McCarthy to Make Another Attempt at Spending Bills and Continuing Resolution

USDA reports | House impeachment hearing | Foreign ownership of farmland | Rice grower payment

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September 24, 2023 08:54 AM

USDA reports | House impeachment hearing | Foreign ownership of farmland | Rice grower payment

Washington Focus

The House and Senate return Tuesday after the long weekend in observance of Yom Kippur.

— The Senate will vote on a measure Tuesday to take up a short-term funding solution, called a continuing resolution (CR). While discussions are ongoing, it will likely extend current government funding until November or December, include an extension of the Federal Aviation Administration bill, which expires at the end of the fiscal year, and potentially include an extension of the farm bill, according to two people familiar with the process who spoke on the condition of anonymity to discuss private negotiations. Negotiations are also ongoing to decide whether $16 billion of disaster aid and $24 billion of aid for Ukraine will be attached.

One way some House Republicans are trying to avert a shutdown is by a discharge petition, which allows an already-introduced bill to be used as a shell for other legislative text. Thus, a deal struck by Republicans and Democrats could be tacked on to the eventual Senate proposal.

A House under fire. House Speaker Kevin McCarthy (R-Calif.) last week had this to say about the five GOP House renegades who voted no on a GOP-supported measure: “This is a whole new concept of individuals that just want to burn the whole place down. It doesn’t work.”

The House Rules Committee on Friday met to set the terms for debate on appropriations bills for the departments of Homeland Security, State, Defense, and Agriculture. So, it appears that McCarthy will now take a run at getting the 12 appropriations bills passed by the end of the week — a tall order.

House Republicans on Saturday set up floor debate for this week on four fiscal year (FY) 2024 appropriations bills (listed above) after making combined cuts of nearly $3.8 billion from agriculture and foreign aid programs compared with original committee-reported versions. The tentative schedule calls for debate and adoption of the rule on Tuesday when the chamber reconvenes, followed by the beginning of debate on the Defense bill. Wednesday would see amendment debate wrap up on the Defense measure, followed by debate on the Homeland Security bill and its amendments. Thursday would be set aside for debate and amendments to the State-Foreign Operations bill and the start of debate and amendments on the Agriculture spending bill. Agriculture amendments would finish up Friday, followed by votes on all four bills.

The House Agriculture bill, scheduled first for a final passage vote, is facing additional cuts totaling $2.8 billion. Initially funded at nearly $25.4 billion when it was reported out by the House Appropriations Committee in the summer, these cuts mark a significant reduction. A manager’s amendment proposed by Agriculture Subcommittee Chairman Andy Harris (R-Md.) would particularly impact the Food for Peace program, slashing $1.2 billion from its funding, bringing it down to $532 million. This represents a nearly 70% decrease from the current fiscal year’s allocation. The move to cut overseas food assistance funds has faced criticism, with some arguing it’s taking place amid a global food security crisis. However, an attempt by Rules ranking member Jim McGovern (D-Mass) to strike the cut was unsuccessful.

Harris’s amendment also includes reductions of over 14% for all other programs funded in the bill, except for the Special Supplemental Nutrition Program for Women, Infants, and Children.

If the rule for floor debate is adopted, the combined effect of the manager’s amendment would result in total cuts in the bill dropping below this year’s comparable levels, amounting to around $3.7 billion, constituting a 14% reduction.

As for a possible House CR measure, Punchbowl News reported that on Saturday, McCarthy urged Republicans to support a short-term CR that would keep the gov’t open until mid-November, while the House attempts to pass additional spending bills. Other sources say Republicans besides extending the length of the CR, cutting the annualized funding rate and adding border security legislation and a fiscal commission to look at long-term deficit reduction measures.

— A full committee hearing to address the issue of foreign ownership of U.S. farmland is slated for Wednesday, Sept. 27, by the Senate Ag Committee. The hearing will include testimonies from key witnesses, including Gloria Montaño Greene, USDA Deputy Undersecretary of Farm Production and Conservation; Harrison Pittman, Director of the National Agricultural Law Center at the University of Arkansas System Division of Agriculture; and Dr. David Ortega, Associate Professor of Agricultural, Food, and Resource Economics at Michigan State University. The hearing aims to explore and discuss the implications and concerns associated with foreign ownership in American agriculture.

Background. There are approximately twenty-four states that specifically limit or restrict foreign individuals, foreign business entities, and/or foreign governments from acquiring or owning an interest in farmland within their state, which is up from fourteen states in 2022, according to Southern Ag Today. During the 2023 legislative session, ten states enacted a new law restricting certain foreign investments in land located within their state, and two states — North Dakota and Oklahoma — amended their laws that prohibit certain foreign purchases of land. Although twenty-four states now have some type of restriction, state laws vary widely, and some states restrict only certain purchases. For example, the majority of foreign ownership laws enacted in 2023 seek to restrict investments from specific countries, particularly China, Iran, North Korea, and Russia.

