Evening Report (VIP) -- January 6, 2014

January 6, 2014 09:03 AM

Martell: Changes in jet stream cause weather extremes... Meteorologist Gail Martell of MartellCropProjections.com says intense cold in the U.S., drought in California and unseasonable warmth in Europe is due to high amplitude waves in the jet stream. "A persistent cold trough in the jet stream over the central U.S. contrasts with a warm ridge along the West Coast," she notes. "The Northeast U.S. has experienced a mostly warm winter to date, due to a warm ridge of high pressure aloft, though at times, cold polar air has intruded."

Martell says high amplitude waves in the jet stream extend halfway around the world. "A cold trough of low pressure in the northeast Atlantic Ocean, offshore from Europe, has prevailed for at least a month. Ahead of the cold trough, a warm ridge of high pressure has built up. This has produced unseasonable mild conditions in Europe," she says. Click here for related maps.


Farm bill savings could still be used as an unemployment benefits extension offset... Senate Democrats have set up a Jan. 6 test vote on a bill (S 1845) to enact a three-month extension of unemployment benefits, which expired Dec. 28. Senate Majority Leader Harry Reid (D-Nev.) said that measure is part of the Democrats' plan to focus on workers' issues in the new session. The bill has bipartisan support in the Senate; The White House has also signaled its support. Reid and other Democrats say they remain optimistic that they can garner five GOP senators to back the three-month extension. Some Republican lawmakers appear open to extending the benefits, as long as Democrats agree to cut other spending or regulations on business.

If any budget offsets are insisted for extending unemployment aid, projected farm bill savings could be used to garner additional House votes for the benefits extension. However, most Democrats argue renewing the benefits constitutes an emergency and balk at the idea of an offset. The Senate bill does not include any offsets. The unemployment bill, which extends benefits through March 31, has a $6.5-billion price tag. Learn more.


Budget baseline ups pressure for quick farm bill completion... The shortened January congressional schedule means a likely effort to get a new farm bill completed by the time of the GOP break -- and likely ahead of an early February budget baseline update from the Congressional Budget Office (CBO), which could show lower commodity prices and higher farm program costs than the current baseline being used for scoring. Last year's CBO's initial baseline was released Feb. 5. Get more details.


FY omnibus spending package still being hashed out... A massive omnibus spending bill will likely not be detailed until closer to when Congress will actually vote on the measure -- largely due to concerns about decisions agreed to over the long holiday break by key appropriations principals and staff. The current stopgap continuing resolution (CR) for FY 2014 expires Jan. 15. The massive omnibus spending package directing how $1.012 trillion in discretionary funds will be spent will be brought to the floor in each chamber soon after it is finalized, of which $491.8 billion is designated for non-defense spending and $520.5 billion for defense. The funding level reflects the budget agreement approved in December. The House is expected to take up the measure by Jan. 10 and in the Senate by Jan. 13.

Bottom line: The FY 2014 omnibus spending package will be approved, with sources signaling many major policy arguments will be bumped to FY 2015 appropriations.


Test of congressional tone on the horizon... A Feb. 7 deadline to either extend a current suspension of the debt limit or raise the limit in order to preserve the Treasury Department's borrowing authority is expected to test this session's congressional tone. Republicans have said they may use the debt limit debate to leverage items they want, including possible revisions to the Affordable Care Act. The CBO says if the current suspension of the debt ceiling isn't extended or if Congress does not agree to a higher debt limit before Feb. 8, the Treasury will have no room to borrow under regular procedures and will have to begin employing its extraordinary measures for a limited time. CBO projects that those measures will probably be exhausted in March, but the date might shift depending on the timing and magnitude of tax refunds and receipts this spring.


Sources indicate 2014 tax reform is unlikely... The outlook is murky regarding an overhaul of the U.S. tax code this year, with veteran sources believing this will not be completed in 2014. Both House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Senate Finance Committee Chairman Max Baucus (D-Mont.) have expressed interest in simplifying the tax code by decreasing the plethora of tax breaks but so far have reported little movement.

House Majority Leader Eric Cantor's (R-Va.) memo regarding items that will be addressed early in 2014 made no mention of tax reform. Also, Sen. Baucus' eventual leaving the Senate to be Ambassador to China lowers the odds of tax reform this year. Importantly, tax reform needs presidential leadership, as occurred in similar debates in 1963-64 and 1986.

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