Biden Signs Second Spending Package; Congress Departs for Two Week Easter Recess
Next up in Congress: Aid for Ukraine & Israel; House farm bill focus in April and/or May
Washington Focus
The House and Senate are out for their two-week Easter break. The Senate returns April 8. The House is in recess until April 9.
— Following months of negotiations to fund the gov’t, President Joe Biden on Saturday signed a $1.2 trillion spending bill that will provide funding through the rest of the fiscal year, while also increasing defense spending and setting spending guidelines for several government agencies. The signing came two weeks after Congress approved the first set of six spending bills, including funding for USDA. Though the president signed the bill after Friday’s midnight deadline, the Office of Management and Budget ceased shutdown preparations when it became clear the bill would reach Biden’s desk imminently. “Because obligations of federal funds are incurred and tracked on a daily basis, agencies will not shut down and may continue their normal operations,” the White House said.
Voting details: After six months into fiscal year (FY) 2024, the Senate approved a $1.2 trillion package funding federal agencies in the early hours of Saturday morning, missing its midnight deadline but averting a partial gov’t shutdown. Though the vote came two hours after a midnight deadline, there will now be no gov’t shutdown after the Senate approved a second package of six spending bills in a 74-24 vote. Earlier on Friday, the House voted 286-134 to pass the package of $460 billion spending bills, barely exceeding the two-thirds supermajority needed to approve the bill under a special procedure (suspension of the rules) used by House Speaker Mike Johnson (R-La.) to bypass internal GOP divisions in his razor-thin majority. “The reality is that on many pieces of legislation, you need Republicans and Democrats to get it across the line,” said Johnson. “That’s the reality of the modern Congress, and we work with what we have.”
In the House, most Republicans (112 of 213 voting) opposed the bill. Of note: nine of 34 GOP appropriators and eight of 22 committee chairs voted no on Friday. Among Democrats, only one appropriator, Barbara Lee (D-Calif.), and two ranking members, Jim McGovern (D-Mass.) of Rules and Nydia Velasquez (D-N.Y.) of Small Business, opposed it.
Of note: While the broad outlines of the House Republicans’ predicament are well known, an analysis (link) by the Wall Street Journal of six major government-funding bills signed into law during this Congress reveals the key components of this de facto coalition — based on ideology, relative electoral dominance in their districts and other factors. The group has remained largely stable over the half-dozen votes, including the one Friday, needed to keep the government open.
In the Senate, 22 of the 24 no votes were from Republicans. Aspiring GOP leaders John Cornyn (R-Texas) and John Thune (R-S.D.) stuck with current leader Mitch McConnell (R-Ky.) and voted for the bill, while John Barrasso (R-Wyo.) and Steve Daines (R-Mont.) voted against it.
Some spending bill details of the second package:
— GOP rebel Rep. Marjorie Taylor Greene (R-Ga.) made a new and some say expected bid to oust Speaker Mike Johnson (R-La.). But Greene did not immediately move to force a vote on her resolution, which means it didn’t trigger action on removing Johnson right away. Some Republicans are aiming their anger at Greene, slamming her attention-causing maneuver that has the potential to thrust the conference into more tumult, again.
Greene said she does not have “a timeline” for when she will trigger a vote on ousting Johnson, telling reporters it would be a “rolling issue that we’ll be judging and making decisions by… I’m not saying that it won’t happen in two weeks, or it won’t happen in a month or who knows when, but I am saying the clock has started,” Greene said. “It’s time for our conference to choose a new Speaker.”
Greene said she is not yet forcing a vote on Johnson’s ouster because she does not want to “throw the House in chaos,” but she said, “we started the clock to start the process to elect a new Speaker.”
Of note: Some Democrats signaled they could be willing to step in to save Johnson if a removal vote is held. That could include a pledge to hold a vote on aid to Ukraine.
— A one-seat House GOP majority coming. After Friday, when Rep. Ken Buck (R-Colo.) resigned, Republicans have a 218-213 majority, with four vacancies. Rep. Mike Gallagher (R-Wis.), retiring chair of the House China Select Committee, announced he'll leave Congress April 19 — leaving Republicans with a majority of just one seat on a party-line vote (Under Wisconsin law, Gallagher’s seat is expected to remain vacant until January, with the November general election to determine who wins; If he were to resign prior to the second Tuesday in April, the state would be able hold a special election before November to fill his vacant seat). Rep. Kevin McCarthy (R-Calif.) left the House with a five-seat Republican majority (221-212). It likely won’t bump up to a three-seat majority until after the June 11 election to replace Bill Johnson of Ohio. And this assumes there won’t be any further GOP departures. Republicans held a 222-213 majority after the 2022 midterm elections.
— Rep. Kay Granger (R-Texas), who is retiring this year, announced she is quitting early as chair of House Appropriations. Granger has been the top Republican on the committee since 2019. Without Granger, only three Texans will chair committees in Congress: Rep. Jodey Arrington chairs the Budget Committee, Rep. Michael McCaul chairs Foreign Affairs and Rep. Roger Williams chairs Small Business. Texas sends more Republicans to Congress than any other state.
