Trump at U.N. | Iran nuclear pact | Fed meeting | Hurricane Maria | USDA nominees | U.S. ambassador to Russia | Health-care bill | Tax cuts | Guest worker proposal | EPA IG report | Markets
— Trump’s speech to United Nations gets mixed reactions. As expected, President Donald’s Trump speech to the U.N. on Tuesday brought very different reactions from both the U.S. and international observers. Leaders of France, the EU and the U.N. were critical of his tone. Republican lawmakers applauded the address. North Korea has yet to respond to the president’s threat of destruction.
Trump spoke out against three “rogue regimes” — North Korea, Iran and Venezuela — with harsh language, pleasing conservatives and the pro-Israel crowd. But he also emphasized the need for allies to work together to root out threats. Russian Foreign Minister Sergey Lavrov told the Associated Press in an interview that he heard positive news in the address “that the U.S. would not impose its way of life on others.”
Key quotes from Trump’s remarks included:
* “Major portions of the world are in conflict and some, in fact, are going to hell.”
* “The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea.”
* “Rocket Man is on a suicide mission for himself and for his regime... It is time for North Korea to realize that its de-nuclearization is its only responsible future.”
* “No nation on earth has an interest in seeing this band of criminals arm itself with nuclear weapons and missiles.”
* “In America, we do not seek to impose our way of life on anyone, but rather to let it shine as an example for everyone to watch.”
* “The United States will forever be a great friend to the world, and especially to its allies. But we can no longer be taken advantage of.”
* “The Iran Deal was one of the worst and most one-sided transactions the United States has ever entered into. Frankly, that deal is an embarrassment to the United States.”
Trump indirectly attacked the World Trade Organization and blasted “unaccountable” multilateral institutions and pacts as the root causes of economic problems plaguing America’s middle class. “For too long, the American people were told that mammoth multinational trade deals, unaccountable international tribunals and powerful global bureaucracies were the best way to promote their success,” Trump said during the speech. “But as those promises flowed, millions of jobs vanished, thousands of factories disappeared. Others gamed the system and broke the rules and our great middle class, once the bedrock of American prosperity, was forgotten and left behind. But they are forgotten no more, and they will never be forgotten.”
— Iran nuclear pact. The parties that negotiated the 2015 nuclear deal with Iran — Britain, China, France, Germany, Russia and the U.S. — are scheduled to meet on the sidelines of the U.N. summit to discuss the pact, with Iran and European powers seeking to convince President Donald Trump to maintain the deal after he slammed it at the U.N. on Tuesday.
— Keys to Fed meeting conclusion today. The Fed will not announce any adjustment to interest rates at the conclusion of the Federal Open Market Committee (FOMC) meeting later today, but is expected to announce the start of tapering its massive $4.5 trillion balance sheet. Most have expected a muted response from markets given that the Fed has telegraphed this action for several months, including detailing how the unwinding will unfold. Market futures show a rate hike by the end of the year is seen as a coin-flip by investors. In June, officials penciled in one more interest rate increase in 2017. But a series of weak inflation reports gave several of them second thoughts about the tentative plan.
Focus on the post-meeting statement will be any impact to the U.S. economy, if any, the Fed sees from hurricanes that hit the U.S., and whether they offer any signals on interest rate changes ahead. That latter will be the focus for the updated Fed projections, specifically how many Fed officials still expect one more rate increase this year.
The post-meeting press conference by Fed Chairwoman Janet Yellen will cap off the Fed action. Her explanation of the reasoning behind the expected balance-sheet moves, any guidance on a rate hike yet in 2017 and the economic impacts from hurricanes will be of note.
— Hurricane Maria is expected to hit Puerto Rico today after battering the storm-ravaged Caribbean island nation of Dominica overnight. The storm is forecast to be a Category 5 hurricane when it makes landfall. Winds of up to 160 miles per hour are expected, according to the National Hurricane Center. If Maria retains its strength, it would be the most powerful hurricane to hit the bankrupt island in 85 years.
Mexico City was struck by a 7.2 magnitude earthquake yesterday, leaving at least 248 dead on the 32nd anniversary of the 1985 quake that killed more than 5,000. More than 40 buildings and other structures in Mexico City have collapsed, and desperate residents and rescue workers spent Tuesday night trying to free people trapped under the rubble.
