Biden Signs First Package of FY 2024 Spending; To Unveil FY 2025 Proposals Monday

Vilsack at NFU | CPI | Midwest Council on Ag gets $2 mil. | WOTUS rule concerns | Rosendale announces retirement

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March 10, 2024 02:45 PM

Vilsack at NFU | CPI | Midwest Council on Ag gets $2 mil. | WOTUS rule concerns | Rosendale announces retirement

Washington Focus

One down and a bigger one to go sums up the latest saga regarding completing fiscal year (FY) 2024 funding measures, which should have been finished by Oct. 1 last year. Meanwhile, the Biden administration on Monday will release its proposals for FY 2025, with several hearings on the topic this week. Most of the White House proposals, especially regarding tax hikes, will go nowhere.

The Senate passed the first six-bill minibus, sending the $460 billion package to President Joe Biden’s desk where he signed it into law, averting a partial gov’t shutdown.

The Senate vote was 75-22, following votes on a handful of Republican amendments that failed on the floor. It approves full-year funding, through September, for the departments of Veterans Affairs, Agriculture, Interior, Transportation, Housing and Urban Development, Justice, Commerce and Energy.

The measure passed the House on Wednesday in a bipartisan 339-85 vote, with 207 Democrats and 132 Republicans supporting the bill.

“We’ve fully funded WIC so seven million moms and kids won’t be malnourished. We’ve built on the infrastructure law by providing billions to repair our roads and bridges and highways,” Senate Majority Leader Chuck Schumer (D-N.Y.) said ahead of the measure’s passage on Friday. “We’ll be able to hire more air traffic controllers and rail safety inspectors. And we’re taking care of our veterans with support for veteran’s homelessness, mental health, and women veterans.”

Congress now has two weeks (March 22) to fund the rest of the government (about 70%) for the remainder of the fiscal year. The second tranche includes some of the more controversial funding bills, including the Departments of Defense, Labor, Health and Human Services, Homeland Security. Completing the unfinished bills presents significant challenges, particularly due to their involvement with contentious topics like immigration. Additional obstacles include debates over lawmakers’ earmarks for district projects, issues concerning lawmaker compensation, and policy riders, notably those addressing diversity, equity, and inclusion offices.

Of note: The minibus is in line with the spending caps deal reached between former Speaker Kevin McCarthy (R-Calif.), Senate Majority Leader Chuck Schumer (D-N.Y.) and President Biden last year. House Speaker Mike Johnson (R-La.) and Schumer reaffirmed the spending deal, which sets a $1.65 trillion spending top line and includes $69 billion in adjustments that were part of a “side deal” to raise the federal debt limit in 2023. Links for Ag spending details: Link to package | Ag bill summary | Ag bill summary | Ag: Explanatory Statement | Congressionally Directed Spending.

— Midwest Council on Agriculture secures funding for new agricultural policy center. The Midwest Council on Agriculture has secured $2 million from the FY 2024 Agriculture Appropriations bill (link) to establish a Midwest Agricultural and Food Policy Center. This initiative aims to fill the void in food and agriculture policy information in the Midwest, where despite its dense agriculture, there has been a lack of coordinated efforts in the policy arena, according to its proponents.

Former U.S. House Agriculture Committee Chairman Collin Peterson (D-Minn.) spearheaded this idea to leverage the agricultural power of the Midwest, with support from Sen. John Hoeven (R-N.D.). The center will complement the work of existing institutions like the Texas A&M Agricultural and Food Policy Center (AFPC) and the Food and Agricultural Policy Research Institute at the University of Missouri (FAPRI).

Based at North Dakota State University, the center will collaborate with Land-Grant Universities across the Midwest to research and address key policy areas such as crop insurance, dairy, livestock, and biofuels. The Land-Grant Universities in Iowa, Illinois, Indiana, Kansas, Michigan, Missouri, Minnesota, Nebraska, Ohio, South Dakota and Wisconsin will be key partners in the research and policy areas where they have the most expertise. This initiative received strong backing from over 80 members of the Midwest Council on Agriculture, promising positive advancements in agricultural advocacy throughout the region.

— NPPC’s Formica raises concerns over EPA’s WOTUS rule for farmers. During a recent public hearing on the implementation of the Waters of the United States (WOTUS) rule by the Army Corps of Engineers and the U.S. Environmental Protection Agency (EPA), NPPC chief legal strategist Michael Formica expressed ongoing worries about the rule’s impact on producers.

Background. Under previous administrations, efforts were made to expand the rule’s authority, potentially subjecting farmers to permits for routine activities near water features. However, a 2023 Supreme Court ruling limited this authority to geographical features like streams and adjacent wetlands.