Of note: Granger said in her letter she would remain chairwoman until the Republican Steering Committee, which determines committee assignments for the conference, selects a new chair. She said she plans to remain on the committee, offering advice to the next chair. "My goal for the next nine months is to return to where I began my career, as an educator," she wrote. "I will remain on the Committee as Chair Emeritus to lead as a teacher would, providing advice and counsel for my colleagues when it is needed." Granger has served on the committee for 25 years. Her own successor is likely the winner of the GOP primary runoff between state Rep. Craig Goldman and Fort Worth business owner John O'Shea. A Democrat Trey Hunt will face the winning Republican in November; however, the district is solidly Republican. Granger hasn't endorsed in the race, but Fort Worth business and politically leaders close to Granger are backing Goldman.
— Future congressional agenda. When lawmakers return from their long Easter recess break, the focus will likely be a push for aid to Ukraine and Israel. Rep. Michael McCaul (R-Texas) said Speaker Mike Johnson (R-La.) is committed to putting a vote for Ukraine funding on the House floor sometime after Easter. He will again need votes from Democrats and that will more than upset some rebel GOP and other conservative Republicans.
As for a new farm bill, the House may finally release details of its proposals late April into May, with several “creative ideas” regarding generating $40 billion to $50 billion in additional spending beyond the $1.51 trillion ten-year baseline. Key will be whether any of those creative plans will meet with stiff Democratic Party resistance, which would mean a farm bill stalemate would continue and the process likely kicked into a new Congress in 2025. House farm bill policy proposals will likely include a variable percentage increase for farm program crop reference prices, crop insurance improvements, back-loaded funding for trade promotion programs (MAP, FMD), and funding for biosecurity.
— On Tuesday, independent presidential candidate Robert F. Kennedy Jr. will announce his running mate in Oakland, California.
— New Jersey first lady Tammy Murphy to end Senate campaign to replace Bob Menendez, according to Politico (link), citing a source with knowledge of her decision. Murphy has been in a heated primary with Rep. Andy Kim for the Democratic nomination. While she's gained wide support from county leadership, crucial in New Jersey, she's faced a revolt among grassroots Democrats since announcing her bid in November.
— Waiting on SAF details: Week 3 as of this Friday. USDA Secretary Tom Vilsack at the Commodity Classic in Houston said it would be “weeks, not months” when detailed information comes out regarding the Sustainable Aviation Fuel (SAF) program after the initial by March 1 date was not met. The Treasury Department will release tax credit details for SAF. An updated Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model will come from USDA, EPA and the departments of Transportation and Energy.
Of note: In an item in Friday’s Updates (link), we noted several analysts’ observations regarding the impact of the coming decisions and on Sustainable Aviation Fuel (SAF) in general. One source said there are enough carbon intensity reductions available for ethanol plants that have invested in technology that increases their output or lowers their inputs enough to get them under the 50kg/mmBTU of CO23 and “in the money.” But such ethanol plants want corn producers included. As one source put it: “We need farmers to pull on the plow just as hard as we are with investments and innovation of their own. Without each other, both groups lose. The bar will continue to go up. We all need to focus on getting our work done more safety, more efficiently, and more sustainably. That will not change.” With that in mind, note the following graphic that appeared last week on AgWeb (link):
— The North Dakota Public Service Commission (PSC) has scheduled public hearings regarding the Summit Carbon Solutions pipeline. The hearings, set to take place April 22, May 24, and June 4, will allow individuals to provide testimony, which will become part of the official record on the case. The PSC may consider input received outside of the hearings and may pose questions to the company based on this input, according to the North Dakota Monitor.
Summit Carbon Solutions describes its Midwest Carbon Express pipeline project as the world's largest carbon capture and storage project, aiming to gather carbon emissions from ethanol plants for underground storage. The pipeline route spans several states, including North Dakota, where it intersects with Tharaldson Ethanol at Casselton.
Although the PSC denied Summit's permit application last year, the company has adjusted its route, addressing concerns about landslides and proximity to populated areas. Summit sees the pipeline as beneficial to the ethanol industry and corn farmers supplying ethanol plants.
The project has drawn both support and opposition. N.D. Governor Doug Burgum has voiced support for carbon capture initiatives, while opponents have raised concerns about safety, farmland damage, and property values. Summit is offering compensation to landowners who sign voluntary agreements but may resort to eminent domain for those who do not comply, ensuring compensation for affected landowners regardless.
— Grassley raises concerns over EPA's proposed vehicle emissions regulation. Sen. Chuck Grassley (R-Iowa) expressed concern about a proposed regulation by the EPA regarding vehicle greenhouse gas emissions. The regulation, set to phase in over five years starting with model year 2027, has raised worries about its impact on the national debt, particularly due to electric vehicle (EV) tax credits.
