Slowdown in New Farm Bill Negotiations Part of End-of-Year List of Things Not Done

Biden to host Ukrainian president Tuesday | COP28 summit seeks U.S./China agreement

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December 10, 2023 10:21 PM

Biden to host Ukrainian president Tuesday | COP28 summit seeks U.S./China agreement

Washington Focus

After this week, Congress will do what it does best: leave DC for a holiday break… early. Of course, they have must-pass things to do, but as usual, they will punt those, this time until early 2024. Key outstanding issues include:

Fiscal year (FY) 2024 spending: The situation with federal spending is currently in a stalemate. House Republicans have not passed five individual spending bills, and it appears they have abandoned plans to do so. Instead, Speaker Mike Johnson’s (R-La.) staff is engaging in discussions with Senate Majority Leader Chuck Schumer’s (D-N.Y.) staff regarding the overall budget for FY 2024, but they have not reached an agreement yet. There is still no consensus framework for budget talks. This is concerning because the first government funding deadline is looming on Jan. 19, including for USDA (second deadline is Feb. 15). The deadlock: House GOP conservatives are adamant about not exceeding the spending caps set by the $1.59 trillion debt deal reached earlier in the summer. This stance would mean rejecting a previous informal agreement to potentially increase funding for non-defense programs by tens of billions of dollars.
Foreign aid: Following a failed Senate vote on $110.5 billion in foreign aid, negotiations on border security are back on track. The aim is to find a potential deal that could garner the GOP support necessary to pass aid packages for Ukraine, Israel, and Taiwan. Some discussions among appropriators involve reallocating existing funds to aid Ukraine. However, Sen. Jon Tester (D-Mont.) rejected this idea, emphasizing that if funding is not allocated to Ukraine, there won’t be any funds available for reprogramming. Additionally, hardline conservatives want any emergency funds, including those earmarked for Israel and Ukraine (amounting to tens of billions of dollars), to be kept within the existing spending caps. Democrats are opposed to this idea, making it clear that a resolution is unlikely before the holiday season. “This is one of the most dangerous moments that I’ve ever faced in American politics,” Sen. Chris Murphy (D-Conn.), said on NBC’s Meet the Press. “If we don’t solve this in the next few weeks, [Russian President] Vladimir Putin is going to have an opening to march through the Ukrainian lines to make a move on Kyiv, threatening all of Europe.” White House officials recently indicated to Republican negotiators that President Biden is willing to discuss major concessions to curb access to asylum. The administration has also signaled openness to designating countries as “safe third countries” where asylum seekers at the border could be sent, and expanding rapid deportations to be used nationwide rather than just at the border. Republicans want mandatory detention for asylum seekers and a reintroduction of the “Remain in Mexico” policy that would be used when detention space runs out.
Nearly half of American voters think the U.S. is spending too much on aid for Ukraine, according to a poll that underscores the fragility of domestic support just as Volodymyr Zelenskyy prepares to visit Washington to lobby for more funding. The latest FT-Michigan Ross poll found that 48% believed the U.S. was spending “too much” in military and financial aid to bolster Kyiv’s war effort against Russia, compared with 27% who said Washington was spending the “right amount” and 11% who said the U.S. was not spending enough. Opposition was particularly pronounced among Republicans, with 65% saying the U.S. was spending too much in Ukraine, compared with roughly half — 52% — of independents and just a third — 32% — of Democrats.
FAA: Reauthorization of the Federal Aviation Administration (FAA) was intentionally separated from gov’t funding several months ago to prevent a potential “double shutdown” scenario if a broader spending deal couldn’t be reached. However, the FAA authorization is set to expire on Dec. 31, and it appears that another temporary patch will be necessary. The House and Senate are expected to pass this patch, which would extend the FAA’s current authorization until March 8. This extension is designed to provide senators with additional time for negotiations (which have dragged on a while). While the House passed its FAA reauthorization bill with strong bipartisan support during the summer, the Senate has yet to make progress on its version of the legislation.
New farm bill: It seems like “progress” on inking a new farm bill is going backwards. Some lawmakers, including Senate Ag Chair Debbie Stabenow (D-Mich.), keep drawing red lines on various issues, including food stamps/nutrition and conservation spending. The 2018 Farm Bill was given a stopgap extension, which will keep it in effect until Sept. 30, 2024. Key lawmakers have acknowledged that they won’t begin work on a new farm bill until 2024. This delay is due to competing priorities, particularly the FY 2024 appropriations, taking precedence. As noted, there is ongoing disagreement among lawmakers regarding funding, which is expected to exceed $1.5 trillion. These funding disagreements are contributing to the delay in the legislative process for the new farm bill.

