Key Issues for Congress: FY 2024 Approps | CR | Supplemental Spending | Farm Bill

G20 leaders announce joint infrastructure agreement linking India with Middle East & Europe

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September 09, 2023 05:25 PM

G20 leaders announce joint infrastructure agreement linking India with Middle East & Europe

Washington Focus

House lawmakers finally return to join their Senate counterparts in a “dash” to get done what they could not accomplish before.

September showdown: Budget deals, program reauthorizations, and supplemental funding on Congress’ agenda. September is a busy month as the federal fiscal year ends on Sept. 30. At issue: Can Congress reach a budget deal by the deadline to prevent a gov’t shutdown, with talk of the need for a likely short-term deal (duration is murky) if a comprehensive agreement isn’t reached. However, ultra-conservatives in the House are seeking assurances for spending cuts as part of the deal, something the Senate will not agree on.

Additionally, several federal programs are up for reauthorization, including the farm bill (see farm bill update item below). The national flood insurance program and the Federal Aviation Administration also require reauthorization, with potential implications for consumer rates and airline customer service.

Separately, discussions are underway to add supplemental funding to the stopgap spending measure, which could include aid for Ukraine, FEMA funding for disasters, and additional support for the WIC food assistance program, as the number of beneficiaries grows. States facing budget constraints may have to limit access to WIC without additional funding. But GOP conservatives in the House do not want additional Ukraine funding as part of the coming continuing resolution (CR), but the Senate does. There are also some poison bill policy riders being pushed by some House GOP lawmakers. That is upping the odds for some of a potential government shutdown. Others say there is still time to rectify issues.

The Senate this week will begin to debate several appropriations measures, including Agriculture. Senate Appropriations Committee Chair Patty Murray (D-Wash.) and Vice Chair Susan Collins (R-Maine) announced they will put forward a “minibus” package combining funding for the Departments of Agriculture, Veterans Affairs, Transportation, Housing and Urban Development, and other agencies.

Budget showdown looms as House Republicans seek spending cuts, putting programs at risk. President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) previously reached an agreement to prevent a default on the nation’s debt, which involved maintaining current spending levels for the next year. However, many conservative members of the Republican caucus are pushing for even deeper spending cuts, with some willing to accept a gov’t shutdown unless these cuts are realized.

This budget dispute has significant implications, as House Republicans are eyeing reductions in funding for critical areas such as water infrastructure, housing, transportation, and climate mitigation. While all 12 bipartisan budget bills have been passed by the Senate Appropriations Committee, the House is way behind and the ultimate agreement between Senate Democrats and House Republicans remains uncertain.

Farm bill update:

Timing: Consensus now is later rather than sooner, with no chance of a farm bill getting done this month and most likely not in October. The last two months of the year are still in the possible category, but a lot depends on actual farm bill text, Title I improvement and funding issues, with the initial hurdle being needed action on fiscal year (FY) 2024 spending issues/measures (detailed below).
Farm bill text: Earlier predictions of filing farm bill text shortly after lawmakers returned from their long summer recess have already been altered. Past farm bill writing has shown that the last 10% or so of the key text and funding issues are the hardest and frequently have delayed the farm bill unveiling. Funding issues and apparent differences over some key policy areas are the main reasons for the delay this time (see next bullet). Whenever House and Senate Ag panel leaders officially introduce their farm bills, the next key timeline is when the bills will be considered by the full Ag committees. Several key issues will likely be part of the panel debates as detailed below. Also important is the coming “Chairman’s Mark” which could offer some farm bill language surprises this time. A Chairman’s Mark is the draft of a bill that the chairman/chairwoman of a committee uses as the starting point in a mark-up.
Farm bill issues: Besides funding, some key, sensitive issues are unfolding. Markup will be a long way off unless Sen. John Boozman’s (R-Ark.) priority of strengthening the Title I farm safety net is not met. Also, Sen. John Hoeven (R-N.D.) recently commented that, “We are not where we need to be yet on the farm bill. The commodity title, Title I, is the heart and soul of a farm bill. And we are not going to pass a farm bill until we get there” Lawmakers, he said, “must get serious” about Title I provisions (link). This is why some talk has surfaced of a “Democratic farm bill” in the Senate, but for now, senators from both parties are hoping and signaling a bipartisan measure in that chamber. Another issue, pushed by South Dakota corn growers and the National Corn Growers Assn., is a mandatory update of base acres, something more than a few farm-state lawmakers and farm groups mostly oppose, as it would mean 34 states losing under such a plan and only 13 states winning, according to a Senate Ag GOP staff analysis. Another issue is potential bill-killing amendments which, if they succeed in floor votes, would have the farm bill being pulled from consideration.
Farm bill floor debate: Some lawmakers have said debate on the House and Senate floors will not begin until some fiscal year (FY) 2024 spending details are finalized. This suggests the chambers must first come to an agreement on a stopgap spending bill (CR) to get the gov’t funded into FY 2024, which begins Oct. 1. But there currently is no overall agreement on the duration of a CR, nor what should be in that measure. Whenever those issues are settled, possible floor time for a farm bill debate can then be more accurately determined. This may allow time for congressional leaders to okay debate time for the farm bill. As usual, farm bill amendments during floor debate could be critical to the eventual fate and significance of the bill. Of note: House Speaker Kevin McCarthy (R-Calif.) has indicated he wants a shorter CR but also wants to move as many appropriations bills as possible to be in a stronger negotiating position with the Senate. This will take time and effort as was seen in July when leadership pulled back on floor debate on the FY 2024 Ag Appropriations measure due to conflicts.
Extension: Key lawmakers last week signaled an attempt will be made to extend some non-baseline farm programs as part of a continuing resolution (CR). But as noted previously, a stopgap spending bill has problems of its own, both in how long it will last and what it will include. A 2018 Farm Bill extension is likely later this year, with the critical deadline being the end of the year. The duration of the extension will signal whether farm-state lawmakers think they can get a new farm bill done yet this year or early in 2024. If not, lawmakers will punt it.
Bottom line: The two major things delaying a farm bill in the Senate are (1) Not meeting Sen. Boozman’s criteria on Title 1 funding and (2) needing to wait on appropriations. The House is more complicated: The appropriations process delays things in the House, too. But beyond that the path forward is murky.

