Focus: FOMC, CPI, USDA Monthly Reports & FY 2025 Ag Spending

Focus: FOMC, CPI, USDA Monthly Reports & FY 2025 Ag Spending
Texas judge grants injunction against USDA's ERP, bans race and sex discrimination in payments

Washington Focus

Focus this week is congressional action on the fiscal year (FY) 2025 Appropriations bill for USDA. The appropriations process is currently underway, with several key developments and discussions taking place in Congress. The House is working to move all FY 2025 spending bills through the Appropriations Committee before the Republican National Convention in July. The Agriculture spending bill, which includes funding for USDA, FDA, and the Commodity Futures Trading Commission, is scheduled for subcommittee consideration on June 11 and a full committee vote on July 10.

The Biden administration released its FY 2025 budget request on March 11, 2024, proposing a significant increase in the USDA budget to $29.2 billion. This proposal includes boosts for climate, nutrition, conservation, and agricultural research programs. However, the president's budget serves primarily as a starting point, with Congress ultimately responsible for drafting and passing appropriations bills.

The Agriculture spending bill has been allocated $25.8 billion for FY 2025. That compares to the $26.2 billion appropriated for FY 2024. The House Ag Appropriations Subcommittee will release its FY 2025 bill on Monday and vote on it on Tuesday.

The House Agriculture Appropriations Subcommittee held a hearing to review the administration's budget request. During this hearing, USDA Secretary Tom Vilsack advocated for increased funding to address critical needs, such as the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). The budget request for WIC is $7.73 billion, which is $700 million above the fiscal 2024 levels, to address rising participation and food costs.

Key issues and debates

WIC funding: There is bipartisan support for WIC, but Republicans on the subcommittee questioned the necessity of the significant increase, citing declining participation rates and lower food cost inflation as reasons to reconsider the requested amount.
Commodity Credit Corporation (CCC): Concerns were raised about the discretionary use of CCC funds to advance political priorities not directed by Congress. The CCC has been used for various programs, including climate-smart agriculture initiatives, which some lawmakers argue should be more tightly controlled.
SNAP and nutrition programs: Discussions also focused on the Supplemental Nutrition Assistance Program (SNAP) and the need to ensure it meets its original purpose of elevating nutrition needs. There were calls to restrict SNAP purchases of unhealthy foods, such as sugary drinks, to better align with nutritional goals. Rep. Andy Harris (R-Md.), the Ag Appropriations Subcommittee chairman, has been actively advocating for pilot projects that would restrict the types of products that can be purchased with SNAP benefits. This initiative aims to encourage healthier dietary choices among SNAP recipients by limiting the purchase of unhealthy foods and sugary drinks. The proposal for these pilot projects was initially dropped during negotiations over the FY 2024 spending legislation that included USDA. However, Harris convened a subcommittee hearing on the issue in May 2024, where he reiterated the importance of ensuring that SNAP delivers on its goal of providing nutritious food rather than just calories. Opposition is based on concerns that such restrictions could increase food prices and may not effectively address nutrition issues among SNAP participants.

Bottom line: The appropriations process is complicated by broader fiscal constraints and political dynamics. The Fiscal Responsibility Act set caps on defense and non-defense discretionary spending, which impacts the overall budgetary environment. Non-defense programs are expected to face a 6% cut, with some subcommittees experiencing even larger reductions. This creates a tight budgetary environment. Federal spending for agriculture is divided into mandatory and discretionary categories. Mandatory spending, which includes programs like farm program payments, crop insurance and nutrition assistance, dominates the budget and is less flexible. Discretionary spending, which funds programs like rural development and agricultural research, is more subject to annual appropriations and budget cuts.

— The IMF’s Deputy Managing Director, Gita Gopinath, urged the U.S. and other advanced economies to reduce their fiscal burdens, emphasizing the need to rein in spending and increase taxes. With the U.S. economy showing strong growth, Gopinath believes there is ample room to reduce fiscal deficits and return debt to pre-pandemic levels.

The Congressional Budget Office predicts US debt to GDP will exceed World War II-era highs by 2029, with deficits between 5.2% and 6.3% over the next decade. Gopinath cautioned against financing all spending through borrowing, highlighting significant risks posed by fiscal deficits in both the U.S. and China.

