Senate to Begin Floor Debate on USICA/China Bill

Reconciliation measure update | House farm bill hearing | FY 2023 Ag appropriations

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July 16, 2022 05:41 PM

Reconciliation measure update | House farm bill hearing | FY 2023 Ag appropriations

Washington Focus

The House and Senate are in session.

Farm bill hearing. The House Agriculture Committee Subcommittee on General Farm Commodities and Risk Management on Wednesday will hold a hearing on “A 2022 Review of the Farm Bill: Stakeholder Perspectives on Title XI Crop Insurance.”

USICA/China bill. The Senate is likely to begin floor consideration during the coming week on a narrower economic competitiveness bill that would provide $52 billion in funding for semiconductor manufacturing grants and investment tax credits for the chip industry. Senate Majority Leader Chuck Schumer (D-N.Y.) reportedly told senators to expect a procedural vote as early as Tuesday to begin the floor process on a limited competition measure that would include those two items and any other provisions from rival, broader bills that have bipartisan consensus and will be ready to move.

A bicameral conference committee on the broader Senate and House competition bills (S 1260, HR 4521) has stalled amid disagreement over trade and other controversial provisions likely to be left out of the more limited measure.

Bipartisan bill would clarify VP role with electors is ceremonial. A bipartisan group of senators is expected to release a bill as soon as the week of July 18 clarifying that the vice president has only a ceremonial role when Congress tallies Electoral College votes after a presidential election. The legislation would also increase, from one each in the House and Senate, the number of lawmakers required to challenge a slate of electors from a state, according to reports.

Centrist Sen. Joe Manchin (D-W.Va.) said he couldn’t support a plan to fund climate measures with tax increases at this time, citing the risk of setting off more inflation. Manchin said in a radio interview Friday that he wanted to see evidence inflation was receding before committing to climate and tax provisions. “Inflation is absolutely killing many, many people,” Manchin said on the radio program. “Can’t we wait to make sure that we do nothing to add to that?” Manchin said that he might be able to look again at the proposals when the next inflation numbers are announced in August (The Federal Reserve’s next monetary policy meeting is on July 26-27). Manchin said on MetroNews Talkline the only policies he would support this month are allowing Medicare to negotiate drug prices and extending enhanced subsidies under the Affordable Care Act (ObamaCare). Manchin said the drug negotiation policy would save the federal government about $280 billion. He called for $40 billion of that savings to go toward extending the subsidy enhancements and the remainder to go toward deficit reduction.

President Biden is coming under pressure to curb greenhouse-gas emissions by using his own executive powers. At the end of a news conference in Jeddah, Biden vowed that “I am not going away” on the climate fight. “I will use every power that I have as president to continue to fulfill my pledge toward dealing with global warming,” he said. Biden could declare a national climate emergency under federal laws that give presidents expanded powers in times of crisis. Biden issued a statement saying he would take “strong executive action to meet this moment,” but didn’t give any specifics. Sen. Sheldon Whitehouse (D-R.I.) released a list of 10 actions the administration could take, including requiring carbon capture from major pollution emitters, imposing stricter limits on coal- and gas-fired power plants, and setting stronger emission controls on vehicles.

Biden’s ability to act has also been clouded by a recent Supreme Court decision that said the Environmental Protection Agency overstepped its authority in seeking to limit emissions from power plants. The court said that when federal agencies issue regulations with sweeping economic and political consequences the regulations are presumptively invalid unless Congress has specifically authorized the action. Courts typically give presidents broad latitude in times of emergency.

Manchin also said he was wary of raising taxes to offset the energy and climate credits, at a time when inflation is rising at its fastest pace in 40 years. Republicans asked Congress’ Joint Committee on Taxation (JCT) to estimate the federal tax impact of the House’s scaled back Build Back Better bill revenue provisions, sans social spending (e.g., Affordable Care Act premium and child tax credits). The bill also raises the state-and-local tax deduction limit to $80,000 from $10,000 today.

The JCT analyses include green energy tax credits along with tax increases such as a 15% minimum tax on corporate book income over $1 billion; 5% surtax on income over $10 million and 8% over $25 million; 1% surtax on corporate stock buybacks; 3.8% “net investment income tax” on pass-through income over $400,000; and a limit on the losses that small businesses can deduct from taxes.

