The Week Ahead: White House $47 Bil. Supplemental Request Seeks Covid, Ukraine, Disaster Funding

White House $47 Bil. Supplemental Request Seeks Covid, Ukraine, Disaster Funding

Podesta to serve as senior advisor on ‘clean energy innovation and implementation’

Washington Focus

The Senate returns to work Sept. 6. The House is on recess until Sept. 13.

Congress is beginning to work on stopgap funding legislation on which President Joe Biden's signature is required before Oct. 1 to avert a partial government shutdown. A continuing resolution (CR) will need 60 votes to clear the evenly divided Senate. Congress hasn't acted on any of the 12 fiscal 2023 spending bills, and the CR is intended to buy time to get through the midterm elections on Nov. 8 and into the lame duck session to wrap up the year's legislative business. House Democratic leaders have been working on a plan to take up a temporary spending bill the week of Sept. 12 that would extend current government funding levels through Dec. 16.

The Biden administration made public emergency funding requests to Congress (link) that add up to $47.1 billion, including a higher-than-expected sum of $11.7 billion in military and budgetary aid for Ukraine. Three-quarters of the aid lawmakers previously approved for the war-torn country had been “disbursed or committed,” according to a White House letter.

The funding request will be part of the debate on the upcoming short-term spending bill lawmakers will take up this month. Link to White House blog on the topic.

The biggest line item is $22.4 billion for Covid-19 response of which $18.4 billion would go to the Department of Health and Human Services and $4 billion would support global efforts to contain and treat the pandemic. Republicans have blocked additional supplemental funds for Covid-19 response efforts, including a $10 billion installment earlier this year, arguing unspent pandemic aid should be repurposed instead. The Biden administration ended up taking the $10 billion from other sources.

They’re also asking for $6.5 billion for emergency disaster relief and $4.5 billion to fight monkeypox, with $600 million of that total devoted to international efforts. The disaster aid is to help communities across the country continue to cope with the aftermath of floods, hurricanes, drought and more. The Federal Emergency Management Agency's main disaster relief fund would get $2.9 billion to help with short-term needs arising from recent flooding in Kentucky and other disasters that may strike early in the next fiscal year. USDA would get $1.5 billion to provide direct payments to farmers and ranchers who've lost crops and livestock. And the Department of Housing and Urban Development would receive $1.4 billion in longer-term recovery funding for disasters that struck last year in Louisiana, California and Texas.

The ag disaster aid, that would be available until Dec. 31, 2024, would include “crops prevented from planting in 2022 and acreage impacted by reduced federal water allocations as announced in Fall of 2021 or 2022 as a consequence of a natural disaster, including drought, occurring in calendar year 2022, or reduced federal water allocations in calendar years 2021 and 2022 under such terms and conditions as determined by the Secretary.” The request adds, “This request would provide $1.5 billion to the Department of Agriculture, Processing, Research and Marketing account for agricultural relief due to natural disasters in calendar year 2022. Funding would be used to assist farmers that experienced revenue, crop, or livestock losses and for administrative costs to streamline the application process and ease the burden on county office employees.”

The proposal also asks $500 million for low-income heating and cooling assistance as households cope with higher utility prices and $150 million to help "improve the resilience of the electric grid."

The funding proposals shouldn't require offsets and are similar to items funded by members of both parties previously. "This is emergency funding and we believe Congress should provide it that way again," an administration official said.

Podesta to serve as a senior advisor on “clean energy innovation and implementation.” President Biden on Friday brought back John Podesta to put into place an aggressive U.S. climate program newly revived by around $375 billion from Congress. Podesta’s jobs for Democratic presidents include acting chief of staff for Clinton and helping push through some early landmark climate efforts by President Obama. Podesta has been serving as head of the Center for American Progress think tank. In the past, Podesta’s emails were leaked by WikiLeaks ahead of the 2016 election and contained controversial material.