During the G20 summit in New Delhi, leaders from the Group of 20 nations achieved consensus on a joint declaration, sidestepping direct condemnation of Russian aggression against Ukraine. While the declaration acknowledges the ongoing conflict in Ukraine, it employs softer language compared to the previous G20 summit in Bali. The statement emphasizes the importance of adhering to the United Nations Charter, refraining from threats or use of force for territorial acquisition, and prohibiting the use or threat of nuclear weapons.

The declaration highlights the adverse impact of the war in Ukraine on global food and energy security, supply chains, financial stability, inflation, and growth. It calls for unimpeded delivery of grains, foodstuffs, and fertilizer from Russia and Ukraine to meet the demand in developing countries, particularly in Africa.

The declaration also welcomes the African Union as a permanent G20 member and underscores the commitment to address the global economic repercussions of the conflict and promote comprehensive and lasting peace in Ukraine.

Of note: China challenged the planned U.S. presidency of the Group of 20 in 2026, according to officials briefed on the discussions, in a move that underscores the deep sense of mistrust between Beijing and Washington. Chinese diplomats called for this year’s G20 summit declaration to delete a reference to the expected U.S. presidency in 2026. Western countries, including the U.K., opposed the Chinese move, and the phrase was included in the final version adopted by leaders. “We look forward to meeting again in Brazil in 2024 and in South Africa in 2025, as well as in the United States in 2026 at the beginning of the next cycle,” the joint statement said.

U.S. and India advance infrastructure deal amid counter-China efforts. President Joe Biden, along with the leaders of India, Saudi Arabia, and the United Arab Emirates, announced a joint infrastructure agreement that would link India with the Middle East and Europe and advance trade between several economies.

The infrastructure deal is seen as a response to China’s influence in the region and aims to connect Gulf and Arab nations through a network of railways, as well as establish shipping lanes to India via regional ports. This move underscores the shifting alliances in the region, with Saudi Arabia and the UAE seeking closer ties with China.

The project, dubbed the India – Middle East – Europe Economic Corridor (IMEC), will consist of two corridors — one connecting India to the Arabian Gulf and one connecting the gulf to Europe, according to a statement from the White House (link).

Officials say the project will: reduce trade costs, generate jobs, lower greenhouse gas emissions and increase trade efficiency.

The corridor will feature a railway capable of providing a “ship-to-rail transit network” and a means of laying cable for electricity, digital connectivity and pipe for the export of clean hydrogen, the White House statement added.

The G20 leaders tried to address the challenges posed by “cascading crises” to long-term economic growth and advocate for coordinated macroeconomic policies to support the global economy.

Meanwhile, Indian Prime Minister Narendra Modi expressed disappointment over the absence of China and Russia at the summit. Chinese President Xi Jinping’s decision not to attend the G20 summit has raised concerns and reflects China’s evolving global strategy. While China has not provided an official explanation for Xi’s absence, it coincides with China’s growing skepticism of established multilateral institutions, which it views as too influenced by the United States. China has been increasingly embracing participation in international groupings where it wields greater influence, such as the BRICS bloc of emerging nations. European Union diplomats have expressed concerns that Xi’s absence from future G20 summits could seriously undermine the forum’s effectiveness.

Nancy Pelosi, the Democratic Representative from California, officially announced her intention to run for re-election in 2024. She made the announcement at a meeting with supporters in San Francisco, citing her commitment to the city’s values and the need to address pressing issues such as crime, homelessness, drug problems, and business closures exacerbated by the Covid-19 pandemic.

Not only is Pelosi’s adopted hometown facing serious economic and social headwinds, but it’s also facing a sudden erosion of veteran leadership in Washington. “Well let’s just go back about six years and we had Dianne, we had Barbara, we had Jackie Speier, now Jackie is gone, so we’ll see,” Pelosi said in an interview with Politico, laying out the rationale for another run by invoking the three, veteran Bay-area lawmakers who’ve retired or are retiring: Dianne Feinstein, former Senator Barbara Boxer, who stepped down in 2017, and former Representative Jackie Speier, who left Congress at the start of this year.

