The Week Ahead: June 26-July 2, 2017

Senate health-care vote | Illegal Immigration | House budget resolution | Trade policy

A possible Friday Senate vote on health-care reform and House votes on two bills that would crack down on illegal immigration are the focus in Congress in the week ahead.

Senate health-care reform vote. The Senate may vote Friday on whether there is enough support to pass the GOP’s health-care proposal Republicans released last Thursday. The Congressional Budget Office (CBO) early this week will release its score of the legislation. GOP leaders want to have a vote-a-rama of amendments late Thursday, according to Sen. John Cornyn (R-Texas), the Senate’s No. 2 Republican, with final passage the day after.

The draft proposal has already drawn opposition from five Republican senators. Sen. Rand Paul of Kentucky said he and three other conservatives — Ted Cruz of Texas, Ron Johnson of Wisconsin and Mike Lee of Utah — intend to negotiate as a team to alter it. Late Friday, a fifth senator, Dean Hiller of Nevada, announced his opposition. GOP leaders can only afford to lose two Republican votes, assuming as most do that no Democratic senator will vote for the measure. Two moderates — Lisa Murkowski of Alaska and Susan Collins of Maine — said they want to remove the bill’s one-year halt in funding for Planned Parenthood. Sen. Rob Portman of Ohio said it doesn’t provide enough funds for the opioid epidemic.

Senate Majority Leader Mitch McConnell (R-Ky.) may have made some intentional omissions in the “discussion draft” he released so senators can be seen securing public victories in return for their support. For example, the draft contains only $2 billion for opioid-related programs, a number that could be increased to win over Midwestern Republicans.

Some provisions may be stripped out by the Senate parliamentarian. It will also be open to amendments when it reaches the Senate floor. For example, Sen. Cruz handed out a flyer with his demands. They included letting states design coverage without needing federal waivers, allowing consumers to buy insurance across state lines, and allowing insurers that meet federal mandates to sell other plans that don’t comply.

House to vote on immigration bills. House Republicans are gearing up to vote on two bills that would crack down on illegal immigration.

One of the measures, dubbed Kate’s Law, boosts penalties for immigrants who try to re-enter the United States after being deported. It is named after Kate Steinle, a young woman who was shot and killed in San Francisco by an immigrant who had been deported repeatedly yet returned.

The second is legislation that goes after so-called sanctuary cities — localities that limit cooperation with federal immigration authorities, including by refusing to hold an immigrant in jail longer just so federal officials can pick him or her up to be deported. The No Sanctuaries for Criminals Act would toughen penalties for sanctuary cities [and expand] mandatory detention policies to cover immigrants with drunken driving violations and those who have had their visa revoked.”

On the budget front, House Republicans failed to reach agreement last week on a budget resolution or on how to package the 12 annual appropriations bills needed to keep the government open come October 1. Disagreements center on the top-line level for defense spending next year, as well as resistance by the Agriculture Committee over cuts to the food-stamp program. The House Budget Committee wanted to markup a bill this Wednesday but unless there in an overall agreement, the timeline is on hold.

Reconciliation instructions to put reductions to entitlement programs such as welfare and food stamps on a fast track remain hurdles. Agriculture Committee Chairman Mike Conaway (R-Texas) is pushing for a smaller requirement to make reductions in programs under his panel’s jurisdiction. He said that he worries the level of cuts in the resolution will make it harder to complete a 2018 Farm Bill, which is built on a coalition of farm interests and urban lawmakers worried about food stamp funding. He said he is open to making some cuts but wants to negotiate the level.

Ag spending markup. On Wednesday, the House Ag Appropriations Subcommittee marks up the fiscal year 2018 Agriculture appropriations bill. A draft of the bill — likely to carry cuts — is expected to be released Tuesday morning.

Key hearings include:

EPA cuts. Sen. Lisa Murkowski (R-Alaska), who chairs the Energy and Natural Resources Committee, at a Tuesday hearing will focus on her roll as chairwoman of the Senate Appropriations Committee’s Interior, Environment, and Related Agencies Subcommittee. The hearing will hear from Environmental Protection Agency Administrator Scott Pruitt to discuss the Trump administration’s proposed 31% budget cut for EPA in fiscal year 2018.

Army Corps budget: The Senate Appropriations’ Energy and Water Development Subcommittee will hold a Wednesday hearing to discuss the budget requests for the U.S. Army Corps of Engineers and the Interior Department’s Bureau of Reclamation. Trump’s budget calls for a 16% cut in corps funding and a 13 percent reduction for Reclamation.

Pesticides in groundwater: The EPA is holding a public meeting Wednesday on modeling scenarios for pesticides in groundwater.

SEC, CFTC Chiefs before Senate hearing: The new leaders of the SEC and CFTC will appear Tuesday at a Senate Appropriations subcommittee hearing together for the first time to testify about their agencies’ budget requests for fiscal 2018. Acting Commodity Futures Trading Commission Chairman J. Christopher Giancarlo used “bypass authority” to request $281.5 million for that agency in 2018, a significant bump over the $250 million White House is seeking. The Securities and Exchange Commission, led by Chairman Jay Clayton, would receive $1.602 billion for 2018 under a White House plan that the agency supports. Clayton has led the SEC since May 4. Giancarlo, who became the acting chairman after Timothy Massad stepped down in January, has been nominated by President Donald Trump to lead the CFTC on a permanent basis.

