— China trade deal a lock; USMCA moves ahead: U.S.-China trade will be back in the spotlight this month with the signing of the "phase one" trade deal on Jan. 15. The Senate is also expected to vote on the U.S.-Mexico-Canada Agreement to replace and modernize NAFTA, once it finishes President Donald Trump's impeachment trial that could begin in January at the earliest.
— Capital decision: The Federal Housing Finance Agency plans to issue a long-anticipated rule setting capital requirements for Fannie Mae and Freddie Mac sometime early in the first quarter, a major announcement for investors when the companies move to raise private funds as they exit government control. The agency said in November that it would re-propose the rule rather than make changes around the edges of a 2018 version proposed by Director Mark Calabria's predecessor, Mel Watt. Calabria says the rule, which will establish capital requirements for the dominant mortgage-financing companies going forward, will be the most important decision of his tenure.
— Countdown for Title IX regulations: Education Secretary Betsy DeVos' proposed Title IX regulations governing how schools and higher education institutions must handle campus sexual assault are in the final approval stage at the Office of Management and Budget. The office has meetings set through January to talk about the rules with education, civil rights and law groups as well as individual parties, but OMB could finalize the rules before then. The final rules aim to curb Obama-era Title IX policies.
EMPLOYMENT & IMMIGRATION
Joint employer, fiduciary rules coming in early 2020: The Labor Department says it will issue two proposed rules in the next several weeks. One will revise DOL's "joint employer" standard, which determines when to hold a business legally responsible for labor violations committed by its contractors and franchisees. The other proposed will establish fiduciary responsibilities for financial professionals who advise clients on how to invest retirement savings.
Both proposed rules were expected to come out in December, but a DOL spokesperson told POLITICO that the department was unable to meet its self-imposed deadline. — Ian Kullgren
Is the buildup over? Congress and the Pentagon kick off a new defense budget cycle with the new year — and spending on defense programs is likely to be flat. A budget deal hammered out last summer proposes just under $741 billion in overall national defense spending for the coming 2021 fiscal year, a slight increase from the $738 billion set this year. That's a far cry from the 3 percent to 5 percent annual spending increases many experts and defense hawks say are needed to implement the administration's strategy of reorienting the U.S. military toward matching gains made by Russia and China.
Vacancies accumulating: While the Senate worked to quickly confirm the president's top Pentagon picks in the waning months of 2019, new vacancies are piling up. Among the recent Pentagon departures: Kari Bingen, the second-ranking civilian intelligence official; Randall Schriver, the top Asia policy official; Jimmy Stewart, who was filling in as undersecretary for personnel and readiness; and Steve Walker, director of the Defense Advanced Research Projects Agency. — Connor O'Brien
Otting vs. Waters: Comptroller of the Currency Joseph Otting is set to testify before the House Financial Services Committee on Jan. 29, a hearing that will bring fireworks over his proposal to remake the Community Reinvestment Act. Democrats fear the rule will water down the landmark law designed to combat discriminatory lending, concerns that prompted Chairwoman Maxine Waters to lead a group of Democrats to attend the Dec. 12 FDIC board meeting where the proposal was approved. — Mark McQuillan
EU tariffs on the brain: Two trade disputes with Europe will dominate focus in January. The USTR will hold a hearing Jan. 7 on its proposal to impose tariffs on $2.4 billion worth of French products to retaliate against France's new digital services tax. Those duties could be imposed as early as mid-January, once USTR completes its public consultation process.
USTR also has proposed to increase tariffs on $7.5 billion worth of European goods in the dispute over European government support for Airbus. Public comments on that idea are due to USTR by Jan. 13 and duty hikes could come quickly afterward.
Departing for Davos: Trump is expected to attend the annual World Economic Forum in Davos, Switzerland, in late January. The Swiss government usually hosts a WTO "mini-ministerial" in conjunction with that, which U.S. Trade Representative Robert Lighthizer or another top U.S. trade official would likely attend.
Goodbye, EU: The U.K. is expected to finally complete its Brexit from the EU on Jan. 31. That would set the stage for the U.K. to formally begin negotiations with the U.S., the EU and other countries on future trade arrangements. — Doug Palmer
SCOTUS to hear Montana school choice case: A closely watched Montana school choice case that could help determine whether public money can be funneled toward religious schools will be argued before the Supreme Court on Jan. 22. Espinoza v. Montana Department of Revenue centers on whether a tax credit scholarship program in Montana violated a state constitutional provision prohibiting the Legislature from appropriating public funds to aid religious schools. — Nicole Gaudiano
Court's turn to the right bodes well for Trump health agenda: A bastion of liberalism in the federal judiciary is turning rightward, threatening Democratic court challenges on everything from abortion to who gets a green card. The recent Senate confirmations of Lawrence VanDyke and Patrick Bumatay to the 9th U.S. Circuit Court of Appeals brought to nine the number of appointments Trump has made to the 29-member bench that serves as the last stop for nearly all legal complaints lodged in nine Western states. Democratic-appointed judges now hold a three-seat majority, compared with 11 at the start of Trump's presidency.