Pelosi, 83, also expressed her belief that the fate of the nation is at stake in the 2024 elections, and she aims to support President Joe Biden’s reelection and House Minority Leader Hakeem Jeffries’ bid for speaker.

Observers are now looking to her fellow leaders in Congress, Steny Hoyer (84) and Jim Clyburn (83), to see if they will also remain in office given their ages.

On the trade policy front, the U.S. and India have agreed to resolve an outstanding dispute over poultry at the World Trade Organization, the Office of the U.S. Trade Representative said in a statement (link). India agreed to reduce tariffs on certain U.S. products, such as frozen turkey, frozen duck, blueberries and cranberries.

USDA Secretary Tom Vilsack welcomed the announcement, saying the move is an opportunity for American producers and exporters to access the Indian market, the world’s most populous nation. Vilsack highlighted recent efforts to rebuild trust and strengthen relationships with global trading partners, emphasizing the importance of ensuring that these partners meet their trade obligations. The announcement coincides with President Biden’s participation in the G20 leaders’ summit in New Delhi. India had previously lifted retaliatory tariffs on U.S. apples, chickpeas, lentils, almonds, and walnuts earlier in the summer. Despite this progress, Vilsack acknowledged that significant tariff and non-tariff barriers still exist for American agricultural products entering the Indian market, and he expressed the commitment to work with U.S. Trade Representative Katherine Tai to address these challenges and enhance trade relations between the United States and India.

Vilsack and Deputy Secretary Xochitl Torres Small on Monday will host members of the National Farmers Union during their 2023 Fall Legislative Fly-in at USDA’s headquarters in Washington, D.C. Torres Small will deliver welcoming remarks, while Vilsack will speak about USDA’s ongoing efforts in building new markets, enhancing competition, supporting farm and food businesses, boosting producer income, promoting equity, strengthening the food supply chain, and generating more job and economic opportunities.

The current contract between the United Auto Workers and the Big Three automakers expires at 11:59 P.M. on Thursday. The UAW have authorized a strike if no contract is agreed upon by the deadline. The contract covers nearly 150,000 workers.

Economic Reports for the Week

Focus this week: Recent oil price increases, due to extended production cuts by Saudi Arabia and Russia, and a perplexing drop in initial jobless claims over four consecutive weeks, have shifted attention to Wednesday’s CPI report. This report is expected to provide insights into the Federal Reserve’s forthcoming monetary policy decisions. Several investor days, an Apple iPhone-unveiling event, and a European Central Bank interest-rate decision will be other highlights.

Tuesday, Sept. 12

The National Federation of Independent Business’ Small Business Optimism Index for August.

Wednesday, Sept. 13

MBA Mortgage Applications
Bureau of Labor Statistics (BLS) releases the Consumer Price Index for August. According to Reuters, the CPI likely rose 0.6% in August after gaining 0.2% in July. Excluding food and energy, the CPI likely rose 0.2% in August, matching the rise in July. CPI, which excludes food and energy components.

Thursday, Sept. 14

Jobless Claims
BLS releases the Producer Price Index for August. It is likely to show that the PPI for final demand likely increased 0.4% in August, following a 0.3% gain in July. Excluding the volatile food and energy components, the so-called core producer prices possibly rose 0.2% in August after climbing 0.3% the month before.
Census Bureau’s retail sales data for August. It is expected to show retail sales likely gained 0.2% in August after jumping 0.7% in July. Excluding automobiles, gasoline, building materials and food services, retail sales are expected to have increased 0.5% in the same month.
Fed Balance Sheet
Money Supply
European Central Bank will announce a monetary-policy decision. Futures pricing is in favor of no change in interest rates.

Friday, Sept. 15

University of Michigan’s Consumer Sentiment index for September. The preliminary reading on the overall consumer sentiment index is expected to come in at 69.1 in September, compared to 69.5 in August.
The Labor Department is expected to say that import prices climbed 0.3% in August following a hike of 0.4% in July.
Industrial production likely grew 0.1% in August, after gaining 1.0% in July, while capacity utilization for the month of August, a measure of how fully firms are using their resources, continues to remain the same at 79.3%. Michigan’s.

Key USDA & international Ag & Energy Reports and Events

On the ag front, Tuesday brings USDA’s Crop Production and S/D updates.

On the energy front, OPEC issues its monthly Oil Market Report on Tuesday, with the U.S. Energy Information Administration releasing its Short-Term Energy Outlook the same day. The International Energy Agency publishes its equivalent report Wednesday.

Monday, Sept. 11

Ag reports and events:

Export Inspections
Crop Progress
London International Shipping Week, Sept. 11-15
Malaysian Palm Oil Board’s monthly report on stockpiles, production and exports
Sugar production and cane crush data from Brazil’s Unica (tentative)
Malaysia’s Sept. 1-10 palm oil exports