— House to debate HR 1147: Expanding milk options in school lunch program. The House this week will debate HR 1147 to allow schools that participate in the National School Lunch Program to serve whole or reduced-fat milk that is flavored or unflavored to students. Under current law, schools must offer milk that is fat-free or low-fat and may only offer flavored milk if it is fat-free. On Monday, House Rules will decide which amendments are in order.

Reps. GT Thompson (R-Pa.) and Kim Schrier (D-Wash.) authored The Whole Milk for Healthy Kids Act of 2023, which would dictate the return of whole milk to school menus, overturning a ban dating back to 2010.

Key Hearings and Events

Monday, Dec. 11:

President Joe Biden is scheduled to be in Philadelphia.
House Rules Committee. The House Rules Committee meets to formulate a rule for several pieces of legislation, including the Whole Milk for Healthy Kids Act.
U.S. electricity supply issues. United States Energy Association virtual media briefing on “A New Era of Energy Crisis is Unfolding,” focusing on the nation’s electricity supply.
Energy workforce. Department of Energy virtual meeting of the 21st Century Energy Workforce Advisory Board for continuing discussion of the Energy Department’s role in meeting future energy workforce needs.
CFTC committee. Commodity Futures Trading Commission (CFTC) meeting of the Market Risk Advisory Committee to discuss current topics and developments in the areas of central counterparty risk and governance, market structure, climate-related risk, and innovative and emerging technologies affecting the derivatives and related financial markets.
Countering Chinese influence. Hudson Institute discussion on “Countering Chinese Influence Operations on American Soil,” as part of the Beyond the SCIF series.
Energy and climate issues. Center for Strategic and International Studies virtual discussion on “2023 Energy and Climate Review.”
2024 campaign. Washington Post Live virtual “Political Roundtable” discussion on “what’s ahead on the 2024 presidential campaign trail.”

Tuesday, Dec. 12:

Sustainable agriculture. Farm Foundation virtual forum on “Defining Sustainability: Industry Leaders on Actionable Goals.”
WTO issues. Cato Institute discussion on “threats facing both the WTO and globalization more broadly, as well as their implications for the global economy, developing countries, and the world’s most vulnerable people.” WTO Director Ngozi Okonjo-Iweala participates.
Electric infrastructure. Homeland Security Department virtual meeting of the President’s National Infrastructure Advisory Council (NIAC) for a keynote address on critical infrastructure security and resilience, a report to the Council from the NIAC’s Electrification Subcommittee and deliberation and vote on Electrification Subcommittee recommendations.
Electric vehicles. Department of Energy virtual meeting of the Electric Vehicle Working Group for remarks from Energy Secretary Jennifer Granholm and Transportation Secretary Pete Buttigieg, a discussion on the first report to be drafted by the EVWG, and a discussion on future report topics and subcommittees. Runs through Wednesday.
Hydrogen energy. Department of Energy meeting of the National Petroleum Council for Energy Department remarks, progress reports from the NPC Hydrogen Energy and GHG Emissions Committees and administrative matters.
U.S. dollar. Atlantic Council virtual discussion on “Debating the Dollar: Who Wants It, Who Doesn’t, and What Comes Next?”
U.S. lithium supplies. United States Energy Association virtual briefing on “U.S. and North American Lithium.”
Export controls. House Foreign Affairs Oversight and Accountability Subcommittee hearing on “Reviewing the Bureau of Industry and Security, Part II: US Export Controls in an Era of Strategic Competition.”
Mineral supply chains. House Natural Resources Oversight and Investigations Subcommittee hearing on “The Mineral Supply Chain and the New Space Race.”
Disaster aid. Senate Appropriations Transportation, Housing and Urban Development, and Related Agencies Subcommittee hearing on “What Happens When Disaster Recovery Funds are Delayed.”
PNW energy production. House Natural Resources Water, Wildlife and Fisheries Subcommittee hearing on “Left in the Dark: Examining the Biden Administration’s Efforts to Eliminate the Pacific Northwest’s Clean Energy Production.”
Small businesses. House Small Business Committee hearing on “A Year in Review: The State of Small Business in America.”
Sanctions on Russia, Venezuela, and Iran. House Financial Services National Security, Illicit Finance, and International Financial Institutions Subcommittee hearing on “Restricting Rogue-State Revenue: Strengthening Energy Sanctions on Russia, Iran, and Venezuela.”

