Congress Out Until September but Staff Work Continues on Appropriations & Farm Bill

Jobs report Friday | Russia/Ukraine peace talks | Podcast series on history of farm policy

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July 30, 2023 11:48 AM

Jobs report Friday | Russia/Ukraine peace talks | Podcast series on history of farm policy

Washington Focus

The House and Senate are on their extended summer recess and won’t return to Washington until after the Labor Day holiday: The Senate returns Sept. 5; the House Sept. 12.

Staff work on fiscal year (FY) appropriations work will likely continue. Drafting and other work on a new farm bill will also be a task for some staffers. Look for possible Senate farm bill news this week. A short-term extension for the farm bill appears likely, but the real deadline is the end of the year. Any need for an extension, however, could see some drama playing out in the House among hard-line Republicans.

A lot of pending work on major legislation is what you get in Congress with just a five-vote Republican majority in the House and a one-vote Democratic edge in the Senate: a pile of critical unfinished business.

The House has just 12 days in September to move the remaining 11 appropriations measures and work on disagreements with the Senate, which is marking up its spending bills at higher levels.

Background. The House completed the Military Construction Appropriations Bill, the first appropriations bill to be completed in either chamber of Congress. The Senate completed work on the annual defense authorization bill. To date, the full Senate has not approved any appropriations bills, but at least the Senate Appropriations panel has completed work on all 12 measures. When lawmakers return in September, the House and Senate will very likely need a continuing resolution (CR) to keep the government open past the end of FY 2023 on Sept. 30. While that should be easy in the Senate, nothing is easy in the House.

The Senate is drafting its bills more in line with the budget caps agreed to in the debt limit deal, but House Republicans are upset about a bipartisan deal in the upper chamber that would allow for more than $13 billion in additional emergency spending on top of those levels (including disaster aid).

House GOP negotiators said they would pursue clawing back more than $100 billion in old funding that was allocated for what they say are Democratic priorities without House GOP support. In a letter to House Speaker Kevin McCarthy (R-Calif.), a group of hard-line conservatives called for all 12 appropriations bills to be in line with FY 2022 spending levels “without the use of reallocated rescissions to increase discretionary spending above that top-line.”

“I just don’t see the wisdom in trying to further cut to strengthen our hand. I don’t know how that strengthens our hand,” Rep. Steve Womack (R-Ark.), a House Appropriations subcommittee chairman, told The Hill of conservatives’ push to further cut the already-scaled-back spending bills. “I do think it puts some of our members in a very difficult spot, particularly those in tough districts, because they’re going to be taking some votes that become problematic,” he added.

Hard-liner approach. During a House Freedom Caucus press conference last week, Rep. Bob Good (R-Va.) said “we should not fear a government shutdown,” claiming that “most of what we do up here is bad anyway; most of what we do up here hurts the American people.” But that is not the viewpoint of McCarthy, who said: “I don’t want the government to shut down.”

The Senate perspective: “The past few weeks in the Senate have shown the power of working in a bipartisan manner,” said Senate Majority Leader Chuck Schumer (D-N.Y.). “The House ought to look to the bipartisan Senate as to how to get things done instead of just throwing out partisan bills that have no chance — no chance — of passing.”

House GOP response: “The real truth is we keep our commitment to America,” said McCarthy.

Senate agenda: Besides FY 2024 appropriations duties, Schumer said the Senate will focus on legalizing banking for marijuana businesses, capping insulin prices at $35 a month, reauthorizing the FAA and enacting rail-safety legislation. Schumer also said he plans votes on nominations to the Federal Reserve, National Labor Relations Board and Federal Communications Commission, as well as more judges. “There’s a lot to do when we get back,” he said.

Note Schumer did not include a new farm bill on the list.

Senate Minority Leader Mitch McConnell (R-Ky.) plans to serve the rest of the 118th Congress as the GOP leader, his office said. Questions about the future of McConnell, 81, were raised after he froze for 30 seconds during a news conference.

GOP presidential candidate Ron DeSantis is set to deliver a speech outlining his economic agenda Monday in New Hampshire as he tries to reset his campaign.

On Tuesday, the U.S. assumes the presidency of the United Nations Security Council for the month of August.

Trump urges conditioning Ukraine aid on congressional Biden probes. The Washington Post reports (link) that former President Donald Trump called on congressional Republicans to withhold military support for Ukraine until the Biden administration cooperates with their investigations of President Joe Biden and his son Hunter Biden’s business dealings. The article says, “The demand … echoed Trump’s conduct at issue during his first impeachment, when Trump withheld aid from Ukraine while pressuring the country’s president to announce an investigation of Biden. … He added that any Republican lawmakers who didn’t join the effort should face primary challenges, a tactic he used last year to unseat Republicans who voted to impeach him for inciting the Jan. 6, 2021, insurrection.”