— The House Oversight panel on Thursday is gearing up for its inaugural hearing in the impeachment inquiry of President Biden, with a focus on addressing constitutional and legal concerns raised by Republicans. While the lineup of witnesses is still in progress, House Oversight Chairman James Comer (R-Ky.) intends to feature a financial expert who will delve into bank records linked to the Biden family’s business activities. Additionally, a constitutional expert will provide insights into the justification for launching an impeachment inquiry. The panel is preparing to issue its first subpoenas to President Biden’s son and brother, Hunter and James Biden.

— USDA’s Farm Service Agency announced final payments for rice farmers under the Rice Production Program (RPP) will be issued soon. The RPP is a $250 million assistance program aimed at supporting U.S. rice farmers who faced stagnant rice market prices and exceptionally high input costs in 2022. This funding was allocated in the 2023 Consolidated Appropriations Act following a request from rice producers led by USA Rice.

Rice farmers who were previously approved and received a first-round payment will not need to submit new applications.

The final payment rate will be set at 0.28 cents per pound, based on previously reported data, resulting in a total assistance of 1.28 cents per pound for the 2022 crop year.

USDA intends to disburse these payments ahead of the fiscal year-end, which is Sept. 30.

— Some farm bill conjecture will likely surface this week on Tuesday when the Farm Foundation host a webinar, “What to Expect from the 2013 Farm Bill Now.” Link to details. Commentators include:

Jonathan Coppess, moderator and presenter, Director of the Gardner Agriculture Policy Program and Associate Professor of Law and Policy, Department of Agricultural & Consumer Economics, University of Illinois at Urbana-Champaign
John Newton, Ph.D. Economist, Senate Ag Committee Ranking Member John Boozman)
Joe Outlaw, Ph.D., Regents Fellow, Professor, and Extension Economist, Texas A&M
Emily Pliscott, Economist/Senior Policy Analyst, House Ag Committee
Steven Wallander, Ph.D., Senior Economist (Detaille), Senate Ag Committee on (Chairwoman Debbie Stabenow)

Outlaw, who has worked on eight farm bills, told AgWeb recently (link) that if a farm bill isn’t passed by February, it could be two years before agriculture sees a new farm bill because of the election. The ever-quotable economist had other things to say about farm bill developments.

— On the political front, this Wednesday brings the next GOP presidential candidate debate being held at the Ronald Reagan presidential library in Simi Valley, California. The debaters include Florida Gov. Ron DeSantis, former South Carolina Gov. Nikki Haley, former Vice President Mike Pence, businessman Vivek Ramaswamy, Sen. Tim Scott of South Carolina, and former New Jersey Gov. Chris Christie.

Former President Donald Trump will not attend the debate and instead will give a speech to union workers in Detroit. He also nixed the first debate and plans to forego the third debate, which is slated for Nov. 8 in Miami. A Wall Street Journal editorial last week (link) asked: “Why is Mr. Trump afraid to confront other Republicans without the aid of a teleprompter? Is he worried he’d look his age at 77 next to younger candidates? To state the obvious, Mr. Trump is running to be President and leader of the free world. Voters deserve to hear him defend his record and his platform.” On trade and tariffs the editorial noted: “Trade and tariffs. Mr. Trump wants to impose a 10% tariff on all U.S. imports, which would cost Americans something like $300 billion a year, while inviting retaliation and alienating friends and allies. Sen. Tim Scott’s new economic plan says he would ‘avoid blunt trade wars with our friends and allies that hurt consumers and set us back in the mission of isolating China.’ It sounds like a good subject to debate.”

The former president has repeatedly cited his front-runner status as a reason for skipping the debates. The latest Morning Consult polling of the GOP field shows Trump in the lead with 59%, followed by DeSantis with 13%, Ramaswamy with 10% and Pence and Haley with 5% each.

Economic Reports and Fed Appearances for the Week

The key economic event of the week ahead is the release of the personal consumption expenditures (PCE) price index for August by the U.S. Bureau of Labor Statistics, set for Friday. Of particular interest is the core PCE, which excludes food and energy components and serves as the Federal Reserve’s favored measure of inflation. It is anticipated to show a year-over-year increase of 3.9%. Additional noteworthy data scheduled for release in the coming week: the Conference Board’s consumer confidence index for September on Tuesday, the Census Bureau’s durable goods report for August on Wednesday, and the Bureau of Economic Analysis’ third and final estimate of second-quarter gross domestic product (GDP) growth on Thursday.