Agriculture: On Tuesday, the House Ag panel holds a hearing on derivative clearing houses. On Thursday, the Senate Ag Committee holds a hearing on conservation and forestry.

Federal Reserve: On Wednesday, the House Financial Services panel’s monetary policy subcommittee holds a hearing on the Federal Reserve.

On the energy front, the U.S. Energy Information Administration (EIA) holds a two-day conference starting Monday on natural gas infrastructure, renewable energy project financing, the future of U.S. nuclear power, and other issues. Energy Secretary Rick Perry will deliver the keynote address, and House Energy and Commerce Committee Chairman Greg Walden (R-Ore.) is among the other scheduled speakers.

On trade policy, the Trump administration is expected to release reports on trade deficits and trade remedies. June 29 marks the 90-day deadline for two of Trump’s trade executive orders: The Omnibus Report on Significant Trade Deficits and the Enhanced Collection and Enforcement of Antidumping and Countervailing Duties. The first order tasks the U.S. trade representative to investigate the major causes of America’s trade deficit, assess whether trading partners are unfairly discriminating against the U.S. and identify trade practices that may impair U.S. national security. The second order calls on USTR to develop a plan to prosecute violators of trade laws, including intellectual property violators and importers that “pose a risk to the revenue of the United States.”

Trump will travel in early July to Hamburg, Germany, to attend this year’s Group of 20 leaders’ summit. German Chancellor Angela Merkel said she expects trade will be a central topic of discussion at the July 7-8 G20 meeting and added that she anticipates some push back from the Trump administration. “We will do everything in our power to reach the broadest possible agreement in Hamburg,” Merkel told industry representatives June 20. “In view of the new American administration, this is not easy. Nevertheless, we must go to the trouble.”

NAFTA 2.0 hearings begin. Three days of hearings take place this week on how the North American Free Trade Agreement (NAFTA) should be reworked. About 130 witnesses are slated for the hearings beginning Tuesday. The suggestions will guide the U.S. negotiating team as it prepares for formal talks that are expected to start as early as mid-August.

On other trade policy matters, a second installment of duties on Canadian softwood lumber imports will likely come this week, and the International Trade Commission is expected to release a report Tuesday on competitive conditions affecting the U.S. aluminum industry. Commerce Secretary Wilbur Ross has said he would like the fractious softwood lumber issue to be dealt with before NAFTA renegotiations start later in the summer. Canadian softwood lumber is already subject to anti-subsidy duties and adding dumping duties on top of that would exacerbate negative effects for Canadian companies since the U.S. market represents almost 75% of Canadian softwood lumber exports.

President Donald Trump meets today with Indian Prime Minister Narendra Modi. Key Cabinet officials such as Secretary of State Rex Tillerson, Commerce Secretary Wilbur Ross, and Treasury Secretary Steve Mnuchin will take part in the visit. Modi on Sunday met with U.S. business leaders, including the heads of Apple, Walmart, Caterpillar, Google, and Microsoft. A White House official said that Modi’s visit will give the U.S. a chance to push for India to reduce tariffs and institute strong intellectual property protections. Both issues were noted as areas of concern in the Trump administration’s 2017 Trade Policy Review, released in February. The two countries are also embroiled in several WTO disputes involving poultry, steel, and solar panels, among other issues.

President Trump hosts newly elected South Korean President Moon Jae-in on Thursday and Friday. Moon reportedly will be joined for his trip by a delegation of 52 South Korean business leaders, including representatives of Hyundai Motor Co. and Samsung Electronics. The American Chamber of Commerce in Korea recently urged Moon to announce during the visit a $10 billion “Buy American Fund” to boost imports of U.S. goods, a move the group said would please Trump and ease the pressure on the Korea-U.S. Free Trade Agreement. Trump has called that deal “horrible” and threatened to renegotiate or terminate it.

President Trump will give a speech on “Energy Dominance” after meeting Thursday with EPA Administrator Scott Pruitt, Interior Secretary Ryan Zinke, and Energy Secretary Rick Perry, who will host the American Energy Dominance Panel at the Department of Energy with labor and industry groups.

Key USDA reports come Friday with release of Acreage, Grain Stocks and Rice Stocks reports. The quarterly Hogs & Pigs report comes Thursday.

On the economic report agenda is the final reading of gross domestic product (GDP) for the first quarter on Thursday.

Federal Reserve Chairwoman Janet Yellen participates Tuesday in “Global Economic Issues” conversation with Lord Nicholas Stern, president of the British Academy, in London, England. Federal Reserve Vice Chairman Stanley Fischer on Tuesday will deliver a keynote speech at the DNB-Riksbank Macroprudential Conference Series in Amsterdam.

On the earnings list: Monsanto will report its third-quarter earnings on Wednesday. General Mills Inc. will release its fourth-quarter results on Wednesday. Conagra Brands Inc. reports its results for the fourth quarter on Thursday.

Key international events and reports include:

The International Grains Council on Thursday releases its monthly market outlook for grain stockpiles, production, demand, trade, 7:30am CT.

Statistics Canada data on grain plantings is released Thursday at 7:30 a.m. CT.

Ethanol Summit Conference in Sao Paulo, June 26-27. Speakers include Brazilian President Michel Temer, Energy Minister Fernando Coelho Filho.

FT Commodities Americas Summit in Buenos Aires occurs Wednesday. Speakers include Louis Dreyfus Co. CEO Gonzalo Ramirez Martiarena, Bunge Brazil CEO Raul Padilla, Olam South America President Satya Mayilswamy.