— Censky, McKinney breeze through confirmation hearing; Senate vote ahead. Steve Censky and Ted McKinney received questions from just six out of 21 members of the Senate Agriculture Committee during their confirmation hearing on Tuesday. Censky, CEO of the American Soybean Association and the nominee for deputy agriculture secretary, and Ted McKinney, director of the Indiana State Department of Agriculture, who was nominated for the newly created position of undersecretary for trade and foreign agricultural affairs, were given a warm welcome by panel members.
Key issues addressed:
* Climate change: Censky said his top three goals for the department would be diversification of agricultural crops as well as domestic and international markets; expansion of broadband service to rural communities; and aiding farmers and ranchers’ adaptation to changing weather and climate. Censky said it is USDA’s “inherent responsibility” to help farmers and ranchers adapt and be resilient to the changing weather and climate, and that the issue would be among his top three priorities. He said he use the department’s research programs “to understand the trends that are happening, what pests might be emerging, to try to adapt our crops so they can survive in colder, hotter, wetter and drier climates.”
* Crop insurance. Senate Ag Chairman Pat Roberts (R-Kan.) sought assurance from Censky, a former USDA official in the Reagan and George H.W. Bush administrations, that he understands the importance of federally subsidized crop insurance to agriculture. Roberts said it will be key to the 2018 farm bill the committee will write. In his fiscal 2018 budget request, Trump proposed limiting crop insurance premium subsidies and limiting crop insurance eligibility to farmers with adjusted gross incomes of $500,000 or less. Censky said farmers have made it clear to him that crop insurance was an important tool for managing their financial risks posed by weather and the markets. “I very much look forward to working with the committee and the administration to make sure we have an effective and viable crop insurance program,” Censky said.
* Trade barriers: McKinney said that removing non-scientific trade barriers — known as sanitary and phytosanitary issues — and reforming international guidelines on food standards are his top priorities. “Too often we play by the rules, but many countries do not. This is one we’ve got to take on, this cannot be a double standard,” he said, citing China as an example. The country continues to ban imports of U.S. poultry over concerns of bird flu, even though the U.S. has proven it can manage the disease, he said. McKinney pledged to be “a happy warrior” on trade, but willing to challenge other countries when they erect non-science based challenges to U.S. agricultural exports. McKinney also said he would focus on being a liaison for agriculture to the Office of the U.S. Trade Representative, Commerce Department and other federal agencies with trade responsibilities.
Floor votes expected soon. While the Senate is now out for the rest of the week, the full Senate is expected to vote on the USDA nominees by the end of the month. Roberts said he wanted to move rapidly with a vote, but did not give a date. USDA Secretary Sonny Perdue appeared at the hearing, underscoring to lawmakers the importance of the two nominees. Perdue cited recent cited hurricane recovery efforts in urging the Senate to quickly confirm Censky. “With producers in many states just beginning to assess the damages and losses from back-to-back hurricanes — and with wildfires continuing to rage in large swaths of the country — we will need Steve Censky’s counsel to help navigate the landscape,” Perdue said in a statement following the hearing. He called for quick approval of McKinney as well: “He will be the one who wakes up every morning asking where he can sell more American products to foreign consumers.”
— Trump’s pick for Russia ambassador says Russia interfered with U.S. election. President Donald Trump’s pick for ambassador to Russia on Tuesday agreed with most lawmakers and the intelligence community that Moscow interfered in last year’s presidential election, marking a distinct departure from the White House. Former Utah Gov. Jon Huntsman, a former U.S. ambassador to China and to Singapore, also acknowledged during his confirmation hearing before the Senate Foreign Relations Committee that Russian President Vladimir Putin has engaged in past and ongoing efforts to undermine voter confidence in the United States and across Europe. “There is no question — underline, no question — that the Russian government interfered in the U.S. election last year and Moscow continues to meddle in the democratic processes of our friends and allies,” Huntsman testified.
Regarding sanctions on Russia, Huntsman said he looked forward to working with lawmakers on implementing congressionally mandated sanctions on Russia and that he hoped Congress would allow him a “fair hearing” if he found that changing circumstances merited a reassessment of the relationship with Moscow, which he characterized as at its lowest mark since the dark days of 1986. “We can’t stay at the 1986 level forever,” said Huntsman, who has also held senior positions at the Commerce Department. “It doesn’t serve the purposes of the region or the world well.” Still, he saw potential for greater collaboration with Russia, particularly on addressing the North Korea nuclear crisis and ending the Syrian civil war. But on Ukraine, he was much less optimistic.
“On the case of Ukraine, we are nowhere,” Huntsman said. “A lot of the main highway that leads to an improvement in U.S.-Russia relations goes through Ukraine.”