According to JCT’s first report, taxpayers would pay $31 billion more next year in federal tax and $150 billion in 2031 as the tax increases are phased in and some green energy tax credits are phased out. Taxpayers across the income spectrum would be hit. In 2023, those earning between $50,000 and $100,000 would pay $5.2 billion more. Over the 10-year budget window, about 30% of the revenue raised would come from Americans earning less than $400,000 per year. JCT’s second analysis shows that more than a quarter of Americans earning between $75,000 and $100,000 would pay more in tax next year, as would more than half of Americans earning between $100,000 and $200,000.

President Biden promised not to raise taxes on Americans earning less than $400,000.

Nearly 200 business groups recently wrote a letter to Congressional leaders warning that the 3.8% net-investment income tax on pass-through income and loss-deduction limit would cost small, individually owned and family-owned businesses more than $400 billion over 10 years. They also noted the net-investment income tax would not shore up Medicare.

Bottom line: Democrats have until Sept. 30 to complete a reconciliation measure. But Biden on Friday called on Democratic senators to pass a narrow bill to expand health-insurance subsidies through the Affordable Care Act and reduce the cost of prescription drugs. Biden’s statement effectively ruled out waiting any longer on Manchin. That is why party leaders are moving to vote on a prescription-drug pricing and health care subsidy package this month. It would likely serve as their last major policy message before voters go to the polls to determine which party controls Congress for the remainder of Biden’s current term.

Collapse of climate legislation comes as Biden’s top environmental advisers are reportedly headed for the exits. Biden’s top international envoy, John Kerry, who served as secretary of state in the Obama administration, is expected to leave after the next round of United Nations climate negotiations, which will be in November in Egypt. Gina McCarthy, who had served as the head of the Environmental Protection Agency under President Barack Obama, now leads a White House office of climate policy. McCarthy has indicated she intends to step down from her position this year but had hoped to do so on a high note after the passage of climate legislation.

House to take up USDA/FDA appropriations bill during the week of July 18 as part of minibus appropriations package. The full House of Representatives is expected to take up a minibus appropriations bill this week that includes the Agriculture Appropriations measure. The House Rules Committee meets on Monday to determine the debate, including which amendments are in order.

Funding levels: USDA, Food and Drug Administration, and related agencies would receive $27.2 billion in discretionary funding in fiscal 2023 under the measure, $2.08 billion more than the fiscal 2022 level and $350.3 million less than the White House requested, according to the House Appropriations Committee’s report on HR 8239.

The bill also includes mandatory funding for nutrition assistance and crop insurance programs, which would bring the total to $195.6 billion.

The Appropriations Committee approved the measure by a party-line 31-26 vote on June 23. Committee Republicans wrote in the report that they supported many elements of the bill, including funding for rural internet, water infrastructure, and agricultural research. They opposed the measure, however, because of the overall funding increase, additional money for the Supplemental Nutrition Assistance Program (SNAP) and the FDA, and other policy provisions.

Some policy items in the House bill include:

Prohibit companies owned by China, Russia, North Korea, or Iran from purchasing agricultural land located in the U.S.
FDA would be prohibited from reviewing or approving applications submitted by drugmakers located in Russia, unless the drug would treat a serious or life-threatening condition with an unmet medical treatment need.
USDA would have to create a process for establishments in the Chesapeake Bay area that process invasive blue catfish to apply for inspection waivers if the facility is also subject to and complies with inspection through the FDA’s Seafood Hazard Analysis Critical Control Points Program.
Prohibit the use of funds to prevent the transportation, processing, sale, or use of hemp in accordance with the law in states that permit cultivation.
Prevent FDA from approving drug research involving genetic modification of human embryos.
Bar the use of funds to purchase poultry products imported from China for school meal programs.
Prevent USDA from enforcing a requirement that if vegetables are substituted for fruit in the School Breakfast Program, the first two cups must be from a vegetable subgroup that doesn’t include white potatoes.
Limit the use of funds to implement a 2016 rule on standards for food retailers that are eligible to accept SNAP benefits until USDA amends it to require retailers to carry additional varieties of items in each staple food category.
Require any future compliance date for a 2021 FDA rule on lowfat yogurt to be at least three years after any objections to its provisions are resolved.
Prohibit personnel from allowing observed violations of the Animal Welfare Act to not be recorded on inspection reports or from prioritizing collaborative approaches to violations ahead of enforcement.
Permanently bar the use of funds to inspect horses for slaughter for human consumption, or to issue licenses to dealers who sell dogs and cats for research and experiments. The riders have been included in previous years and effectively prohibit the activities.