She praised recent fiscal reforms in the euro area but stressed the importance of implementation.

Looking ahead, 2025 is seen as a critical year for the U.S. fiscal outlook, with concerns about potential increases in deficits under the current economic plans of both political parties.

Gopinath also discussed the need for fundamental reforms in pension systems and medical spending due to aging populations, supporting more progressive taxation to address these issues. Additionally, she warned that while generative AI could boost productivity, it also poses risks to job security, urging countries to enhance support for displaced workers through more generous unemployment insurance and wage insurance programs.

— Attorney General vote in House? House Republicans announced that lawmakers could potentially vote this week on whether to hold Attorney General Merrick B. Garland in contempt of Congress.

— Manhattan DA Alvin Bragg has agreed to testify before a House Judiciary Committee panel regarding former President Trump’s hush-money trial, which led to Trump's conviction. This response follows House Judiciary Chair Jim Jordan's (R-Ohio) request for Bragg and prosecutor Matthew Colangelo to testify at a June 13 hearing on what he called the “unprecedented political prosecution of President Trump.” The DA's office confirmed their commitment to voluntary cooperation, according to the Associated Press.

— Judge grants injunction against USDA's ERP, bans race and sex discrimination in payments. A federal judge in Amarillo, Texas, recently granted a preliminary injunction against USDA regarding the 2022 Emergency Relief Program (ERP). This injunction allows payments to continue but prohibits discrimination based on sex or race. The judge's decision was influenced by the likelihood that the plaintiffs would prevail on the merits of their case, which challenges the constitutionality of USDA's methodology for distributing aid under the ERP.

The lawsuit, filed by a group of Texas farmers, claims that the USDA's prioritization of minority groups in its aid distribution is discriminatory. The plaintiffs argue that such prioritization violates their constitutional rights by discriminating against them based on race and sex. This case is part of a broader trend of legal challenges against federal policies perceived as favoring certain groups over others.

The Northern District of Texas, where this case was filed, has become a focal point for conservative litigants seeking favorable rulings. The Northern District of Texas has the highest percentage of Republican-appointed judges among all federal district courts in the United States. This has led to a reputation for issuing rulings that align with conservative ideologies, attracting conservative litigants who believe they have a better chance of winning their cases in this district. A notable feature of the Northern District of Texas is its use of single-judge divisions. In these divisions, cases are assigned to a single judge, often leading to predictable outcomes. For example, any case filed in the Amarillo division is automatically assigned to Judge Matthew Kacsmaryk, a Trump appointee known for his conservative rulings. This practice has been criticized for enabling "judge-shopping," where litigants can effectively choose their judge by selecting the division in which they file their case.

Conservative litigants in the Northern District of Texas have employed several main arguments in their legal challenges, often targeting federal policies and regulations. Here are the key points:

Constitutional violations: Many cases argue that federal policies violate constitutional rights. For instance, the lawsuit against USDA's 2022 Emergency Relief Program (ERP) claims that prioritizing aid based on race and sex is discriminatory and violates the Equal Protection Clause of the Constitution.
Federal overreach: Conservative litigants frequently argue that federal agencies exceed their authority. This argument was central in the case challenging FDA's approval of the abortion pill mifepristone, where the plaintiffs contended that the FDA overstepped its regulatory authority.
Religious liberty: Cases often invoke religious freedom as a basis for challenging federal policies. For example, Judge Matthew Kacsmaryk, a Trump appointee in Amarillo, has ruled against Biden administration efforts to protect LGBTQ workers, citing religious liberty concerns.
Administrative Procedure Act (APA) violations: Litigants argue that federal agencies fail to follow proper procedures under the APA. This was a significant point in the challenge to the Biden administration's vaccine mandate for federal contractors, where plaintiffs claimed the mandate was implemented without proper notice and comment.
Economic and regulatory impact: Some cases focus on the economic and regulatory burdens imposed by federal policies. For instance, challenges to environmental regulations often argue that these rules impose undue economic hardships on businesses and states.
Nationwide injunctions: Conservative litigants often seek nationwide injunctions to halt federal policies across the entire country, not just within the jurisdiction of the court. This strategy aims to maximize the impact of favorable rulings

