Yellen | Trump in France | Perdue in Georgia | Tax reform | Budget allocations | Health-care reform | NAFTA 2.0 | USTR team | Aid to cotton industry | Vaccine bank | School nutrition riders | ICE enforcement funding | Drought bill | More livestock drought aid | OMB on FY 2019 spending | Dow Chemical
— Yellen testifies before House panel today. Federal Reserve Chairwoman Janet Yellen testifies this morning before the House Financial Services Committee on monetary policy. Yellen will likely face questions about the central bank’s promises of another rate hike and plans to start shrinking its $4.5 trillion asset holdings. She will also likely be questioned on the lack of wage growth despite very low unemployment. Yellen will deliver the same testimony at a separate hearing of the Senate Banking Committee on Thursday. Unless President Donald Trump nominates her to a second term, her time as Fed leader will end in early February 2018. She could remain on the Fed’s board after her term as chairwoman ends. Some reports have suggested National Economic Council Director Gary Cohn could replace Yellen next year, instead of her serving a second term, but those close to Cohn have discounted the conjecture.
— Trump travels to France today, could talk climate change with French president. President Donald Trump and First Lady Melania Trump depart Washington, D.C. on their way to Paris, France. A senior administration official on Tuesday said it was “entirely possible” French President Emmanuel Macron would raise climate change during the trip. “If he does, the president has spoken on the issue a number of times, and he’ll be ready to engage in that as well,” the official said.
Trump will meet today with Joseph Dunford, the chairman of the Joint Chiefs, and then will also hold a bilateral meeting with French President Emmanuel Macron. Trump and Macron will also hold a news conference.
— USDA Secretary Perdue to speak at school nutrition summit. Sonny Perdue will speak at the School Nutrition Association’s convention in Atlanta, making him the first USDA leader to speak at SNA’s summit in at least a decade. Perdue’s USDA recently relaxed some of the school nutrition standards pushed by former first lady Michelle Obama.
— Senate tax reform hearing set for July 18. Senate Finance Chairman Orrin Hatch (R-Utah) announced a July 18 hearing on a tax overhaul with testimony from four former Treasury assistant secretaries for tax policy. Hatch said the session would explore how lawmakers can “act to implement a simpler, fairer tax system.”
Hatch set a July 18 confirmation hearing for David Kautter, an accounting and taxation instructor at American University, to be Treasury assistant secretary for tax policy. Kautter was a national tax director for Ernst & Young and legislative counsel for former Sen. John Danforth (R-Mo.).
— House appropriators’ allocations for spending bills revealed. House Republican appropriators have proposed dividing $1.14 trillion across the 12 fiscal 2018 spending bills, a plan that exceeds current spending caps in law and outlines a massive boost to defense programs. USDA’s spending level for FY 2018 versus the enacted House FY 2017 level shows the FY 2018 funding level at $20.0 billion, down from $20.88 billion in FY 2017.
— Health-care reform gets top GOP leader focus. Senate Majority Leader Mitch McConnell (R-Ky.) today will brief the full GOP caucus on the CBO’s analysis of proposed changes to the Senate’s draft Obamacare repeal bill. McConnell announced Tuesday that he will keep the Senate in session the first two weeks of August — the Senate recess will now start the week of Aug. 14, two weeks later than the previously scheduled start in the week of July 31. Senate Republicans are planning a procedural vote next week aimed at clearing the way for floor consideration of their ObamaCare repeal bill, McConnell said, but he did not say when the final vote would occur if GOP leaders are able to move the bill to the floor.
The latest GOP changes retain ObamaCare’s two taxes on high-income households to give Republicans more money to sweeten the bill to win over GOP holdouts. Sen. John Cornyn (R-Texas) said the money could go to a fund that states could use to shore up their individual-insurance market, and potentially to allow insurers to bring down premiums. Despite the latest GOP changes, 10 Senate Republicans still remain publicly opposed to the legislation. With Democrats unlikely to support the bill, McConnell can lose no more than two GOP votes to pass it. Vice President Mike Pence could break a potential 50-50 tie.
No GOP leadership decision has been made on whether to include a proposal by Sens. Ted Cruz (R-Texas) and Mike Lee (R-Utah) to let insurers sell some health plans that don’t comply with all of the Affordable Care Act rules, as long as they also sell plans that do. The Senate parliamentarian is deciding this week what ObamaCare rewrites are allowed under Senate budget rules. If the Cruz-Lee proposal doesn’t comply with the budget rules, it can’t be part of the bill, and it would need 60 votes to pass — an unlikely outcome.