Despite this, Formica highlighted ongoing issues with the EPA’s rule and its implementation. He emphasized the lack of clarity and consistency, making it impractical for farmers to seek guidance on the legality of everyday activities. Additionally, he raised concerns about the EPA’s use of internal guidance not shared with the public, calling it “outrageous.”

Reports from farmers indicate that the EPA continues to assert jurisdiction over streams far from navigable waters, even those not covered under previous rules, prompting ongoing uncertainty and frustration among agricultural communities.

— GOP Rep. Matt Rosendale of Montana unexpectedly announced his retirement from politics at the end of his current term, reversing his recent decision to seek re-election. This decision comes after a series of shifts in his political plans, including initially launching a Senate campaign in February but then suspending it due to lack of support, particularly from former President Trump, and later opting to run for his House seat instead.

Rosendale’s tenure in the House, where he established himself as a staunch conservative, will come to an end with this decision. Notably, he was among the Republicans who sought to remove former Speaker Kevin McCarthy (R-Calif.) from his leadership position.

In a statement shared on social media, Rosendale cited a death threat made against him, although he did not provide specific details regarding the threat or any associated allegations. This announcement follows claims made by former Sen. Heidi Heitkamp (D-Neb.) that Rosendale withdrew from the Senate race due to rumors involving him and a 20-year-old staff member.

The sudden withdrawal of Rosendale from the race leaves the Montana GOP without a clear candidate for the upcoming election, signaling a significant development in the state’s political landscape. We checked in with David Wasserman of the Cook Political Report with Amy Walter. He told us: “Elsie Arntzen, Troy Downing and Denny Rehberg are names to watch. It’s a safe GOP district.”

— Update on close Senate race in Arizona. A USA Today article (link) focused on the Senate race in Arizona, which has evolved into a showdown primarily between Democratic Rep. Ruben Gallego and Republican contender Kari Lake, a former TV news anchor. Initially, the race was anticipated to be a three-way competition involving incumbent and independent Sen. Kyrsten Sinema, but her decision not to seek re-election has altered the landscape.

Gallego, being the sole prominent Democrat in the race now, stands to benefit from unified party support previously diffused due to Sinema’s candidacy, the article notes. With Sinema out, Democrats can openly back Gallego, potentially boosting fundraising efforts.

Meanwhile, Lake, despite garnering significant GOP support and fundraising, faces scrutiny over her campaign’s discipline and approach. Her association with election denialism and divisive messaging could hinder her appeal to Arizona voters, especially in comparison to the late Sen. John McCain, whom some Republicans still admire, the article adds.

Gallego’s challenge lies in positioning himself effectively to win over independent voters, given his more progressive stance compared to Sinema and Democratic Sen. Mark Kelly. However, Lake’s spending patterns raise concerns about her campaign’s sustainability in the long run.

Bottom line: The race is expected to be fiercely competitive, with both candidates vying for support across party lines while navigating the complexities of Arizona’s political landscape. The article omits a huge issue: concerns about the number of illegal migrants crossing the border. That could be a key election-deciding issue.

— No Labels, a third-party group, advances plans for 2024 presidential ticket despite lacking a candidate. State ballot access and candidate selection pose logistical challenges, with efforts underway to overcome these hurdles. The organization is accelerating candidate outreach and will announce a selection process on March 14. Uncertainty persists on how third-party candidates will impact election without clarity on candidates and ballot access.

The group is considering picking Geoff Duncan, the Republican former lieutenant governor of Georgia, to lead a “unity” presidential ticket, the Wall Street Journal reports (link), citing people familiar with the discussions said.

Of note: No Labels has a well-financed effort to get on the ballot in all 50 states and is currently on 16, including the key swing states of Arizona and Nevada. No Labels leaders have said they will nominate a ticket if Joe Biden and former Donald Trump are the main parties’ nominees, as is now likely. The group’s leaders have said that their so-called “unity ticket” would have a Republican presidential candidate and a Democratic running mate.

— European farmers’ unconventional protests threaten EU policies. Farmers across Europe have been protesting in unconventional ways, such as showering authorities with liquid manure and eggs outside the European Union headquarters in Brussels. This surge of agrarian protests poses a threat to key aspects of EU environmental and foreign policies and could potentially bolster far-right parties in the upcoming European Parliament elections, according to a Barron’s article (link).

The EU’s Green Deal, championed by European Commission President Ursula von der Leyen, aimed at revolutionizing farming practices to address pollution and climate change. However, challenges such as Russia’s natural gas cutoff, soaring energy and fertilizer prices, and high-interest rates have strained farmers’ financial resources, prompting them to push back against stringent environmental regulations.