— The Biden administration on Friday finalized new fuel economy standards for cars and light trucks, calling for a more gradual increase than initially proposed. The Corporate Average Fuel Economy (CAFE) standards, set by the National Highway Traffic Safety Administration, require automakers' fleets to average 50.4 miles per gallon by model year 2031. This move is projected to save vehicle owners over $600 in fuel costs over the vehicle's lifetime and reduce pollution and reliance on foreign oil, according to Transportation Secretary Pete Buttigieg.

Key details of the standards:

Passenger cars must increase fuel economy by 2% annually from model years 2027 through 2031.
Light trucks must increase fuel economy by 2% annually from model years 2029 through 2031, down from the 4% proposed last year.

John Bozzella, president of the Alliance for Automotive Innovation, praised the coordination with another rule tightening EPA limits on vehicle carbon dioxide emissions.

However, the rule has faced opposition. The American Petroleum Institute and Senator Ted Cruz (R-Tex.) criticized the standards, arguing they ignore consumer preferences for affordable gas-powered cars and could raise car prices. Cruz plans to introduce a resolution to overturn the CAFE standards.

Bottom line: The overarching goal of these standards is to promote electric or zero-emission vehicles, aiming for all new vehicle sales to be zero-emission by 2030, as the transportation sector is the largest source of U.S. emissions at 28%, per the EPA.

— The Supreme Court's current term is poised to deliver rulings on a range of high-stakes issues that could significantly impact the political landscape, especially in the context of the 2024 presidential election. Some rulings are coming Thursday. The court heard only 61 cases in the 2023-24 term, close to a historic low. It still needs to decide on 29 cases.

Here are some of the key cases and their potential implications:

Trump's ballot eligibility

Case: Originating from Colorado, this case involves the attempt to disqualify Donald Trump from appearing on the ballot due to his alleged involvement in the Jan. 6 insurrection.

Implications: The ruling could set a precedent for Trump's eligibility in other states and impact his political future. The justices appeared skeptical about disqualifying Trump, emphasizing the potential consequences for democracy and voter disenfranchisement.

Abortion rights

Cases: Several cases, including those from Idaho and Florida, address the legality of abortion restrictions and the federal requirement for hospitals to provide abortions in medical emergencies.

Implications: These rulings could reshape abortion access across the country, especially in states with near-total bans. The decisions will likely influence voter sentiment and mobilize both pro-choice and pro-life advocates.

Gun control

Case: United States v. Rahimi, which questions whether individuals subject to domestic violence restraining orders can be prohibited from possessing firearms.

Implications: A ruling against the prohibition could weaken gun control measures and affect public safety, particularly concerning domestic violence.

Social media and free speech

Cases: NetChoice, LLC v. Paxton and Moody v. NetChoice, LLC, which challenge laws in Florida and Texas that restrict social media companies from moderating content based on political views.

Implications: The decisions will address the balance between free speech rights of social media companies and state regulations, potentially affecting how online platforms operate.

Racial gerrymandering

Cases: Cases from Alabama and South Carolina address whether congressional district maps were drawn based on racial or partisan considerations.

Implications: These rulings could influence future redistricting efforts and the balance of political power in affected states.

Presidential immunity

Case: Trump v. United States, which examines whether a former president can claim immunity from criminal prosecution for actions taken while in office.

Implications: The outcome will determine the extent of legal accountability for former presidents and could impact ongoing and future prosecutions of Trump.

Federal agency power

Case: The justices could do away with Chevron deference, a bedrock precedent of administrative law that for decades has bolstered federal agencies’ powers to regulate wide areas of American life. The doctrine instructs judges to defer to an agency’s interpretation of a law when it is ambiguous. It has provided the executive branch with wide latitude to implement policy change in countless areas, including environmental protections and cryptocurrency.

Implications: Conservatives have increasingly looked to eliminate the precedent as part of a broader attack on the “administrative state.” At oral arguments, some of the Supreme Court’s conservatives who have long criticized the precedent railed against it, but it remains unclear if a majority is willing to end Chevron deference.