New podcast series reviewing history of farm policy in the U.S. with Combest Sell & Associates’ Jeff Harrison and Pro Farmer’s Jim Wiesemeyer.

National Sorghum Producers released a three-episode series on the Sorghum Smart Talk: Policy Edition podcast, reviewing the history of farm policy in the U.S. Combest Sell & Associates’ Jeff Harrison and Washington farm journalist Jim Wiesemeyer. The group says the podcast “is an excellent resource for all listeners, whether you’re a seasoned agriculture policy expert, or a novice learning the ropes.” All three episodes may be found here.

Economic Reports for the Week

The Jobs report on Friday is the focus this week.

Monday, July 31

The Chicago PMI is expected to improve 2 points in July to a still very weak 43.5 versus 41.5 in June which was the tenth straight month of sub-50 contraction.
Dallas Fed Manufacturing Survey: The activity index is expected to post a 15th straight negative score, at a consensus minus 22.5 in July versus minus 23.2 in June.
Earnings: Arista Networks, Yum China, Tenet Healthcare, and Western Digital.

Tuesday, Aug. 1

BLS releases the Job Openings and Labor Turnover Survey (JOLTS). Consensus estimate is for 9.7 million job openings on the last business day of June, slightly less than in May. Fed Chairman Jerome Powell reiterated this past week that “labor demand still substantially exceeds the supply of available workers.”
The final manufacturing PMI for July is expected to come in at 49.0, unchanged from the mid-month flash to indicate marginal contraction.
The ISM manufacturing index has been in sub-50 contraction the last eight months. July’s consensus is 46.5 versus June’s 46.0.
Construction spending for June is expected to rise a further 0.6% following May’s 0.9% increase that benefited from a sharp jump in residential spending.
Earnings: Merck, Pfizer, Advanced Micro Devices, Caterpillar, Starbucks, Uber, and Altria.

Wednesday, Aug. 2

MBA Mortgage Applications
Motor vehicle sales: Unit vehicle sales in July are expected to edge lower to a 15.6 million annualized rate from June’s 15.7 million which compared with expectations for 15.3 million.
Forecaster see ADP’s July employment number at 185,000. This would compare with June growth in private payrolls reported by the Bureau of Labor Statistics of 149,000. ADP’s number for June was way off at 497,000.
Earnings: CVS Health, Shopify, PayPal, Kraft Heinz, MetLife, Humana), Skillz, and Joby Aviation. Bunge Ltd, a leading global grain merchant and oilseed processor, is set to release its second-quarter results. This will be the company’s first quarterly report since announcing a merger with competitor Viterra. The quarterly performance is predicted to have been positively impacted by a record-breaking Brazilian soy crop which likely increased processing volumes. However, it’s noted that crush margins (profit made from processing soybeans) narrowed during the same period.

Thursday, Aug. 3

Jobless claims for the July 30 week are expected to come in at 225,000 versus 221,000 in the prior week. Claims have been moving lower in recent weeks.
Nonfarm productivity is expected to rise at a 1.3 percent annualized rate in the second quarter versus 2.1 percent contraction in the first quarter. Unit labor costs, which rose 4.2 percent in the first quarter, are expected to rise to a 2.6 percent rate in the second quarter.
PMI Composite Final: No change at the mid-month’s 52.4 is the call for the PMI service’s July final.
Factory orders are expected to rise 1.7% in June versus May’s 0.3% gain. Durable goods orders for June, which have already been released and are one of two major components of this report, jumped 4.7% on the month.
ISM services are expected to slow 9 tenths in July to 53.0 versus 53.9 in June which was more than 3 points above expectations.
Fed Balance Sheet
Money Supply
Earnings: Apple, Amazon, Amgen, Anheuser-Busch InBev, ConocoPhillips, Booking Holdings, Opendoor Technologies, and Wayfair.

Friday, Aug. 4

BLS releases the jobs report for July. Economists forecast a gain of 200,000 for nonfarm payrolls, 9,000 less than in June. Average hourly earnings in July are expected to rise 0.3% on the month for a year-over-year rate of 4.2%; these would compare with 0.4% and 4.4% for the last three reports. The unemployment rate is expected to remain unchanged at a historically low 3.6%.
Earnings: Enbridge, Dominion Energy, Magna International, Nikola, and fuboTV.

Key USDA & international Ag & Energy Reports and Events

U.S. weather and crop developments are the focus as traders try to assess the size of U.S. corn and soybean crops. Meanwhile, the United Nations’ monthly food price index is due on Friday, Aug. 4.

On the energy front, the OPEC+ Joint Ministerial Monitoring Committee is due to hold an online review of the oil markets Friday.

Monday, July 31

Ag reports and events:

Export Inspections
Crop Progress
Malaysia’s July palm oil exports