Meanwhile in the Senate, the Appropriations Subcommittee chairmen plan to release fiscal year 2023 bills by the end of July, a spokesman for Senate Appropriations Committee Chairman Patrick Leahy (D-Vt.) said in a news release.

Timeline: While the House plans to clear as many of the 12 annual appropriations bills as possible before the August recess, the Senate is not expected to move any of the bills through subcommittee, full committee, or the full chamber. This means the need for at least one Continuing Resolution (CR) to keep the government running after Sept. 30 and ultimately in an omnibus bill in the lame duck session or early next year. Failure to pass an omnibus would result in Congress passing a year-long CR.

Other hearings of note this week include:

Tuesday: Infrastructure bill implementation. House Transportation and Infrastructure Committee.
Tuesday: Small business trade expansion. House Small Business — Subcommittee on Economic Growth, Tax, and Capital Access.
Tuesday: Regenerative agriculture. House Oversight and Reform — Subcommittee on Environment Subcommittee.
Tuesday: Ukraine. Senate Armed Services Committee.
Wednesday: H2 visa programs’ impact on workers. House Education and Labor — Subcommittee on Workforce Protections.
Wednesday: Global food security crisis/U.S. response. Senate Foreign Relations Committee.
Wednesday: U.N. World Food Program. House Foreign Affairs Committee.
Wednesday: Food Safety and the FDA. Senate Ag Appropriations Subcommittee. Witnesses: FDA Commissioner Robert Califf; Deputy FDA Commissioner for Food Policy and Response Frank Yiannas; Assistant FDA Commissioner for Human and Animal Food Operations Michael C. Rogers; Susan, T. Mayne, director of the FDA Center for Food Safety and Applied Nutrition.
Thursday: Housing prices. Senate Banking, Housing and Urban Affairs Committee.

Economic Reports for the Week

U.S. housing starts on Tuesday and existing-home sales on Wednesday will show how the market held up last month as higher interest rates and elevated sales prices made homeownership less affordable. In May, new-home construction tumbled while sales of previously owned homes slid for the fourth straight month.

Monday, July 18

National Association of Home Builders releases its Housing Market Index for July. Consensus estimate is for a 64 reading, three points fewer than the June figure, a two-year low.

Tuesday, July 19

Census Bureau reports new residential construction statistics for June. Economists forecast a seasonally adjusted annual rate of 1.58 million privately owned housing starts, 1.7% higher than in May. Starts have fallen sharply this year and are at their lowest levels since April of last year.

Wednesday, July 20

MBA Mortgage Applications
National Association of Realtors reports existing-home sales for June. Expectations are for existing-home sales to decline 0.7% to a seasonally adjusted annual rate of 5.37 million. Existing-home sales have declined for four consecutive months.

Thursday, July 21

Jobless Claims
Conference Board releases its Leading Economic Index for June. Consensus estimate is for a 0.4% month-over-month decline, matching May’s drop.
Fed Balance Sheet
Money Supply
Bank of Japan is expected to keep its target interest rate steady at negative 0.1%.
European Central Bank is expected to raise its key interest rate by 25 basis points, from negative 0.5% to negative 0.25%.

Friday, July 22

S&P Global releases both its Manufacturing and Services Purchasing Managers’ Indexes for July. Expectations are for a 51.5 reading for the Manufacturing PMI and a 53 for the Services PMI. Both indexes registered a 52.7 reading in June.

Key USDA & international Ag & Energy Reports and Events

Weather continues to be the primary ag-market focus both in the United States and internationally. Meanwhile, on Thursday, the International Grains Council releases its monthly report.

Monday, July 18

Ag reports and events:

Export Inspections
Crop Progress
Livestock, Dairy, and Poultry Outlook
Sugar and Sweeteners Outlook
Mink
China’s second batch of June trade data, including corn, pork and wheat imports
Holiday: Japan