— President Emmanuel Macron stunned France on Sunday when he called snap parliamentary elections after his centrist alliance was trounced by Marine Le Pen’s far-right movement in a European parliamentary vote.

Far-right parties made significant gains in the EU elections, winning the vote in France and performing well in Germany and other countries, in results that will help tilt the European parliament towards a more anti-immigration and anti-green stance, according to observers.

Other Events & Hearings

Monday, June 10

International Fresh Produce Association’s annual Washington conference, through Wednesday,

President Joe Biden is in Wilmington, Delaware.
Ukraine reconstruction. German Marshall Fund of the United States forum on "All Reconstruction is Local" on the eve of the Ukraine Recovery Conference.
Immigration. Inter-American Dialogue discussion on "Addressing the Root Causes of Migration: Insights from the U.S. Strategy for Central America."
National Park, sites names. National Park Service meeting of the Advisory Committee on Reconciliation in Place Names to present its work identifying federal land unit and geographic feature names that may be considered derogatory, and its recommendations for determining a process to engage Tribes, state and local governments, affected federal agencies, and members of the public in identifying additional derogatory terms and federal land unit and geographic feature names.
U.S./Korea relations. Center for Strategic and International Studies (CSIS) holds a discussion on "U.S./Republic of Korea (ROK) Bilateral Dialogue for Strengthening U.S./ROK Alliance."

Tuesday, June 11

ReFED Food Waste Solutions Summit, through Thursday.

Juneteenth event. The White House hosts a Juneteenth Concert for a celebration of community, culture and music.
FY 2025 Budget: USDA, FDA. House Ag Subcommittee markup of the FY 2025 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies bill.
European Parliament elections. Brookings Institution virtual discussion on "Can't always get what you want: Unpacking the European Parliament elections." The Atlantic Council also holds a discussion on "Debriefing the European Elections."
China venture capital. Peterson Institute for International Economics (PIIE) holds a virtual discussion on "China's Experience of Promoting Venture Capital Investment."
Accounting standards. Federal Accounting Standards Advisory Board holds a meeting with the agenda including a focus on accounting and reporting of government land and climate-related financial reporting.
Battery supply chains. Center for Strategic and International Studies discussion on a new report, "Friendshoring the Lithium-Ion Battery Supply Chain."
Increased electricity demand. Center for Strategic and International Studies virtual discussion on meeting the demand for increased electric power.
U.S./Korea relations. Center for Strategic and International Studies (virtual discussion on "the latest developments on the Korean peninsula and the U.S./Republic of Korea (ROK) alliance."
Infrastructure. Homeland Security Department virtual meeting of the President's National Infrastructure Advisory Council for a keynote address on critical infrastructure security and resilience, presentation of the Transformer Production Report, council deliberation and vote and subcommittee updates and member discussion.
Russia/Ukraine war. Carnegie Endowment for International Peace discussion on "A Pivotal Year: Assessing the Russia-Ukraine War in 2024."

Supreme Court ethics. House Oversight and Accountability Democrats discussion on "High Court, Low Standards, and Dark Money: Flagging a Supreme Ethics Crisis in America."