Biden also announced the departure of his current climate advisor, Gina McCarthy. A former Environmental Protection Agency chief, McCarthy, 68, had led Biden’s domestic climate program during the Biden administration’s nearly first two years. McCarthy will step down on Sept. 16. Her departure had been expected for months. Ali Zaidi, McCarthy’s deputy, will succeed her as national climate advisor, the White House said. Zaidi, 35, worked in the Obama administration for years and later served as deputy secretary for energy and environment and chair of climate policy and finance for the state of New York.

President Biden and First Lady Jill Biden will host the Obamas on Wednesday for the unveiling of their portraits in front of friends, family and staff members. The ceremony will also mark Michelle Obama’s first visit to the White House since Obama’s presidency ended in January 2017, and only the second visit for Barack Obama. He was at the White House in April to mark the 12th anniversary of the healthcare law he signed in 2010. Bill Clinton joked in 2004 that “most of the time, till you get your picture hung like this, the only artists that draw you are cartoonists.”

With Labor Day completed, election-year/politics will make it even harder to ascertain the Signal from the Noise, as my podcast with Chip Flory tries to do each Monday morning (Tuesday this week due to the holiday). Link to the podcast.

Key Economic Reports for the Week

Key economic reports of note include the Federal Reserve's sixth beige book of the year on Wednesday and the Department of Labor's initial jobless claims for the latest week on Thursday. Meanwhile, the European Central Bank announces a monetary-policy decision on Thursday. Futures markets are pricing in the greatest odds of a 75-basis-point hike, which would bring ECB’s benchmark interest-rate target to 0.75%.

Monday, Sept. 5

Holiday in U.S. and Canada.

Tuesday, Sept. 6

Institute for Supply Management releases its Services Purchasing Managers’ Index for August. Consensus estimate is for a 54 reading, about three points lower than in July. The index is well off its record high of 68.4 from November, but still above the expansionary level of 50.

Wednesday, Sept. 7

MBA Mortgage Applications
Federal Reserve releases the beige book for the sixth of eight times this year. The report summarizes current economic conditions with anecdotal data collected by the 12 regional Federal Reserve banks.
Mortgage Bankers Association releases its mortgage application survey for the week ending on Sept. 2. Mortgage applications have dropped for three consecutive weeks and are at a multidecade low amid record-high home prices and surging mortgage rates.

Thursday, Sept. 8

Jobless Claims
Department of Labor reports initial jobless claims for the week ending on Sept. 3. Claims averaged 241,500 in August and have risen steadily this year from historically low levels.
European Central Bank announces its monetary-policy decision. Traders are pricing in a 60% chance of a jumbo-size 75-basis-point hike, which would bring ECB’s deposit facility rate to 0.75%. At its last meeting, in July, the central bank lifted its key interest rate by half a percentage point, from negative 0.5% to zero. It has been just over a decade since the deposit facility rate was last above zero.
Fed Balance Sheet
Money Supply

Friday, Sept. 9

Federal Reserve releases the Financial Accounts of the United States for the second quarter. The report gives a snapshot of the nation’s household net worth and debt. In the first quarter, household net worth fell by $544 billion, to $149.3 trillion. It was the first decline since the first quarter of 2020. With the S&P 500SPX index plunging more than 16% in the second quarter, it’s very likely that the report will show another decrease.

Key USDA & international Ag & Energy Reports and Events

A key focus in the ag markets: Whether China continues its torrid soybean buying from the U.S., Brazil and Argentina.

On the energy front, the OPEC+ alliance meets on Monday to decide oil production policy after recent calls from Saudi Arabia that cutbacks might be needed again at some point after many months of small increases. Meanwhile, EIA production forecasts due in the monthly Short-Term Energy Outlook come Wednesday.

Monday, Sept. 5

Ag reports and events:

Holiday: U.S. and Canada
EU weekly grain, oilseed import and export data
Malaysia’s Sept. 1-5 palm oil export data