South Carolina Gets First Slot in 2024 Democratic Presidential Primary Calendar

China spy balloon raises security & political issues as U.S. shoots down balloon | SOTU address Tuesday | Senate Ag farm bill hearing Thursday

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February 05, 2023 02:56 PM

China spy balloon raises security & political issues as U.S. shoots down balloon | SOTU address Tuesday | Senate Ag farm bill hearing Thursday

Washington Focus

The House and Senate are both in this week, with the House in session Monday through Thursday and the Senate in session Tuesday through Friday. Focus this week: State of the Union (SOTU) address Tuesday evening, USDA’s farm income forecast update on Tuesday, a House Transportation and Infrastructure Committee hearing Wednesday on the Biden administration’s new “waters of the U.S.” (WOTUS) rule, which redefines the wetlands and streams that fall under federal jurisdiction via the Clean Water Act. and a Senate farm bill hearing on Thursday on commodity programs, crop insurance and farm credit.

President Joe Biden gives his SOTU address on Tuesday evening to a joint session of Congress and a national televised event. The downing of an alleged China spy plane will likely be part of the topics the president talks about. The ag sector is watching to see whether Biden mentions a new farm bill as one of the possible bills that could see bipartisan support and action yet this year.

The annual address will provide Biden with a chance to highlight key priorities and agenda items. This year’s address will take place with Republicans newly in control of the House.

GOP response. Following Biden’s speech, Arkansas Gov. and former Trump White House press secretary Sarah Huckabee Sanders will deliver the Republican response.

The U.S. military shot down the Chinese spy balloon that floated across North America for the past week — with U.S. Secretary of Defense Lloyd Austin slamming the device as an “unacceptable violation of our sovereignty.” Fox News video showed the deflated white balloon dropping down into the Atlantic Ocean, 10 miles below, shortly after the craft cleared the South Carolina coast near Myrtle Beach Saturday afternoon. An F-22 jet fired a single missile into the craft, causing it to crash. Link for details of the topic that we released Saturday in a special report.

Pentagon officials said they could not tell how long the recovery would take — the debris field extends some seven miles — but they were relieved that most of the fallen material rests primarily in about 47 feet of water.

President Biden said he ordered the military Wednesday to down the aircraft, but accepted recommendations from Austin and others to wait until there was minimum chance for injury to people or damage to property on the ground. The administration has been criticized in some quarters, especially among China hawks in Congress, for not shooting the balloon down sooner. It entered Alaskan airspace on Jan. 28, crossed into Canada on Monday and then headed south toward Idaho and beyond starting Tuesday, according to a timeline provided by senior Pentagon officials. The delay in downing the balloon “actually provided us a number of days to analyze this balloon and through a number of [classified] means ... learn a lot about what the balloon was doing, how it was doing it, why the [People’s Republic of China] might be using balloons like this,” said a senior Defense official who briefed reporters on condition of anonymity. “All debris and any material of intelligence value” will be plucked from the ocean, the senior Defense official said, and turned over to the FBI and government intelligence agencies for analysis. Although Defense officials said Saturday they did not know how long recovery of the downed balloon’s now-submerged payload — said to measure the length of three buses — would take, it would probably be a matter of days, not weeks.

Rep. Michael McCaul (R-Texas), head of the House Foreign Affairs Committee, said Secretary of State Antony Blinken should have gone to China to tell “Chairman Xi and his government that their military adventurism will no longer be tolerated.” Blinken on Friday canceled a long-planned trip to Beijing for high-level meetings with officials there, an important follow-up to last year’s opening rapprochement between Biden and Chinese President Xi Jinping. He would have been the first U.S. secretary of State to make an official trip to China in nearly five years.

China watcher Bill Bishop said, “I don’t think the [Chinese] leadership understands how big a political deal this spy balloon is becoming in DC. [It] just darkens even more an already rapidly darkening mood on [Capitol] Hill.”

U.S. officials summoned China’s chargé d’Affaires in D.C. to discuss the matter.

The Chinese government said the downing of the “civilian” aircraft was an “excessive reaction,” and that it “retains the right to respond further.” In a statement, the ministry said that China had told Washington repeatedly that the balloon was a civilian aircraft and had inadvertently flown over the United States and its presence was “totally accidental.” The Wall Street Journal says the initial response suggested China “prefers to let the heat seep out of the controversy surrounding the inflatable craft,” adding China’s statements on the matter “were brief and conveyed a tone less strident than in recent diplomatic standoffs with Washington such as those involving U.S. engagement with Taiwan.”