Wednesday, June 12

FY 2025 Budget: Homeland Security. House Appropriations Committee markup of the FY 2025 State, Foreign Operations, and Related Programs bill; and the FY 2025 Homeland Security bill.
FY 2025 Budget: U.S. Fish and Wildlife Service. Senate Environment and Public Works Committee hearing on "The U.S. Fish and Wildlife Service's Proposed FY 2025 Budget." USFW Director Martha Williams testifies.
FY 2025 Budget: Commerce, Justice and related agencies. House Appropriations Commerce, Justice, Science, and Related Agencies Subcommittee markup of the FY 2025 Commerce, Justice, Science, and Related Agencies bill.
Sub-Saharan Africa trade. House Ways and Means Trade Subcommittee hearing on "Looking Beyond 2025 for Trade with Sub-Saharan Africa, Haiti, and Others."
Supply chain competition. International Trade Administration holds a virtual meeting of the Advisory Committee on Supply Chain Competitiveness to discuss supply chain resilience and congestion, trade and competitiveness, freight movement and policy, trade innovation, regulatory issues, finance and infrastructure and workforce development.
Presidential elections. CQ Roll Call and FiscalNote virtual discussion on "U.S. Presidential Campaigns."
U.S. airline industry. Politico discussion on "Flight Path: State of the Airline Industry."
AI and infrastructure. PunchBowl News discussion on "the news of the day and how AI will impact the future of infrastructure, security, and tourism worldwide."
International minerals issues. Center for Strategic and International Studies virtual discussion on "International Minerals Diplomacy," focusing on Saudi Arabia.
China issues. Atlantic Council virtual discussion on a new report, "A Global South with Chinese Characteristics."
CFPB report to Congress. Senate Banking, Housing and Urban Affairs Committee hearing on "The Consumer Financial Protection Bureau's (CFPB) Semi-Annual Report to Congress." CFPB Director Rohit Chopra testifies.
Immigration issues. Brookings Institution's Economic Studies Program and Governance Studies Program discussion on "The Economics and Politics of Immigration."
CARB and transportation system. House Science, Space and Technology Investigations and Oversight Subcommittee hearing on "Environmentalism Off the Rails: How CARB (California Air Resources Board) will Cripple the National Rail Network."
FDIC oversight. House Financial Services Committee hearing on "Oversight of the FDIC's Failed Leadership and Toxic Workplace Culture."
Wall Street issues. Senate Budget Committee shearing on "Making Wall Street Pay Its Fair Share: Raising Revenue, Strengthening Our Economy."
Climate and ESG. House Judiciary Administrative State, Regulatory Reform, and Antitrust Subcommittee hearing on "Climate Control: Decarbonization Collusion in Environmental, Social, and Governance (ESG) Investing."
India post-election. Henry L. Stimson Center virtual discussion on "India's Post-Election foreign Policy."
China influence in Asia. Center for a New American Security virtual discussion on "Lost Decade: The US Pivot to Asia and the Rise of Chinese Power."
Russia/Iran collaboration. Center for Strategic and International Studies virtual discussion on "Understanding the Growing Collaboration Between Russia and Iran."
Minerals workforce. Senate Health, Education, Labor and Pensions Employment and Workplace Safety Subcommittee hearing on "Digging Deeper: Building Our Critical Minerals Workforce."
American manufacturing. Joint Economic Committee hearing on "Made in America: The Boom in U.S. Manufacturing Investment."
War in Ukraine. Atlantic Council virtual book discussion on "Battleground Ukraine: From Independence to the War with Russia."

Thursday, June 13

Federal Reserve. New York Fed President John Williams scheduled to speak, but his remarks may be limited by Fed rules covering the FOMC blackout period which will not end until 11:59 pm CT tonight.
FY 2025 Budget: Defense, Financial Services. House Appropriations Committee markup of the FY 2025 Defense bill; the FY 2025 Financial Services and General Government bill; and the FY 2025 Legislative Branch bill.
FY 2025 Budget: SEC, CFTC. Senate Appropriations Financial Services and General Government Subcommittee hearing on proposed budget estimates and justification for FY 2025 for the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Farm Credit system economic situation. Farm Credit Administration meeting for a quarterly report on economic conditions and farm credit system condition and performance and semiannual report on Office of Examination operations.
U.S. power grid. American Enterprise Institute for Public Policy Research discussion on "Achieving Speed and Scale: Developing a Next-Generation, Efficient, and Resilient U.S. Power Grid."
BLM oversight. Senate Energy and Natural Resources Committee hearing on "Oversight of the Bureau of Land Management.
U.S./China panel. The U.S./China Economic and Security Review Commission virtual hearing on "China's Stockpiling and Mobilization Measures for Competition and Conflict."
Medicare and Social Security impact on the budget. House Budget Committee hearing on "Medicare and Social Security: Examining Solvency and Impacts to the Federal Budget."
Gaza peace plan. Arab Center virtual discussion on "Biden's Latest Peace Plan for Gaza: Impediments and Prospects."
CFPB report to Congress. House Financial Services Committee hearing on "The Semi-Annual Report of the Bureau of Consumer Financial Protection." CFPB Director Rohit Chopra testifies.
FAA oversight of aviation. Senate Commerce, Science and Transportation Committee hearing on "FAA Oversight of Aviation Manufacturing." FAA Administrator Michael Whitaker testifies.
Immigration and national parks/federal lands. House Natural Resources Oversight and Investigations Subcommittee hearing on "Destroying America's Best Idea: Biden's Border Crisis, Desecrating National Park Lands and Damaging Communities."
Critical minerals supply chains. House Energy and Commerce Energy, Climate, and Grid Security Subcommittee hearing on "Securing America's Critical Materials Supply Chains and Economic Leadership."
Uyghur forced labor. Hudson Institute discussion on "Tackling the Uyghur Forced Labor Challenge."
Microsoft and homeland security. House Homeland Security Committee hearing on "A Cascade of Security Failures: Assessing Microsoft Corporation's Cybersecurity Shortfalls and the Implications for Homeland Security."
CARB impacts on railroads. House Science, Space and Technology Investigations and Oversight Subcommittee hearing on "Environmentalism Off the Rails: How CARB (California Air Resources Board) will Cripple the National Rail Network."

