A Vote-Count Analysis of a Debt Ceiling Bill

Liberal Democrats Have Leverage on Debt Deal

By NATE SILVER

Nancy Pelosi hasn’t had very many opportunities to influence policy in the 112th Congress. Republicans have too large a majority, and vote too uniformly on most issues, for Democratic votes in the House to make much difference. Instead, the Democrats’ veto points are in the Senate and in the White House.

But the vote to raise the federal debt limit, which now seems tied inexorably to efforts to reduce the national debt, is one exception. We’ve run through these numbers before, but they’re worth revisiting now that we may be getting closer to a deal.

A vote on a deal is a potential triple whammy for members of Congress. Raising the debt limit, in and of itself, is unpopular. So is cutting or amending popular entitlement programs. The cherry on top are potential tax increases — although since some of the revenue raisers on the table poll reasonably well, that is likely to be more of a problem for Republicans than Democrats.

Read more here.

CFTC meeting with the Coalition for Derivatives End-Users

Earlier this week, as part of the Coalition for Derivatives End-Users, CMC met with several CFTC staff. The topic of discussion was the CFTC’s proposed rule on margin requirements. Comments on this rule are due on Monday, July 11, and CMC will be submitting comments to the CFTC as well as the Prudential Regulators. Among the major topics discussed at the meeting were the CFTC’s legal authority to impose margin on end-users, inter-affiliate trades and eligible collateral. Most of the market participants present at the meeting weighed in strongly on these and other margin-related topics.

CMC specifically talked about the importance of the affiliates issue to our members. We emphasized that requiring Swap Dealers and Major Swap Participants to post collateral with regard to inter-affiliate swaps is unnecessary because such swaps are risk allocation tools that do not increase a corporate enterprise’s outward counterparty risk exposure. We also said that inter-affiliate swap transactions should be exempt from recordkeeping and reporting requirements, as such requirements are unnecessary and onerous for these transactions, and provide little benefit to the regulators. CMC also reminded CFTC staff that Sen. Blanche Lincoln (Democrat – Arkansas) had expressly stated as then Chair of the Agriculture Committee in 2010 that end-users should not have margin requirements imposed on them.

It was quite evident that the CFTC hadn’t thought deeply about the affiliates issue and they admitted that they don’t really have a clear definition for what constitutes an affiliate transaction. Given how many industry coalitions cutting across various industrial sectors have weighed in on margin-related issues, we hope and expect – although we can never be certain – that the CFTC takes into account at least some of industry’s legitimate concerns and comments before promulgating their final rule on the subject.

CMC meets with Sens. Corker and Crapo

Last week, CMC met with two influential Senators in the financial and economic realm. They are Sen. Bob Corker (Republican – Tennessee) and Sen. Mike Crapo (Republican – Idaho), both of whom are senior members of the Banking Committee.

Sen. Corker devoted much of his time to discussing budget/debt issues, although he was also asked a few questions by the intimate audience on energy, financial and political topics. CMC brought up the issue of derivatives regulation – specifically how the CFTC is imposing onerous rules on industry here in the US, and is not paying heed to the need for international coordination with foreign regulators, most of whom are either far behind the CFTC in their regulatory agenda or do not share the CFTC’s heavy-handed perspectives on policy and regulatory matters. Sen. Corker suggested that it would be a good time for the Banking Committee to have conversations with Treasury Secretary Timothy Geithner and other regulators (e.g. CFTC, SEC, etc.) on this topic. CMC offered to assist Mr. Corker and his staff in preparing for such conversations as needed.

Sen. Crapo also spoke at length about budgetary and fiscal issues, specifically commenting on the “Gang of 6” negotiations on Capitol Hill. Being a strong conservative, he emphasized that he would refuse to vote affirmatively on any bill that raises the debt ceiling if such bill doesn’t cut government spending very deeply. However, he did signal an openness to compromise by indicating that he is not against the idea of “revenue raisers” that are not direct hikes in marginal tax rates (i.e. he would not be opposed to ending subsidies and closing tax loopholes). He said that if the House Republicans vote against a debt ceiling increase, they would be making a political mistake. When CMC asked him about derivatives issues, he voiced concern that the derivatives space is being overregulated by American regulators and said that the Banking Committee continues to monitor this realm.

USDA WASDE Report Conference Call

Please join MGEX for the next Crop Report Conference Call on Tuesday, July 12 at 8:15 a.m. Our commentator will be Brain Basting from Advance Trading.

Please RSVP to marketing@mgex.com.

Call-in Information:

• Long Distance, 1-866-755-7677
• Twin Cities, 763-231-7677
• Participant Code, 150844# (*Note: new code)
• Please Mute Your Phone, Press *2
• Call begins at 8:15 a.m. CT

Please remember to mute your phone to avoid background noise during the call.  All media members will have the opportunity to ask a question and a follow-up, if time allows.

The call audio will be posted to the Exchange website later that morning.

You can also find written and audio commentary on our website, as well as information on all our products and services.  Visit www.mgex.com.

CMC Continues To Work for Market Transparency & Reporting In the Ag Markets

Yesterday, CMC conferenced with our colleague from the National Oilseed Processors Association, the American Soybean Association, the North American Millers’ Association, and the National Cotton Council to review our plans for pressuring the U.S. Census Bureau to reinstate the Current Industrial Report program.  This program, which the Census Bureau has terminated, includes the following reports:

• Flour Milling Report;
• Fats and Oils: Oilseed Crushing;
• Fats and Oils: Production, Consumption and Stocks; and
• Consumption on the Cotton System and Stocks.

As a coalition, we are working to create a Congressional record illustrating the importance of these reports and hope the House Appropriation Subcommittee mark-ups slated for today will be a vehicle for this goal.  We are working with Rep. Jo Bonner (R-AL), Hal Rogers (R-KY) and Kevin Yoder (R-KS).

To view CMC’s letter on this issue click here.

CMC Meets with Valis

Yesterday, CMC met with Wayne Valis, the coordinator of the Trade Association Liaison Council.  CMC uses its membership in TALC to interact with other associations, increase our visibility in town, and engage directly with lawmakers.   Meeting with Mr. Valis was an opportunity for the Council to determine how TALC can best help CMC advance’s action plan.

CMC Talks with Sen. Rand Paul (R-KY)

CMC recently sat down with Sen. Rand Paul, the junior Republican Senator from Kentucky, and his lead tax and budget staffer to discuss the issues facing the Senate including financial reg reform.  CMC emphasized the importance of getting the regulatory balance correct.  We talked specifically about margin and capital requirements and international coordination. Sen. Paul was sympathetic and continues to be an advocate for reigning in government overreach.  He also speculated that there could be a very interesting lame duck session at the end of 2012 with the ’01 and ’03 tax cuts set to expire on December 31, 2012.