Grassley highlighted a cost estimate (link) by the Congressional Budget Office (CBO), which projected a $224 billion increase in the cumulative deficit due to higher electric vehicle tax credit claims and reduced gas tax revenues. He emphasized that the EPA's proposed EV Rule, identified by the CBO as a significant contributor to these revisions, could burden American taxpayers. Grassley conveyed his concerns to the EPA in a letter (link), stating that the proposed regulation is neither supported by nor affordable for American taxpayers.
— In Minnesota, legislators are proposing to introduce a sales tax on commercial fertilizer to pay for closing drinking wells contaminated with nitrates and supplying thousands of southeast Minnesota residents with clean sources of water. The U.S. Environmental Protection Agency (EPA) ordered Minnesota to halt nitrate contamination in groundwater last November.
Under the measure, ag retailers and vendors for nitrogen fertilizer would pay a 99-cent-per-ton tax. The tax, expected to draw $3 million, would go to community health boards in eight southeastern counties to be used on safe drinking water, with priorities for mothers and infants.
According to a petition to the EPA filed last year by Minnesota Center for Environmental Advocacy, the Minnesota Well Owners Association and others, roughly 80 residents use private wells for drinking water in the impacted region.
Lee Helgen, executive director for Minnesota Crop Production Retailers, an association comprising members who’d directly pay the tax, says “There’s not a compelling nexus in policy between a statewide fertilizer tax and allocating funds for a very specific, narrow geographic” concern, labeling the policy approach “defective.”
— Farm labor: An issue not only for the United States, but now for Mexico. Mexico has is experiencing a diminishing farmworker population and its negative impact on agricultural industries, the Washington Post reports (link). Historically, Mexican workers crossed the border to work on American farms, but now Mexico faces a shortage of laborers due to various factors, including an aging workforce and increased opportunities elsewhere, including seasonal work visas in the United States.
As a result, Mexican farmers are advocating for a guest-worker program to address labor shortages. The government plans to open job opportunities to non-Mexicans, potentially attracting migrants in search of better opportunities.
Despite lower wages compared to the U.S., Mexican farms are improving working conditions and offering incentives to attract workers. However, recruiting foreigners to work in Mexican agriculture poses challenges, as seen in a pilot project where Central American workers struggled with farming and eventually left for the United States.
In the long term, Mexico's guest-worker programs may not immediately reduce migration to the U.S., but they could become more attractive if border crossing becomes more difficult, potentially shifting migration patterns.
Of note: Farm labor issues in the U.S. were a major topic addressed to USDA Secretary Tom Vilsack last week during the House Ag Appropriations Subcommittee hearing (link). Growers and agribusiness officials talk about labor as much as anything else. One person emailed me: “One of the biggest areas of concern I hear from almost every grower I speak with is labor — worker availability, cost, regulations —you name it. What are the chances for any help from the federal level?” Answer: With the current uncivil political climate, the odds are low.
Other Events of Note This Week
Monday, March 25
Tuesday, March 26
Wednesday, March 27
Thursday, March 28
Friday, March 29
Economic Reports and Events for the Week
In the upcoming week, the focus will be on a series of speeches by Federal Reserve officials, following the end of a blackout period after the latest Federal Open Market Committee (FOMC) meeting. The Fed has indicated its confidence in implementing three anticipated interest rate cuts throughout the year, and investors will closely monitor these speeches for insights that reinforce this stance. Various Fed board governors will be delivering talks throughout the week, culminating with Fed Chair Jerome Powell's participation in a moderated discussion at a San Francisco Fed conference towards the end of the week.
The economic calendar for the week includes key indicators such as the personal consumption expenditures price index, which is the Fed's preferred measure of inflation. The release of the PCE deflator for February in the report on personal income and spending at 8:30 ET will be Friday’s highlight. Some analysts say it would not be a surprise if the index came in above the 2.4% year-over-year reported for January, or the core index about 2.8% in the prior report. While the PCE deflator is the Fed’s preferred measure of inflation, the readings of the past couple of months are not enough to inspire the “greater confidence” policymakers want before easing monetary policy by lowering rates. Data on consumer confidence and durable goods orders will also be released, providing further insights into the state of the economy.
Monday, March 25
Tuesday, March 26
Wednesday, March 27
Thursday, March 28
Friday, March 29
Key USDA & international Ag & Energy Reports and Events
USDA reports on Thursday include Prospective Plantings, Grain Stocks and a Hogs & Pigs survey.
Monday, March 25
Ag reports and events:
Energy reports and events:
Tuesday, March 26
Ag reports and events:
Energy reports and events:
Wednesday, March 27
Ag reports and events:
Energy reports and events:
Thursday, March 28
Ag reports and events:
Energy reports and events:
Friday, March 29
Ag reports and events:
Energy reports and events:
|
KEY LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | | Russia/Ukraine war, lessons learned | | SCOTUS on WOTUS | SCOTUS on Prop 12 pork | New farm bill primer | | Gov’t payments to farmers by program | Farmer working capital | USDA Ag Outlook Forum |