Von der Leyen, eyeing a second term, has made concessions in response to farmers’ grievances, proposing to freeze pesticide reduction plans and offering exemptions to fallow land requirements. This retreat from ambitious environmental goals has drawn criticism from environmental advocates.

Farmers’ concerns also extend to cheap imports, with the EU’s free trade deal with South America’s Mercosur bloc and the influx of Ukrainian agricultural products raising alarms. These issues have sparked complex political debates and delicate diplomatic maneuvers.

— President Biden’s State of the Union: Tax hikes and fiscal policy agenda. President Biden’s State of the Union address underscored his commitment to an agenda resembling his first term, albeit with intensified measures, particularly in taxation, the Wall Street Journal notes in a commentary item (link).

Biden proposes increasing taxes, as seen in his Inflation Reduction Act, aiming to augment existing levies. For instance, he seeks to raise the excise tax on stock buybacks from 1% to 4%, potentially incentivizing corporations to pursue dividends or acquisitions instead.

Additionally, he advocates raising the IRA’s book minimum tax on large corporations from 15% to 21%, while also proposing a corporate tax rate hike from 21% to 28%.

However, critiques suggest that such tax hikes could curtail business investment and wage growth, potentially leading to lower tax revenue.

Biden’s push for a new 25% minimum tax on billionaires, targeting individuals with wealth exceeding $100 million, further amplifies concerns over wealth taxation.

The WSJ commentary adds that despite Biden’s claims of aiming to reduce the federal deficit, his proposed tax measures may not significantly mitigate it, especially amid plans for increased spending.

While the passage of these measures remains uncertain, Biden may possess leverage over tax policy due to expiring provisions of the 2017 tax reform in 2025. Regardless, a second Biden term, the WSJ concludes, could entail even greater fiscal expenditures than the first, significantly impacting the nation’s financial trajectory.

Hearings and Other Events for the Week

Monday, March 11

President Joe Biden delivers remarks on lowering costs for American families, in Manchester, New Hampshire.
Vilsack at National Farmers Union. USDA Secretary Tom Vilsack addresses the National Farmers Union to announce another effort on consumer and livestock producer opportunities via the final rule on the voluntary Product of USA label.
Worldwide threats. Senate Select Intelligence Committee hearing on “Annual Worldwide Threats Assessment.” CIA Director Williams Burns to testify.
North American Millers’ Association Spring Conference, Marco Island, Florida.
Indoor Ag-Con, Las Vegas, Nevada.

Tuesday, March 12

U.S. fiscal situation. Joint Economic Committee hearing on “The Fiscal Situation of the United States.”
Special counsel hearing. House Judiciary Committee hearing on the Report of Special Counsel Robert Hur.
U.S. electric grid. House Oversight and Accountability Economic Growth, Energy Policy, and Regulatory Affairs Subcommittee hearing on “The Power Struggle: Examining the Reliability and Security of America’s Electrical Grid.”
U.S. manufacturing. Senate Finance Committee hearing “American Made: Growing US Manufacturing Through the Tax Code.”
FY 2025 budget. Senate Budget Committee hearing on “The President’s FY 2025 Budget Proposal.” Office of Management and Budget Director Shalanda Young testifies.
Critical minerals. Center for Strategic and International Studies virtual discussion on “Investing in Critical Minerals.”
Home care in rural America. House Ways and Means Committee hearing on “Enhancing Access to Care at Home in Rural and Underserved Communities.”
U.S./Canada relations. Wilson Center’s Canada Institute virtual discussion on “Roadmap at Three: Progress Report on a Renewed US-Canada Partnership.”
Russia and nuclear energy. House Foreign Affairs Europe Subcommittee hearing on “Going Nuclear on Rosatom: Ending Global Dependence on Putin’s Nuclear Energy Sector.”

Wednesday, March 13

Europe, U.S. and Taiwan. Carnegie Endowment for International Peace virtual discussion on “Can the United States and Europe Coordinate Counter-Coercion with Taiwan?”

China investment in Mexican auto sector. Washington International Trade Association virtual discussion on “What’s Driving Chinese Investment into the Mexican Automotive Sector?”
Infrastructure issues. Homeland Security Department virtual meeting of the President’s National Infrastructure Advisory Council for a keynote address on critical infrastructure security and resilience and subcommittee updates.
Decarbonization. Washington Post Live virtual discussion on “The race to decarbonize the American economy.”
Global economic outlook. National Institute on Retirement Security (NIRS) virtual discussion on “2024 Global Economic and Market Outlook.”