“This is not the last such incident we’re going to see from the Chinese Communist Party,” said Rep. Mike Gallagher (R-Wis.), head of a new House select committee on China. “They’re testing us, they’re mocking us, & of course, they’re trying to collect as much sensitive info from us as possible.”

Bottom line: While the long-term impact of the incident is not clear, it has further inflamed tensions between the world’s two largest economies.

Upcoming Senate farm bill hearing dates:

• Feb. 9: Commodity programs, crop insurance and farm credit programs

• Feb. 16: Nutrition programs

• March 1: Conservation and forestry programs

• March 16: USDA Secretary Tom Vilsack testifies

House Ag Chairman G.T. Thompson (R-Pa.) will begin the 2023 Farm Bill listening session tour at the World Ag Expo in Tulare, California, on Feb. 14. Thompson will be joined by Rep. David Valadao (R-Calif.) along with bipartisan Members of the House Committee on Agriculture. Link to tune into the live stream of the event.

USDA announced its new proposed rule updating school nutrition standards aimed at reducing sugar and sodium. The rules will be rolled out over the next few years. Critics say tightening nutrition standards discourages participation in school lunch programs and contributes to food waste. Link to USDA announcement.

Flavored milk with “reasonable limits on added sugars” would be allowed under the proposal. USDA Secretary Tom Vilsack said school meal administrators tell USDA that kids just won’t drink much no-fat skim milk or unflavored milk. “That’s not what they get at home,” Vilsack said. “We want to encourage kids to drink milk because there are there’s tremendous nutritional value in milk.”

The proposed standards would limit added sugar in certain high-sugar products like prepackaged muffins, yogurt, and cereal. Eventually, the guidelines would then limit added sugars across the weekly menu.

The standards would reduce sodium limits, but that would happen gradually over several school years. The Food and Drug Administration provided some insight and direction “by suggesting that it is easier for people to accept and adopt to reduced sodium if you do it over a period of time in small increments,” Vilsack said.

The guidelines would also place a bigger emphasis on whole grains, but still leave options open for an occasional non-whole grain product.

The proposed rule would also strengthen the Buy American requirements encouraging schools to use more locally grown food. USDA will invest $100 million in the Healthy Meals Incentives initiative which offers farm-to-school grants and grants to buy equipment.

Funding would also reward schools that do a good job providing nutritious meals. Grants would also be aimed at small and rural districts and training.

Vilsack said the USDA created these proposed standards after the USDA received thousands of comments and held 50 listening sessions with parents, school food administrators, the food industry, public health and nutrition experts. “Establishing these standards are difficult because you have to follow the science you have to follow the dietary guidelines, but you also have to understand that they need to be implemented in the real world which is which is which is tough,” Vilsack said in an interview with CNN.

Key Republicans react. Sen. John Boozman (R-Ark.), ranking member of the Senate Ag Committee and House Education and the Workforce Committee Chairwoman Virginia Foxx (R-N.S.) released a statement noting they will “review this proposal and talk with the stakeholders who make this program run to understand what works and what does not. Claiming to be science-based doesn’t mean USDA can put unworkable standards in place that make it harder for local school personnel to feed kids. Claiming to have solicited feedback does not mean USDA can ignore what works for schools and families to ensure kids will eat the meals. Claiming to be flexible does not mean USDA can add requirements that drive up costs for schools and families.”

Democrats alter presidential primary calendar, demoting Iowa and New Hampshire. Democrats voted to allow South Carolina to hold the party’s first presidential primary next year, ending nearly 50 years of Iowa and New Hampshire leading the party’s nominating season. Under the new calendar, proposed based on recommendations from President Biden, candidates would face voters in South Carolina on Feb. 3, followed by Nevada and New Hampshire on Feb. 6, then Georgia (Feb. 13) and Michigan (Feb. 27). Super Tuesday would be March 5. To be determined: Iowa.

President Biden says the order of Democratic primaries should be adjusted to allow states with racially diverse populations to have more of a say in early presidential contests, which can set the tone for the rest of a campaign. (Biden is polling poorly in New Hampshire.) Key: Will Biden get a credible primary challenger?

Iowa and New Hampshire are still key for the Republicans — Nikki Haley is headed to both states after she kicks off her campaign Feb. 15.

Monday, Feb. 6

• Biden/Lula meeting. Center for Strategic and International Studies conference call briefing on “Previewing President Biden’s Meeting with President Lula of Brazil.”

• State of the Union preview. Brookings Institution virtual discussion on “What to Expect from Biden’s Second State of the Union Address.”

• U.S./Kenya trade. U.S. and Kenya in-person round of conceptual discussions under their Strategic Trade and Investment Partnership (STIP), with the U.S. delegation led by Assistant United States Trade Representative Connie Hamilton (runs through Saturday).

