The countries also committed to reducing methane emissions from the solid waste and wastewater sector by at least 15% by 2030 compared with 2020 levels, and to develop a proposal to cut food loss and waste in half by 2030. They will also create a plan for standards and installation of electric vehicle chargers along their international borders. Mexican officials are in consultations with the U.S. to avoid a U.S.-Mexico-Canada Agreement (USMCA) dispute panel over Mexican energy policy. The U.S. Trade Representative’s office says the policy puts billions of dollars in U.S. investments at risk. Canada has also joined in the complaint. Canada also has concerns over the implementation of an electric-vehicle provision in the Inflation Reduction Act signed by Biden last year. Biden said Trudeau has “always been there” when he reached out. He also said he intends to travel to Canada in March.

López Obrador thanked Biden for not building “even one meter of wall,” something the Associated Press said (link) was “a not so subtle dig at Biden’s Republican predecessor, Donald Trump. The warmth during their joint press conference stood in stark contrast to the more brusque exchange a day earlier.” Still, López Obrador prodded Biden to “insist” Congress regularize undocumented Mexican migrants who work in industries where American employers are struggling mightily to find enough workers. López Obrador challenged Biden to improve life across the region, telling him that “you hold the key in your hand… This is the moment for us to determine to do away with this abandonment, this disdain, and this forgetfulness for Latin America and the Caribbean,” López Obrador said.

Vilsack’s Phase 2 details laid an egg with many in the ag sector. Says one source: “Phase I of the Emergency Relief Program (ERP) built off crop insurance. Phase 2 is not only a disaster in and of itself, but it does not build off crop insurance. The industry needs to unite against the Phase 2 approach and in support of Phase 1.” As noted Tuesday, Phase I was highly successful and it worked well. Phase 2 has tons of problems. Comparing schedule F in relevant years to past years doesn’t reflect losses. A farmer may have had to sell land or livestock when they didn’t want to. They may have sold a previous year’s crop in the year in question. These and other things skew the schedule F. There is also the issue of forcing farmers to share schedule F info with local FSA offices.

Fed Chair Powell: Fed won’t stray into climate policy. The Fed must avoid straying into political issues that are not directly related to its economic-management objectives, such as climate change, to protect its ability to bring down inflation without interference from elected officials, Fed Chair Jerome Powell said. Bringing inflation down when it “is high can require measures that are not popular in the short term as we raise interest rates to slow the economy,” Powell said. That made it all the more important, he added, for the central bank to “‘stick to our knitting’ and not wander off” into addressing issues that aren’t directly linked to its mandate to keep inflation low and to support a strong job market. “We are not, and will not be, a ‘climate policy maker,’” Powell said.

President Joe Biden asked Treasury Secretary Janet Yellen, 76, to stay in her post, and she agreed, a White House official familiar with the matter said, according to Bloomberg (link). Biden reportedly made the request in mid-December and is preparing for turnover in his Cabinet. The development ensures stability at the Treasury ahead of a fight in Congress over raising the debt ceiling and a looming threat of a recession as the Federal Reserve raises interest rates to ease inflation. It also gives Yellen more time to see through some of her key priorities, including a revamp of the Internal Revenue Service, reforms at the World Bank and adding pressure on Russia over its Ukraine war via sanctions and the oil price cap. She is scheduled to attend this year’s first Group of 20 finance ministers meeting next month in India, after a visit to Africa later this month.

Ukrainian troops will travel to Oklahoma for training on the Patriot missile system, an advanced ground-based air defense system. The drills will take several months but the U.S.-made system will ultimately allow Ukrainian troops to blunt Russia’s fearsome missile and drone assault on civilians. The U.S. will train 90 to 100 Ukrainians on the system over the course of the next several months, according to Pentagon spokesperson Brig. Gen. Patrick Ryder. The training will take place at Fort Sill, Okla., where the primary training school for U.S. and allied forces on Patriot is located, he said. The course will include classroom instruction, time in a simulator and exposure to the system itself.

Russia posted a $47 billion budget deficit in 2022, the second highest since the breakup of the Soviet Union. Published Wednesday by the Centre for Research on Energy and Clean Air (CREA), an independent Finnish think tank, a report found the first month of the European Union’s ban on seaborne imports of Russian crude and the G7′s price cap had cost Moscow an estimated 160 million euros ($171.8 million) per day. CREA’s report said the Western measures were largely responsible for a 17% fall in Russia’s earnings from fossil fuel exports in the final month of 2022. It means that Russia — one of the world’s top oil producers and exporters — saw revenues from fossil fuel exports slump to their lowest level since Putin launched his full-scale invasion of Ukraine in late February. Russia could face 2 new price caps for refined petroleum products as another EU embargo looms, according to Bloomberg (link).

Big bipartisan House vote creates the new China Select Committee. The vote to establish the Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party (CCP) was 365-65, clearly showing China is perhaps the biggest bipartisan issue in the House if not all of Congress. 146 Democrats voted with all Republicans to establish the CCP select committee. Rep. Mike Gallagher (R-Wis.) will chair the committee. China watcher Bill Bishop says, “The biggest China-related question for the new House is when will Speaker Kevin McCarthy (R-Calif.) travel to Taiwan, as he has promised, and how might the PRC react if/when he does?”

Asian stocks enter bull market as investors bet on China. Investors have been cheered by China’s pivot away from its zero-Covid policy, the ending of its crackdown on tech companies and Beijing’s renewed commitment to growing the world’s second biggest economy. Meanwhile, European shares were slightly up today, with Germany’s DAX 40 almost touching the 14,900 level for the first time since end-March, helped by optimism over China reopening and as investors looked ahead to a key U.S. inflation report due Thursday that could provide clues on the Federal Reserve’s next move.

The U.S. and allies released about 314 barrels of oil from strategic reserves, more than making up for about 122 million barrels of lost Russian production, Javier Blas writes (link). That almost 3-to-1 ratio shows the West was fighting both Moscow and the OPEC+ cartel.

California Rep. Katie Porter (D) enters Senate race. Porter, 42, a favorite of the progressive wing of the Democratic Party, said she would run for Senate in 2024, the first big name to enter what is expected to be a contested race for the seat currently held by Democratic Sen. Dianne Feinstein, 89, who has not said if she will seek another term. She narrowly won re-election in 2022. Because California is seen as a solidly Democratic state, the primary is the race to watch. Under state election law, the top two vote-getters in the race regardless of party will advance to the November 2024 general election. Other lawmakers who have expressed interest for the seat include Reps. Adam Schiff and Ro Khanna.

$165 billion+… The damage costs from 2022’s extreme weather events in the U.S. That’s the third-most costly year since 1980, according to the National Oceanic and Atmospheric Administration, which also calculated that weather and climate disasters last year killed at least 474 people.

And now this… A new scientific study out of Arizona State University suggests that just by adopting Monty Python’s silly walk, people can nail their daily recommended activity targets. The leg kicking action of the John Cleese character Mr. Teabag can burn as much energy as jogging. The sillier the walk, the greater the burn. Link for more.

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