Meanwhile, Vice President Mike Pence travels to Kentucky today to meet with small businesses and participate in an ObamaCare listening session.
— GOP agenda beyond health-care reform. “We’re going to do health care next week,” McConnell said Tuesday. “And then we’re going to turn to other issues,” he said, citing the annual defense policy bill, confirmation of President Donald Trump’s nominees and raising the federal government’s borrowing limit among the summer’s goals.
— NAFTA 2.0 hearing July 18. The House Ways and Means Committee will hold a hearing July 18 on the Trump administration’s plan to renegotiate NAFTA. The session will come one day after the Office of the U.S. Trade Representative is expected to publish its detailed negotiating objectives for the talks.
“NAFTA has been remarkably successful for American workers, businesses, farmers, and consumers, but the world has changed so much since it was negotiated in 1993,” Trade Subcommittee Chairman Dave Reichert (R-Wash.) said in a statement announcing the hearing. “We have an opportunity now to improve and update NAFTA to make it a stronger agreement that opens markets for U.S. goods and services and holds other countries accountable with strict and enforceable rules.” Reichert sqid the hearing would “provide an opportunity for American agricultural producers, manufacturers, and services providers to share their views on how we can modernize NAFTA to create more jobs and opportunities for all Americans.”
— USTR team continues to fill out as Trump nominates ambassador to WTO. The Office of the U.S. Trade Representative (USTR) is getting closer to the full-staff status after President Donald Trump announced his intent to nominate Dennis Shea, the current vice chairman of a China watchdog panel, to serve as U.S. ambassador to the World Trade Organization. Shea has served on the U.S.-China Economic and Security Review Commission since 2007 and has been either chairman or vice chairman since 2012. Shea also worked on Capitol Hill for former Senate Majority Leader Bob Dole (R-Kan.)
— House appropriators want USDA to make cost-share payments to cotton growers. The recommendation is including in the House Ag spending bill language to create a program that subsidizes ginning costs. The Appropriations panel said it supports establishment of a Cotton Ginning Cost Share Program starting with the 2016 crop — and on an ongoing basis — because it “recognizes the significant challenges cotton producers continue to face.”
Former USDA Secretary Tom Vilsack sent about $300 million in cost-share assistance payments to cotton growers in June 2016 through a similar if not identical program. Any program for the 2016 crop would total more than $300 million because last year growers planted more acres to cotton versus the 2015 season.
The non-binding report also supports adding cottonseed as an eligible commodity under the Price Loss Coverage program, but USDA Secretary Sonny Perdue has already indicated he is unlikely to do that.
— Animal welfare Inspection, vaccine bank language part of House ag spending bill. House appropriators want USDA to develop plans for a vaccine bank to combat an outbreak of foot and mouth disease. The department also would be directed to estimate the cost for starting and maintaining the vaccine supply.
Meanwhile, the Ag Appropriations panel also reacted to the Trump administration’s attempt to limit access to animal welfare inspection records. The committee report calls on USDA to “promptly finish” reviewing inspection information on its website and then to restore all legally permissible records that were previously removed, and resume posting new information.
— School nutrition riders also part of House ag spending bill. The House spending bill scheduled for an Appropriations Committee markup today would rescind a ban on low-fat flavored milk in school lunches, block requirements for whole grains and lower sodium foods, and prevent the Food and Drug Administration from deeming as “unsafe” the partially hydrogenated oils that are a major source of trans-fats linked to cardiovascular disease.
In May, USDA Secretary Sonny Perdue announced he would continue providing waivers to schools unable to meet the whole grain requirements in the act and would delay the deadline for meeting sodium reduction targets. Low-fat flavored milk was also allowed back on school cafeteria menus where only non-fat flavored milk had been allowed after the standards were implemented. Riders in the agriculture bill would uphold these policies by barring any federal spending to carry out the rules.
Another rider would effectively repeal a 2015 FDA rule on partially hydrogenated oils. The original rule removed the FDA’s designation of the oils as “generally recognized as safe,” giving the food industry until June 18, 2018, to phase them out. The rider would instead prohibit them from being deemed unsafe at all.