• Data and climate risks. Middle East Institute (MEI) holds a virtual discussion on “Climate Tech: Leveraging Data to Mitigate Climate Risks.”

• Decarbonization in the Black Sea. Atlantic Council discussion on “U.S./Romania spotlight: How transatlantic cooperation can advance energy security and decarbonization in the Black Sea region.”

• New Israeli government. Carnegie Endowment for International Peace virtual discussion on “Unpacking Israel’s New Government.”

• Deadline for farmers to respond to the 2022 Census of Agriculture.

Tuesday, Feb. 7

• President Joe Biden delivers the State of the Union message to a joint session of Congress. Arkansas Governor Sarah Huckabee Sanders to deliver the Republican response.

• Federal Reserve. Fed Chair Jerome Powell participates in a discussion at the Economic Club of Washington Chairman David Rubenstein. Fed Vice Chair for Supervision Michael Barr speaks on financial inclusion in Jackson, Mississippi.

• U.S. border security. House Oversight and Accountability Committee hearing, “On the Front Lines of the Border Crisis: A Hearing with Chief Patrol Agents.”

• Small businesses and SEC rules. Securities and Exchange Commission (SEC) meeting to discuss rules and regulations affecting small and emerging businesses and their investors under the federal securities laws.

• Electricity market report. International Energy Agency (IEA) holds an embargoed media briefing ahead of the launch of the 2023 Electricity Market Report.

• Russian war update. Wilson Center’s International Change and Security Program virtual discussion on “Water and Conflict: Updates from the Russia-Ukraine War.”

• FAA Reauthorization. House Transportation and Infrastructure Committee hearing on “FAA (Federal Aviation Administration) Reauthorization: Enhancing America’s Standard in Aviation Safety.” Dave Boulter, acting associate FAA administrator for aviation safety; and Jennifer Homendy, chair of the National Transportation Safety Board among those testifying.

• Energy and supply chains. House Energy and Commerce Energy, Climate, and Grid Security Subcommittee and Environment, Manufacturing, and Critical Materials Subcommittee joint hearing on “Unleashing American Energy, Lowering Energy Costs, and Strengthening Supply Chains.”

• Economic threat from China. House Financial Services Committee hearing on “Combatting the Economic Threat from China.”

• China and U.S. national security. House Armed Services Committee hearing on “The Pressing Threat of the Chinese Communist Party to U.S. National Defense.”

• Plans for 118th Congress. House Natural Resources Committee meeting to consider the Committee Authorization and Oversight Plan for the 118th Congress

• Are Chinese companies private. Center for Strategic and International Studies virtual discussion on “How Private are Chinese Companies?”

• Russia’s invasion of Ukraine. Brookings Institution discussion on “The Russia/Ukraine War: Year two and strategic consequences.”

• Organizing for the 118th Congress: Senate. Senate Small Business and Entrepreneurship Committee meeting to organize for the 118th Congress.

Wednesday, Feb. 8

• Federal Reserve. Fed Governor Christopher Waller speaks on the Economic Outlook in Arkansas; Fed Vice Chair for Supervision Michael Barr delivers remarks in Mississippi; New York Fed President John Williams scheduled to speak.

• Biden WOTUS rule. House Transportation and Infrastructure Water Resources and Environment Subcommittee hearing on “Stakeholder Perspectives on the Impacts of the Biden Administration’s Water of the United States (WOTUS) Rule.”

• CODEX meeting. USDA’s U.S. Codex office virtual meeting of the Codex Committee on Nutrition and Foods for Special Dietary Uses to discuss the 43rd Session of the Codex Committee on Nutrition and Foods for Special Dietary Uses of the Codex Alimentarius Commission.

• U.S. economy. Brookings Institution event with Council of Economic Advisors Member Jared Bernstein on “The U.S. Economy: Where it’s been and where it’s going.”

• Covid response oversight. House Energy and Commerce Health Subcommittee and Oversight and Investigations Subcommittee joint hearing on “The Federal Response to Covid-19.” CDC Director Rochelle Walensky and FDA Commissioner Robert Califf among those to testify.

• Energy and Commerce panel priorities. PunchBowl News virtual discussion with House Energy and Commerce Chairwoman Cathy McMorris Rodgers (R-Wash.) on priorities for the 118th Congress for the House Energy and Commerce Committee.

• Liquidity risks. The Peterson Institute for International Economics virtual discussion on “Lessons for Systemic Liquidity Risk from Recent Crises.”