Friday, June 14

Federal Reserve. Fed Governor Lisa Cook to speak on Lessons from the American Economic Association Summer Program at an event marking the 50th anniversary of the American Economic Association Summer Program. Chicago Fed President Austan Goolsbee scheduled to deliver remarks.
Fed's monetary policy. The Brookings Institution conference on "The Federal Reserve's Review of Its Monetary Policy Framework."

Economic Reports and Events for the Week

Wednesday is the key day this week as it brings May CPI figures and later an FOMC statement on interest rates, updated Fed projections and a Fed chair presser.

Monday, June 10

Japan: revised Q1 GDP figures
Apple begins its annual Worldwide Developers Conference (WWDC) at its headquarters in Cupertino, with an opening keynote address by CEO Tim Cook

Tuesday, June 11

NFIB Small Business Optimism Index

Wednesday, June 12

MBA Mortgage Applications
CPI: The consumer price index (CPI) is expected to have risen 0.1% in May, compared to a 0.3% gain in April. In the 12 months through May, the CPI likely advanced 3.4%, matching April's growth. Excluding the volatile food and energy components, the CPI probably climbed 0.3% in May, mirroring April's increase. On an annual basis, this so-called core CPI is forecast to have ticked up 3.5% in May, compared to a 3.6% hike in April.
FOMC statement
FOMC projections
Fed Chair presser
Germany: May consumer price index (CPI) and harmonized index of consumer prices (HICP) inflation rate data

Thursday, June 13

Jobless Claims is expected to show initial claims for state unemployment benefits falling to 225,000 in the week ending June 8 from 229,000 the week before.
PPI-FD: The producer price index (PPI) for final demand likely inched up 0.1% in May, after advancing 0.5% in April. In the 12 months through May, the PPI is forecast to have climbed 2.6%, after gaining 2.2% in the previous month.
Fed Balance Sheet
Money Supply
Tesla annual shareholder meeting. Investors will vote on a key proposal related to CEO Elon Musk's pay.
Italy: G7 Summit, hosted by Italian Prime Minister Giorgia Meloni and attended by leaders of the other G7 member nations, plus the presidents of the European Council and the European Commission, begins in Apulia, south-west Italy.

Friday, June 14

Import & Export Prices
Consumer Sentiment
Japan: interest rate announcement

Key USDA & international Ag & Energy Reports and Events

Ag focus is on Wednesday’s monthly reports from USDA — updated old- and new-crop balance sheets and the second winter wheat production estimate from NASS.

In the energy sector, OPEC, the EIA and the IEA will publish their monthly market outlooks during the week.

Monday, June 10

Ag reports and events:

Export Inspections
US Agricultural Trade Data Update
Crop Progress
Malaysian Palm Oil Board’s monthly data on stockpiles, exports and production
Sugar production and cane crush data from Brazil’s Unica (tentative)
Malaysia’s June 1-10 palm oil exports