Monday, Sept. 25

Chicago Fed National Activity Index: The national activity index is expected to rise further to 0.15 in August versus a higher-than-expected 0.12 in July that benefited from a jump in industrial production.
Dallas Fed Manufacturing Survey: The activity index is expected to post a 17th straight negative score, at minus 12.0 in September versus minus 17.2 in August.
Minneapolis Fed’s Neel Kashkari participates in a question-and-answer session hosted by the Wharton Central Banking Club in Philadelphia, Pennsylvania

Tuesday, Sept. 26

Case-Shiller Home Price Index: Forecasters see the adjusted 20-city monthly rate rising 0.6%B in July versus June’s 0.9% increase.
Consumer Confidence: The index is expected to hold nearly steady in September, at a consensus 105.9 versus August’s much lower-than-expected 106.1. A downturn in the assessment of the jobs market and expectations for higher interest rates were two key factors in August’s results.
New home sales rose from 697,000 in June to a 714,000 annual rate in July with forecasters calling for modest slowing in August back to a 699,000 rate.
Richmond Fed Manufacturing Index
Federal Reserve Board Governor Michelle Bowman gives welcome remarks on Post-Pandemic Challenges and Strategies for Addressing Rental Housing Affordability on Tuesday, before the “FedCommunities — Keys to Opportunity in the Housing Market: Research on Strategies for Preserving and Expanding Rental Housing Affordability” event in Washington DC.

Wednesday, Sept. 27

MBA Mortgage Applications
Durable Goods Orders: Forecasters see durable goods orders falling 0.3 percent in August following July’s sharp 5.2 percent fall that, reflecting swings in aircraft, followed June’s 4.3 percent jump. Ex-transportation orders are seen up 0.2 percent.

Thursday, Sept. 28

Jobless Claims for the Sept. 23 week are expected to rise 10,000 to 211,000 versus 201,000 in the prior week. Claims have been moving noticeably lower in recent weeks.
GDP: The third estimate of second-quarter GDP, at a 2.3% consensus, is expected to show even more growth than 2.1% in the second estimate. Personal consumption expenditures are expected to be unrevised at 1.7%.
Pending Home Sales: The National Association of Realtors developed the pending home sales index as a leading indicator of housing activity. Specifically, it is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed. It usually takes four to six weeks to close a contracted sale.
Corporate Profits
Fed Balance Sheet
Money Supply
Federal Reserve Chair Jerome Powell gives opening remarks and will likely participate in a moderated discussion at the “Conversation with the Chair: A Teacher Town Hall Meeting” in Washington DC and nationwide via a webcast.
Chicago Fed President Austan Goolsbee gives a policy speech before the Peterson Institute for International Economics at Washington DC.
The Fed’s Lisa Cook gives closing remarks, before the Minorities in Banking Forum hosted by the Federal Reserve Bank of Dallas in Dallas, Texas.
Richmond Fed President Thomas Barkin speaks on “The New Job Hierarchy” before the Money Marketeers of New York University, at New York.

Friday, September 29

International Trade in Goods (Advance): The U.S. goods deficit (Census basis) is expected to narrow by $1.1 billion to $90.1 billion in September.
Personal Income and Outlays: Personal income is expected to rise 0.4% in August with consumption expenditures expected to increase 0.5%. These would compare with July’s 0.2% increase for income and 0.8% jump for consumption. Inflation readings for August are expected at monthly increases of 0.5% overall but only 0.2% for the core (versus July’s increases of 0.2% for both). Annual rates are expected at 3.5% overall and 3.9% for the core (versus August’s 3.3% and 4.2%
Retail Inventories (Advance)
Wholesale Inventories (Advance): Wholesale inventories are expected to edge 0.1% lower in the advance report for August that would follow July’s 0.2% draw.
The Chicago PMI is expected to fall in September to 47.9 versus 48.7 in August which was better than expected but still the 12th straight month of sub-50 contraction.
Consumer sentiment is expected to end August at 67.7, unchanged from the mid-month flash and nearly 2 points lower than July.
New York Fed President John Williams delivers remarks and participates in a moderated discussion on the economic outlook and monetary policy before the Long Island Association (LIA) Regional Economic Briefing in Garden City, New York.

Key USDA & international Ag & Energy Reports and Events

Key USDA reports include an update on food prices (Monday), Hogs & Pigs report (Thursday) and Grain Stocks and Small Grains Summary (Friday).

On the energy front, the International Energy Agency will host three events focused on the transition to cleaner sources of power. Energy Trading Week will be held in London.

Monday, September 25

Ag reports and events:

Export Inspections
Crop Progress
Food Price Outlook
Cold Storage
Poultry Slaughter
International Rapeseed Congress, Sydney, Sept. 24-27
Malaysia’s Sept. 1-25 palm oil exports
Sugar production and cane crush data from Brazil’s Unica (tentative)