• Ukraine democracy. United States Institute of Peace discussion on “Winning the Peace After the War: Supporting Ukrainian Democracy.”

• India sodium nitrite vote. International Trade Commission meeting to vote on Inv. Nos. 701-TA-679 and 731-TA-1585, Sodium Nitrite from India, and is scheduled to complete and file its determinations and views of the Commission on Feb. 20, 2023.

• Farm Credit board meeting of the Board of Directors.

• Unemployment fraud. House Ways and Means Committee hearing on “The Greatest Theft of Taxpayer Dollars: Unchecked Unemployment Fraud.”

• U.S. energy and mineral potential. House Natural Resources Committee hearing on “Unleashing America’s Energy and Mineral Potential.”

• Russian threats to global financial security. Atlantic Council virtual discussion on “Countering Russian threats to global financial security.”

• Organizing for the 118th Congress: House. House Appropriations, Homeland Security, Veterans Affairs, Foreign Affairs, Small Business Committees meet to organize for the 118th Congress.

• Rethinking China’s rise. Brookings Institution virtual discussion on “Rethinking China’s Rise, Restraints, and Resilience.”

• FTC rules. Federalist Society for Law and Public Policy Studies webinar on “FTC: Cost/Benefit Analysis of Proposed Rules - A Deeper Dive,” looking at “how a federal agency undertakes the cost-benefit analysis for proposed rules, comparing independent agencies to those subject to OIRA review.”

• U.S. grid. American Council on Renewable Energy (virtual discussion on “Any Hurry Since Uri? Evaluating the U.S. Grid Two Years After the Deadly Storm.”

• EVs. The Hill virtual event on “Charging Ahead: The Hill’s EV/AV (electric vehicles/autonomous vehicles) Summit 2023.”

• Finland, Sweden NATO membership. American University School of International Service virtual discussion on “Nordic Security Transformed — Spotlight on Finland and Sweden,” focusing on the two countries’ move to apply for NATO membership following the Russian invasion of Ukraine.

• Crop Insurance and Reinsurance Bureau (CIRB) annual meeting, through Friday, Bonita Springs, Florida.

• National Council of Farmer Cooperatives annual meeting, through Friday, Orlando, Florida.

Thursday, Feb. 9

• Farm bill hearing. Senate Ag Committee hearing on “Farm Bill 2023: Commodity Programs, Crop Insurance, and Credit.” USDA Undersecretary for Farm Production and Conservation Robert Bonnie; Marcia Bunger, administrator of the USDA Risk Management Agency; and Zach Ducheneaux, administrator of the USDA Farm Service Agency to testify.

• Governors’ meeting. National Governors Association 2023 Winter Meeting (runs through Saturday).

• Critical minerals. House Natural Resources Oversight and Investigations Subcommittee hearing on “Dependence on Foreign Adversaries: America’s Critical Minerals Crisis.”

• Industry and sustainable energy transition. Atlantic Council virtual discussion on “industry’s role in an inclusive and sustainable energy transition.”

• EU energy transition. CQ Roll Call and FiscalNote webinar on “2023 Energy Crisis: Opportunities to Shape the EU’s Energy Transition.”

• India economic trends. Center for Strategic and International Studies virtual discussion on “Rating India 2023: Key Opportunities and Risks,” focusing on economic trends.

• Farm Credit meeting. Farm Credit Administration meeting.

• Dietary Guidelines Advisory Committee virtual meeting, through Friday.

• Organizing for 118th Congress: Senate. Senate Energy and Natural Resources; Commerce, Science and Technology; Health, Education, Labor and Pensions; Homeland Security and Governmental Affairs Committees meet to organize for the 118th Congress.

• U.S./China policy. Senate Foreign Relations Committee hearing on “Evaluating U.S./China Policy in the Era of Strategic Competition.”

• Deterring Russia. Wilson Center’s Polar Institute virtual discussion on “Deterring Russia at Sea in the High North.”

• Climate change views. Environmental and Energy Study Institute discussion on “Public Polling on Climate Change.”

Friday, Feb. 10

• Federal Reserve. Fed Governor Christopher Waller to deliver remarks on Digital Assets in California; Philadelphia Fed President Patrick Harker scheduled to speak.

• Europe and its green transition. Georgetown University 2023 Transatlantic Policy Symposium with the theme “In Transition: Towards a Green, Digital, and Resilient Europe?”

• Small modular nuclear reactors. United States Energy Association (USEA) a virtual briefing “Small Modular Reactors.”

• Governors’ meeting. National Governors Association 2023 Winter Meeting (runs through Saturday).