Wednesday, Dec. 13:

Ukrainian farmland reclamation. Center for Strategic and International Studies virtual discussion on a new report, “From the Ground Up: Demining Farmland and Improving Access to Fertilizer to Restore Ukraine’s Agricultural Production.”
EVs and the future. Economic Club of Washington, D.C. discussion on “the transformation of the automotive industry to an all-electric future, the path to autonomous vehicles, and the recent negotiations with GM’s workforce against the backdrop of evolving macroeconomic trends and global competition.” GM CEO Mary Barra speaks.
Oil companies and methane. Center for Strategic and International Studies discussion on “The Role of National Oil Companies in Methane Reductions.”
2024 elections. CQ Roll Call and FiscalNote webinar on “Countdown to 2024: Understanding the Political Endgame Dynamics.”
OPEC and clean energy. New America virtual discussion on “The Future of OPEC (Organization of the Petroleum Exporting Countries) in a Clean Energy World.”
China, Taiwan and the U.S. RAND Corporation virtual discussion on “China, Taiwan, and the United States: The Coming War?”
US-Japan-Korea relations. Brookings Institution discussion on “Redefining U.S./Japan/South Korea Relations in an Era of Economic Security.”
Small business regs. House Education and the Workforce Health, Employment, Labor, and Pensions Subcommittee hearing on “Protecting Workers and Small Businesses from Biden’s Attack on Worker Free Choice and Economic Growth.”
WHO reform. House Oversight and Accountability Select Coronavirus Pandemic Subcommittee hearing on “Reforming the WHO (World Health Organization): Ensuring Global Health Security and Accountability.”
Argentina moving to the dollar. American Enterprise Institute for Public Policy Research virtual discussion on “Should Argentina Dollarize?”
WRDA. House Transportation and Infrastructure Water Resources and Environment Subcommittee hearing on “Proposals for a Water Resources Development Act of 2024: Stakeholder Priorities.”

Thursday, Dec. 14:

Agriculture economy, derivatives market. Commodity Futures Trading Commission meeting of the Agricultural Advisory Committee to discuss topics related to the agricultural economy, including geopolitical and sustainability issues, as well as recent developments in the agricultural derivatives markets.
Curbing carbon emissions. The Hill discussion on “Enhancing Energy Efficiency: How Technology is Cutting Carbon Emissions.”
Food systems. Center for Strategic and International Studies (discussion on “The Future of Public-Private Partnerships in Food Systems: Policies and Practices.”
Trade issues. Washington International Trade Association virtual discussion on “250 Years Since the Boston Tea Party Made Trade a Political Issue in America,” focusing on the past and future of trade.
Israel/Hamas conflict. Washington Institute for Near East Policy virtual forum on “The Hamas-Israel War: End of the Beginning or Beginning of the End?”
Hydrogen and U.S. decarbonization. United States Energy Association virtual briefing on hydrogen as part of the U.S. decarbonization plan.