Thursday, March 14

Climate smart farming practices. League of Conservation Voters and the National Sustainable Agriculture Coalition, discussion with farmers and ranchers from across the United States on federal climate-smart agriculture programs.
Rural America challenges. American Enterprise Institute for Public Policy Research and the Brookings Institution hold an “On the Front Porch” discussion on “the unique challenges and opportunities facing rural America.”
Global energy markets. Center for Strategic and International Studies discussion on “Global Energy Markets: Views from Energy Aspects and the Energy Information Administration (EIA).”
FY 2025 budget: HHS. Senate Finance Committee hearing on “The President’s FY2025 Health and Human Services Budget.” HHS Secretary Xavier Becerra testifies.
Wildfire threat. Senate Homeland Security and Governmental Affairs Committee hearing on “A Nation on Fire: Responding to the Increasing Wildfire Threat.”
Taiwan situation. Cato Institute forum on “Taiwan’s Urgent Need for Asymmetric Defense.”
IRA report card. Environmental and Energy Study Institute briefing on “Updates from Rural America: Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA) Progress Report.”
American Coalition for Ethanol, DC Fly-in and Government Affairs Summit, Washington, D.C.

Friday, March 15

St. Patrick’s Day observation. White House hosts a St. Patrick’s Day Shamrock presentation and reception with Irish Taoiseach Leo Varadkar.

Economic Reports and Events for the Week

This week, the spotlight shifts to the consumer as retailers unveil their quarterly results and the federal government releases crucial retail data. Dollar Tree and Williams-Sonoma are set to report on Wednesday, followed by Dick’s Sporting Goods, Dollar General, and Ulta Beauty on Thursday. Investors will keep an eye on inflation trends with the release of the Consumer Price Index on Tuesday. Additionally, tech earnings reports are on the horizon, with Oracle scheduled for Monday and Adobe on Thursday.

Of note: The communications blackout period around the March 19-20 FOMC meeting went into effect at midnight on Saturday, March 9 and runs through midnight on Thursday, March 21. Fed speakers will be absent from the public engagement calendar this week.

Tuesday, March 12

NFIB Small Business Optimism Index
The CPI is anticipated to have risen 0.4%, following a 0.3% increase in January. Annually, the CPI is projected to reflect a similar 3.1% surge in February. The forecast for the seasonally adjusted core CPI rises 0.3%, following a 0.4% uptick in January.
Treasury Budget

Wednesday, March 13

MBA Mortgage Applications

Thursday, March 14

Jobless claims for state unemployment benefits likely increased to 218,000 for the week ended March 9 from 217,000 in the prior week.
PPI-FD: The Labor Department report is expected to show producer price index (PPI) for final demand likely rose 0.3% in February after recording a similar increase in the previous month. In the 12 months through February, the PPI is expected to advance 1.2% after climbing 0.9% in January. Excluding the volatile food and energy components, PPI likely edged up 0.2% in February after rising 0.5% in the month before. Annually, the so-called core PPI is expected to gain 2.0% in February.
The Commerce Department’s Census Bureau is unveiling retail sales data for February that is expected to show a 0.7% increase following January’s 0.8% decline.
Business Inventories
Fed Balance Sheet
Money Supply

Friday, March 15

Empire State Manufacturing
Import prices are expected to rise 0.3% in February after gaining 0.8% in January. Export prices are likely to increase 0.3% in December, after advancing 0.8% the month before.
Industrial production data is anticipated to remain stagnant in February. Simultaneously, the seasonally adjusted capacity utilization is forecasted to read 78.4%, a slight decrease from January’s 78.5%.
The University of Michigan will release the preliminary reading of its consumer sentiment index for March, which is expected to come in at 76.9.

Key USDA & international Ag & Energy Reports and Events

Ag reports of note this week: Statistics Canada will publish its seeded area data for several crops, such as wheat, barley and canola, on Monday. Also this week: Brazil’s Conab issues production, area and yield data for corn and soybeans (Tuesday) and the International Grains Council’s report (Thursday).

In the energy sector, Saudi Aramco on Sunday unveiled its 2023 full-year earnings. OPEC will publish its monthly Oil Market Report on Tuesday, with the U.S. Energy Information Administration releasing its Short-Term Energy Outlook, or STEO, the same day. The International Energy Agency will publish its equivalent report on Thursday.

Monday, March 11

Ag reports and events:

Export Inspections
Season-Average Price Forecasts
Feed Grains Database
Wheat Data
U.S. Agricultural Trade Data Update
Price Reactions after Crop Reports
Price Reactions after Livestock Reports
StatsCanada releases seeded area data for wheat, barley, canola and soybeans
Malaysian Palm Oil Board’s monthly data on stockpiles, exports and production
Malaysian palm oil export data for March 1-10