Dems Plan for Another Huge Increase in Thrifty Food Plan

Note: Abbreviated format today as I am in Colorado Springs at a CIPA event.

— U.S. equities yesterday: The Nasdaq broke its own record again, closing at another all-time high as stocks moved up on the day’s tech earnings. The Nasdaq was up 0.78% at 18,712.75. The Dow closed down 0.37%, at 42,233.05. The S&P 500 rose 0.16%, at 5,832.92.

— McDonald’s sees 10% drop in visits amid E. coli outbreak. McDonald’s experienced a 10% decline in nationwide visits and a 33% drop in Colorado following an E. coli outbreak that sickened dozens, with cases linked to its Quarter Pounder burger (onions). However, the fast food chain expects recovery, planning to attract customers with $5 value meals and Big Macs with chicken. Quarter Pounders will return to menus this week after Colorado authorities confirmed the patties tested negative for E. coli.

— Agriculture markets yesterday:
• Corn: December corn futures rose 3 cents to $4.13 3/4 and nearer the session high.
• Soy complex: November soybeans fell 8 3/4 cents to $9.65 1/4, the lowest close since Aug. 22, while January soybeans fell 7 cents to $9.79. December soymeal closed down $3.00 to $301.80, nearer the session low, while December soyoil rose 11 points to 42.80 cents.
• Wheat: December SRW futures surged 11 3/4 cents higher to $5.70 1/2 and settled nearer session highs. December HRW futures climbed 12 3/4 cents to $5.74 1/4. December HRS rallied 11 1/4 cents to $6.06 1/2.
• Cotton: December cotton rose 20 points to 70.56 cents and near mid-range.
• Cattle: December live cattle futures sunk $1.325 to $187.95. November feeder cattle futures plunged $2.60 to $246.60.
• Hogs: December lean hogs rose $2.20 to $82.825, near the daily high and hit at contract high.

— Oil prices closed slightly lower on Tuesday, following a steep 6% drop on Monday, as reports surfaced of potential diplomatic efforts in the Middle East. Brent crude futures fell 30 cents, 0.4%, to settle at $71.12 a barrel, while U.S. West Texas Intermediate (WTI) crude slipped 17 cents, 0.3%, to $67.21 a barrel. The declines came after news that Israeli Prime Minister Benjamin Netanyahu would discuss a diplomatic solution to the conflict in Lebanon, with Axios reporting that he plans to meet with military and intelligence leaders on the matter.

— GOP gears up for leadership elections as Senate and House face tight races. House and Senate Republicans are pushing forward with leadership elections soon after the Nov. 5 general election, even though some races could remain undecided. Senate Republicans will hold their internal elections on Nov. 13, likely in the Old Senate Chamber, while House Republicans will meet the same day at the Hyatt Regency.

Sen. Mitch McConnell’s (R-Ky.) tenure as GOP leader is nearing its end, with Sens. John Thune (R-S.D.), John Cornyn (R-Tex.), and Rick Scott (R-Fla.) vying to succeed him. Meanwhile, the race to replace John Barrasso (R-Wyo.) as Conference Chair sees Sens. Tom Cotton (R-Ark.) and Joni Ernst (R-Iowa) competing.

In the House, Speaker Mike Johnson (R-La.) aims to move forward despite potential delays in California’s slow vote count, which could significantly impact the final majority. The House GOP is also considering rule changes, including clarifying leadership roles in the event of a Speaker’s removal. Link to House proposed changes. Link to explanations.

— House GOP braces for leadership votes amid uncertain majority. As previously noted, House Republicans plan to hold leadership elections on Nov. 13, despite the likelihood that several key races, especially in California, may remain undecided for weeks. In 2022, California’s slow vote count delayed results until December, and similar scenarios could unfold this year, as the majority hinges on a slim margin of five seats either way.

Critical House races include California’s 13th, 22nd, 27th, 41st, and 45th districts, with close contests also expected in the 47th and 49th. However, early results from states like Virginia, North Carolina, and Ohio on election night could offer initial clues about the House majority. If Democrats successfully defend seats held by Reps. Jared Golden (Maine), Marcy Kaptur (Ohio), and Matt Cartwright (Pennsylvania), the GOP’s path to control narrows further.

— Election forecasts. We met with David Wasserman, election analyst for the Cook Political Report with Amy Walter. He predicts a GOP sweep of the White House (Trump 60/40 vs Harris), a GOP led Senate of between 51-54 seats, and a very close House contest with Republicans keeping control but barely at 219-216. As noted above, it may take a few days or longer to decide some elections (especially in the House). If so, that could delay Congress’ timeline for key items.