— Senate panel delays nomination hearings. Hearings for nominees to serve in posts at the Environmental Protection Agency (EPA) and the Nuclear Regulatory Commission (NRC) planned for today have been postponed by the Senate Environment and Public Works Committee. The panel took the action because of plans for the chamber to adjourn in recognition of Rosh Hashanah. Up for consideration were the nominations of four individuals for EPA: Matthew Leopold to be general counsel, William Wehrum to run the air office, Michael Dourson to run the Office of Chemical Safety and Pollution Prevention and David Ross to run the water office. Jeff Baran’s re-nomination to the NRC was also to be considered. No date was set for the rescheduled hearings.
— Health-care bill faces one last attempt in Senate. A last-ditch push to repeal the Affordable Care Act is underway in the Senate: Republicans are pressing for a vote next week. The latest bill would undo much of the health law and send money to the states, with vast discretion over how to spend it. Eleven governors, including five Republicans (including Alaska’s governor) and an independent, urged the Senate to reject the bill.
The Trump administration fully supports the Senate bill, according to VP Mike Pence, and Mitch McConnell (R-Ky.), who is behind the Graham-Cassidy bill. With 50 votes within reach, the Majority Leader called the effort an “intriguing idea,” but was noncommittal about whether the measure would end up getting a vote on the Senate floor.
— Senate GOP endorsing tax cuts without budget offsets. Senate Republican Conference Chairman John Thune of South Dakota has endorsed the effort by GOP colleagues on the Budget Committee to come up with a 2018 budget resolution that would clear the way for temporary tax cuts that could increase the national debt by up to $1.5 trillion over 10 years. “I think most of our members are willing to accept a certain amount of deficit if we think it’s a very pro-growth tax bill that will accomplish our objectives, and that’s greater growth in the economy,” Thune said. Thune, the third-ranking Senate Republican, indicated that two Republicans on the Budget Committee, Bob Corker of Tennessee, and Patrick Toomey of Pennsylvania, were trying to resolve differences over the issue in the GOP conference. Corker and Toomey released a joint statement Tuesday evening that said they’d reached an agreement but it did not provide any further details.
Senate Finance Chairman Orrin Hatch (R-Utah) said that while he favored giving his panel leeway to draft a far-reaching tax overhaul, he was unsure whether any agreement reached by Corker and Toomey would stick. “They are only two members of the committee. It’s got to be a full committee decision.”
Republicans are looking for ways to write reconciliation instructions that do not depend on dynamic scoring but could allow at least some of the tax cuts to be permanent. Senate rules require that tax cuts that increase the deficit outside the 10-year budget window must expire.
— New guest worker program coming in House proposal. The plan, anticipated for weeks, will come from House Judiciary Chairman Bob Goodlatte (R-Va.). It is designed replace the H-2A program with an expanded and more flexible guest worker program.
The new proposal, called the H-2C program, would include some changes intended to help farms retain workers who are now in the country illegally, Goodlatte told members of the United Fresh Produce Association yesterday. The bill would allow those workers to convert to H-2C status although they would have to return to their home country briefly, a requirement known as “touchback.” The workers would have six months to do the touchback. Language would also shorten the touchback requirement for other H-2C workers from one-sixth to one-12th of the period they were working in the United States.
The bill would not require employers to provide housing and transportation or pay “an unrealistic and uncompetitive wage rate” to guest workers, he told the audience. It also would not offer a special pathway to residency, he said, but would allow agricultural employers that need year-round workers — such as in the forestry and dairy industries — to apply to the guest-worker program when domestic labor can’t be found.
The bill faces high hurdles not only in the House but in the Senate, where Democrats want a more comprehensive approach to immigration reform.
— EPA’s inspector general released a report Tuesday that the agency failed to follow through on a 2005 agreement with livestock groups to develop methodologies for estimating airborne emissions from farms. The report said the agency had no timeline for completing the work, though EPA said it will develop by the beginning of 2018 a plan for when and how it will complete the emissions estimating methodologies. Link to report.
— Markets: Equity markets around the world are quiet ahead of the U.S. Fed’s decision. U.S. stock index futures were flat this morning in a wait-and-see approach ahead of monetary policy guidance from the Federal Reserve. On Tuesday, the Dow posted its 41st record close of the year. The S&P and Nasdaq also notched record closes. We’re officially in the 2nd-largest bull market since World War II. Stocks have climbed roughly 270% from their March 2009 low, eclipsing the bull run from June 1949 to August 1956, according to data from LPL Financial. The 10-year Treasury yield was at 2.225% and gold was up $9 an ounce.