— More money to hire 1,000 new ICE enforcement officers. The House Homeland Security spending bill includes funding for Customs and Border Protection, which is charged with immigration enforcement, helping it pay for surveillance technology, aircraft and sensors. The measure would also provide for funding to hire 500 new Border Patrol agents and 1,000 Immigration and Customs Enforcement (ICE) agents, plus add 4,676 immigration detention beds for a total of 44,000, according to a committee summary of the bill. The number of detention beds falls short of the 51,379 that the Trump administration sought. The House spending bill would provide $7 billion next fiscal year for ICE. A subcommittee takes up the bill this afternoon.
The total includes $1.6 billion for what the committee said will allow construction of a physical barrier along the border. “This funding bill provides the resources to begin building a wall along our southern border, enhance our existing border security infrastructure, hire more border patrol agents and fund detention operations,” Subcommittee Chairman John Carter (R-Texas) said. “Additionally, this bill will increase funding for Immigration and Customs Enforcement, support grants in cases of emergency and natural disaster, and provide critical resources to protect our cyber networks.” A committee spokeswoman said the $1.6 billion is likely to be used to support fencing, a levee wall, and bollards along the border. The funding represents the full amount the White House requested.
FEMA would get $7.3 billion, including $2.7 billion in federal grants that go to states and localities to help prepare for natural disasters as well as potential acts of terrorism.
— California governor blasts House drought bill. California Gov. Jerry Brown (D) is adamantly opposing a House measure aimed at rebalancing the state’s water systems. “This bill overrides California water law, ignoring our state’s prerogative to oversee our waters. Commandeering our laws for purposes defined in Washington is not right,” Brown wrote in a letter to House Speaker Paul Ryan Tuesday. HR 23 from Central Valley Republican David Valadao is up for consideration on the House floor as soon as today. California’s two Democratic senators have opposed the measure, meaning hurdles ahead in overcoming a filibuster in the Senate.
— USDA announces crop insurance change for Northern Plains livestock producers. A suspension of the requirement for livestock producers in Montana, North Dakota and South Dakota enrolled in the Livestock Risk Protection (LRP) insurance product to own the livestock in the last 30 days of the insurance period has been announced by USDA’s Risk Management Agency (RMA).
Under LRP, livestock producers enrolled in the product have to won the livestock during the last 30 days of the insurance period or the policy is terminated and the premium is still owed and no indemnities are paid out.
“In keeping with USDA measures to assist producers in managing drought conditions, Approved Insurance Providers, at their sole discretion, may waive the 30-day ownership requirement for LRP Specific Coverage Endorsements (SCE) currently in effect as of July 11, 2017, subject to verification of proof of ownership,” RMA said. “Proof of ownership can include sales receipts, kill sheets, or other documentation that verifies ownership during the insurance period showing the date the livestock were sold or slaughtered. The waiver does not affect actuarial performance of the LRP policy and permits producers to market their livestock as necessary while the policy continues in force.”
The action is the latest in a series of announcements from USDA to aid livestock producers that are struggling to find adequate supplies of feed or forage. USDA previously allowed emergency grazing of Conservation Reserve Program (CRP) acreage in areas determined to be in D2 drought or worse as determined by the Drought Monitor. USDA this week announced they would allow emergency haying of CRP acres, and those taking that option in the Northern Plains would not see a reduced CRP rental payment.
— OMB begins focus on fiscal 2019. Office of Management and Budget (OMB) Director Mick Mulvaney is beginning the fiscal 2019 budget process with a three-page memo telling administration officials that their requests “should continue the proposals included in the FY 2018 Budget, and should reflect a level no higher than the net total provided for your agency in the FY 2019 column of the FY 2018 Budget.” Agency and department heads are told they can increase “effective programs that further support their mission and fill a clear federal role” by up to 5%. Mulvaney said OMB plans to “closely scrutinize” any request to increase federal spending, which are due by September 11.
Regarding mandatory spending, OMB said any new mandatory spending needs to be budget neutral or come with offsets that make up for the full cost of the new proposal. The next White House budget request, which won’t be released until February, will continue the restructuring of the federal government that is already underway.
— Dow Chemical has agreed to sell part of its Dow AgroSciences corn seed business in Brazil to China’s CITIC Agri Fund for $1.1 billion. The sale should satisfy its commitments to Brazilian regulators for clearance of its proposed merger with DuPont. Dow also reaffirmed its expectation to close the merger in August, with planned spinoffs to occur within 18 months.