Friday, Dec. 15:

U.S./China relations. Brookings Institution discussion on “U.S./China Relations.”
Taiwan elections. Asia Society Policy Institute virtual discussion on “Taiwan Elections in 2024: Who is Running and What to Expect.”

Economic Reports for the Week

The Federal Reserve wraps up its last interest rate (FOMC) meeting of the year on Wednesday. No change is expected, and investors are already looking toward the possibility of rate cuts next year. Of note will be the Fed’s updated projections and Chair Jerome Powell’s presser. The Fed’s favored inflation gauge, core PCE inflation, looks on track to end the year comfortably below the central bank’s forecast and not too far off the Fed’s 2% target. Outside of the Fed meeting, the economic calendar also includes the consumer price index and producer price index reports, as well as updates on retail sales and industrial production.

Monday, Dec. 11

U.S. Conference Board is likely to issue Employment Trends for the month of November.

Tuesday, Dec. 12

NFIB Small Business Optimism
CPI: The Labor Department is expected to report that in the 12 months through November, the CPI is expected to climb 3.1%. Excluding the volatile food and energy components, the CPI is expected to rise 0.3% in November, slightly higher than the 0.2% rise in October. The core CPI will likely maintain a 4.0% gain on a year-on-year basis in November.
Treasury Budget

Wednesday, Dec. 13

MBA Mortgage Applications
PPI: The Labor Department is expected to show that the producer price index (PPI) for final demand likely rose 0.1% in November after declining 0.5% in October. In the 12 months through November, the PPI is expected to increase 1.0%. Excluding the volatile energy and energy components, PPI likely edged up 0.2% in November after remaining flat in the month before.
Atlanta Fed Business Inflation Expectations
Federal Open Market Committee (FOMC) rate-setting announcement. The central bank is expected to keep its policy rate unchanged at 5.25-5.5% at the upcoming meeting. On Wednesday, Federal Reserve Chair Jerome Powell is scheduled to hold a news conference after the release of the Fed policy decision. Also closely monitored will be updated Fed projections.

Thursday, Dec. 14

Jobless Claims: Initial claims for state unemployment benefits are expected to have risen to 221,000 in the week ending Dec. 9.
Retail Sales: The Commerce Department is expected to report retail sales likely fell 0.1% in November, matching the 0.1% fall in October. Excluding automobiles, gasoline, building materials and food services, retail sales likely fell 0.1% in November after climbing 0.1% in October.
Import and Export Prices: Import prices are expected to fall 0.8% in November after depreciating 0.8% in October. Export prices are likely to fall 1.0%, after the dip of 1.1% the month before.
Business Inventories likely remained unchanged in November after gaining 0.4% in the previous month.
Fed Balance Sheet
Money Supply

Friday, Dec. 15

December’s Empire State Manufacturing Index is expected to slow to 3.7 after November’s nearly 14-point rise to 9.1 in a report, however, where both new orders and backlogs continued to contract.
Industrial Production and Capacity Utilization: Industrial production likely gained 0.3% in November after dipping 0.6% in October. Meanwhile, capacity utilization for the industrial sector, a measure of how fully firms use their resources, is expected to be at 79.2% in November, from 78.9% in October.
S&P Global U.S. Manufacturing PMI – Preliminary is likely to come in at 49.1 in December.
S&P Global U.S. Services PMI is likely to read 50.5 in the same month.

Key USDA & international Ag & Energy Reports and Events

The ag sector focus turns to South America weather and crop prospects.

On the energy front, this week brings several outlook reports of note.

Monday, Dec. 11

Ag reports and events:

Export Inspections
Season-Average Price Forecasts
Feed Grains Database
Wheat Data