— Dems plan for another huge increase in Thrifty Food Plan (TFP). We have learned that the Biden USDA has developed their methodology for the 2026 TFP update. If they have not already, USDA-OIG is initiating their subject inspection, including whether FNS officials incorporated recommendations from GAO’s 2022 report. There is the prospect of increased SNAP spending either before year’s end or in the first 100 days of a Harris Administration.

Background: The Biden administration’s past huge increase to the TFP, which is used to calculate Supplemental Nutrition Assistance Program (SNAP) benefits, was controversial. The increase was the largest permanent expansion of food stamp benefits in the program’s history, raising benefits by an average of 21-27% and costing an estimated $250-300 billion over 10 years. The administration implemented this massive increase through executive action, without explicit Congressional approval. Critics argue this circumvented Congress’s role in authorizing such large spending increases. For nearly 50 years, TFP reevaluations had been conducted in a cost-neutral manner. The 2021 update abandoned this long-standing principle. Government Accountability Office (GAO) audits found that USDA violated multiple internal guidelines, project management best practices, and federal standards for economic analysis in rushing through the reevaluation. Critics argue USDA used a “black-box methodology” that lacked transparency and relied on subjective adjustments by officials. Some argue the benefit increase, combined with other expanded welfare programs, creates disincentives for low-income individuals to seek employment. GAO found that USDA’s actions violated the Congressional Review Act, which requires agencies to submit significant policy updates to Congress. Supporters of the increase argue it was necessary to provide adequate nutrition for low-income families, while critics contend it was an unlawful and fiscally irresponsible expansion of the welfare state without proper Congressional oversight or approval.

— USDA awards $239 million to boost domestic biofuels across 18 states. USDA Deputy Secretary Xochitl Torres Small announced $239 million in grants to support domestic biofuel production. Of this, $200 million comes from the Biobased Market Access and Development Program, funded by the Commodity Credit Corporation and the Inflation Reduction Act (IRA/Climate Act). The remaining $39 million will be distributed through the Higher Blends Infrastructure Incentive Program (HBIIP).

— Eurozone GDP hits two-year high with 0.4% growth in Q3. The Eurozone’s economy grew by 0.4% in Q3 2024, the highest quarterly growth rate in two years and surpassing forecasts of 0.2%. Key contributors included Germany (0.2%), France (0.4%), Spain (0.8%), and Ireland, which posted a significant 2% jump. However, Italy’s economy stagnated, and Latvia was the only member to report a contraction (-0.4%).

— The U.S. imports a wide variety of horticultural products, which make up a significant portion of its agricultural imports. Fresh fruits and vegetables are a major component of U.S. horticultural imports: In 2023, fresh fruit and vegetable imports were valued at $30.5 billion. They are projected to grow at an annual rate of 2.1% over the next decade.

Mexico is the largest supplier of horticultural products to the U.S., especially for fresh fruits and vegetables. Other major sources include Canada, Chile and Peru.

Perspective: Horticultural products comprise about half of total U.S. agricultural imports. The value of horticultural imports is projected to grow at an average of 1.4% annually over the coming decade. Fresh produce imports have been rising steadily, with the U.S. importing 60% of its fresh fruit and 38% of its fresh vegetables.

Factors driving imports
• Year-round consumer demand for products not available domestically due to seasonal or climatic limitations.
• Changing consumer preferences
• Increasing competitiveness of foreign producers
• Free trade agreements like USMCA facilitating imports from Mexico and Canada

Of note: Some sources note that increased U.S. regulations and labor supply and pricing issues, along with transportation and port competitive issues, have negatively impacted California’s horticultural industry.

— Wild animals found to imbibe alcohol from fruits for centuries. A new study reveals that wild animals have been consuming ethanol — alcohol naturally formed from fermenting fruit and grain sugars — for hundreds of years. Even low concentrations of 1-2% alcohol can intoxicate small animals or birds, posing risks, especially for climbers. However, researchers suggest that occasional drinking may also help animals relax.

— NWS outlook: Moderate to heavy snow over parts of the Southern Cascades and Northern Intermountain Region with a second area over parts of the Upper Midwest on Thursday... ...Temperatures will be 20 to 30 degrees above average over parts of the Great Lakes/Ohio Valley... ...There is an Enhanced Risk of severe thunderstorms over parts of the Middle Mississippi Valley and Central/Southern Plains on Wednesday

(NWS)

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