• China policies. Center for Strategic and International Studies virtual discussion on “Recent Visitors to China: Takeaways and Next Steps,” focusing on China’s zero-Covid policy and impressions of Chinese society and economy, views expressed about the U.S.

• National Cotton Council annual meeting, through Sunday, Dallas, Texas.

Economic Reports and Key Events for the Week

Earnings reports, Michigan consumer confidence, and trade balance data take the spotlight. On the international front, both the Reserve Bank of Australia on Tuesday and the Reserve Bank of India the following day will probably deliver quarter-point hikes in borrowing costs that might mark their final salvos for now.

About a half-dozen central bankers are due to speak, including New York Fed President John Williams, Atlanta Fed President Raphael Bostic, Minneapolis Fed President Neel Kashkari, and Fed Chair Jerome Powell. Details:

Powell will be interviewed by Carlyle Group co-Executive Chairman David Rubenstein at the Economic Club of Washington, D.C., on Tuesday.
Fed Vice Chair for Supervision Michael Barr will give keynote remarks at the Banking on Financial Inclusion Hope Economic Mobility Forum on Tuesday.
Jared Bernstein, a member of the president’s Council of Economic Advisers, will discuss the U.S. economy at a Brookings Institution and Hutchins Center on Fiscal & Monetary Policy event on Wednesday.
Acting Comptroller of the Currency Michael Hsu will give opening remarks at the agency’s Bank Merger Symposium on Friday.
New York Fed President John Williams and Binance US CFO Jasmine Lee are among the speakers at the Wall Street Journal CFO Network Summit on Wednesday.
Fed Governor Lisa Cook speaks at a Joint Center for Political and Economic Studies event on Wednesday.
Fed Governor Christopher Waller and Philadelphia Fed President Patrick Harker will speak on digital assets Friday at an event on “Digital Money, Decentralized Finance, and the Puzzle of Crypto.”
Waller also speaks at the 2023 Arkansas State University Agribusiness Conference on Wednesday.

Tuesday, Feb. 7

Federal Reserve reports consumer credit data for December. In November, total consumer debt increased at a seasonally adjusted annual rate of 7.1%, to a record $4.76 trillion. Revolving credit — mostly credit-card debt — jumped 16.9%, as the estimated $2.3 trillion in excess savings that consumers put away during the pandemic has dwindled to less than $1 trillion.
International Trade: The Commerce Department reports on U.S. exports and imports of goods and services in December. The trade deficit shrank by more than a fifth in November as exports and imports fell, adding to signs that global economic demand weakened late last year
Federal Reserve Chairman Jerome Powell speaks at the Economic Club of Washington D.C.

Wednesday, Feb. 8

MBA Mortgage Applications
Wholesale Trade

Thursday, Feb. 9

Department of Labor reports initial jobless claims for the week ending on Feb. 4. Claims averaged 191,7500 in January, 26,000 fewer than in December, and remain historically low. Federal Reserve Chairman Jerome Powell, at the FOMC news conference this past week, cited 1.9 job openings for every unemployed person as something that needs to come into better balance. The reported unemployment rate hit a half-century low of 3.4% in January.
Productivity and Costs
Factory Orders
Fed Balance Sheet
Money Supply
China’s National Bureau of Statistics releases January figures on consumer inflation. Consumer prices in China rose 1.8% in December from a year earlier, a faster pace than the 1.6% annual pace in the prior month.

Friday, Feb. 10

University of Michigan releases its Consumer Sentiment Index for February. The consensus estimate is for a bearish 65 reading, roughly even with the January figure. Consumers’ expectations for year-ahead inflation was 3.9% in January, the lowest level since April of 2021. The Fed has stated that expectations for inflation play an important role in determining actual inflation. Powell recently said that inflation expectations were “well anchored,” meaning that consumers’ expectations for future inflation aren’t sensitive to current inflation.
Treasury Budget
The U.K.’s Office for National Statistics releases fourth-quarter gross domestic product.

Key USDA & international Ag & Energy Reports and Events

USDA’s World Agricultural Supply & Demand Estimates will be released Wednesday. Official data on Malaysian palm oil stockpiles and Statistics Canada’s report on wheat, barley and soybean stockpiles will also be released during the week. China and Brazil also release reports this week.

On the energy front, the European Union’s ban on imports of Russian oil products came into effect on Sunday, two months after the bloc imposed a similar prohibition on shipments of crude. The U.S. Energy Information Administration releases its monthly Short-Term Energy Outlook on Tuesday. More major energy companies report earnings during the week, including BP and TotalEnergies.

Monday, Feb. 6

Ag reports and events:

Export Inspections
Holiday: Malaysia, New Zealand