The appeals court could rule within weeks on the administration's overhaul of the Title X federal family planning program — and decide whether to take up the "conscience rule" allowing health providers to opt out of providing care on religious or moral grounds. With Congress largely gridlocked, the rules often are the only way to change policies. The circuit has been the go-to venue for activist state attorneys eager to freeze Trump policies on health care, immigration and other social issues. It ruled against Trump's weakening of Obamacare's contraceptive mandate, as well as multiple versions of his travel ban. — Susannah Luthi
BUDGET & APPROPRIATIONS
Budget day awaits: It's not the start of the fiscal year, but it might as well be. Since Trump just signed the two-part spending deal to fund the government through the end of September, leaders in Congress and the administration can now focus on a plan for the fiscal year that follows. White House budget leaders will spend January finalizing Trump's wish list for funding federal departments in fiscal 2021.
That big blue book is due Feb. 3 and probably won't be too late, if tardy at all, since the president is rounding out his fourth year in office. The nation's budget experts also have the advantage now — for the first time since Trump was elected — of a fresh calendar year unspoiled by the spillover of spending negotiations from the fiscal year that has already started.
Don't expect fiscal 2021 work to be any easier, though, than the protracted appropriations battles of late. The president is still insistent on continued funding for his chief campaign promise: the border wall. Congressional Democrats are ever resistant. And it's an election year. — Jennifer Scholtes
GMO labeling law takes effect this month: Major food manufacturers and importers must start implementing a law requiring them to list when their products contain genetically modified ingredients on Jan. 1, although the Agriculture Department is allowing a two-year phase-in period before the disclosures become mandatory. Companies have three GMO labeling options: words, a symbol developed by USDA, or a digital link. — Catherine Boudreau
Antitrust probes, privacy clampdown loom: The many dark clouds gathering over Silicon Valley are poised to turn downright stormy in 2020, as January arrives with a tangle of unresolved antitrust actions still hanging over the industry. Those include the DOJ's review of complaints of anti-competitive behavior in the tech industry — a probe that Attorney General William Barr has said he hopes to wrap up this year — as well as potential DOJ antitrust investigations of Google and Apple and possible FTC inquiries into Facebook and Amazon. USTR is separately considering whether to place some of Amazon's overseas operations on a list of "notorious markets" that enable the sale of fake or pirated goods, The Wall Street Journal reported last month.
Meanwhile, U.S. tech companies are awaiting news this month on a federal privacy law that would override the stricter state-level standards that take effect this month in California. Congress left town in December without either of the key House or Senate committees coming to agreements on their versions of a privacy bill, with two crucial sticking points being whether federal law should preempt states' requirements and whether individuals should have the right to sue companies for violations. If Congress cannot pass a bill, California's privacy law would set the de facto national standard — a development some Democrats have said they would welcome.
POLITICO is going to CES: We're sending Pro Tech reporters Nancy Scola and Cristiano Lima to the CES 2020 conference Jan. 7-10 in Las Vegas, where they'll be giving you insights into the interplay between industry heavyweights and Washington power players. Don't miss their special daily newsletter that debuts Jan. 6 — sign up today.
More time to weigh in on hemp regs: Feedback on proposed hemp regulations can roll in all through this month after the USDA tacked on an extra month for submitting comments. Farmers and state government agencies are concerned that the rules, which require testing for THC levels at only DEA-certified labs, will be onerous. Already, 1,300 comments have been submitted to the Agricultural Marketing Service, but the bulk of the comments are expected to arrive towards the end of the comment period. The delay may be good for some commenters — farm bureaus of nine Western states had requested a 60-day extension. At the same time, the extension could end up delaying implementation for farmers planning for the 2020 season.
The hemp industry and state regulators have expressed some concern over the proposed rules, though the industry shows no sign of slowing as the CBD market continues to boom. Many states are eager to help their farmers take advantage of the potentially lucrative crop — Texas Gov. Greg Abbott signed a hemp bill in June. While the state waits to hear from the USDA on its hemp plan, the industry will be convening at The Texas Hemp Convention Jan. 28-30. Mona Zhang will be in Dallas for the event, moderating a panel on cannabis and hemp marketing. — Mona Zhang
Iranian cyber retaliation: U.S. businesses and critical infrastructure operators such as utilities and power plants may feel the sting of Iranian revenge attacks over Trump's decision to kill Maj. Gen. Qassem Soleimani. Iranian hackers have hit adversaries hard before, taking out computer servers at a Saudi Arabian oil company and attacking banks and financial institutions in the U.S. and Europe. Cybersecurity experts say they expect Iran's hackers to step up operations aimed at U.S. government targets as well as the private sector, and they've warned U.S. power utilities to be extra vigilant. Already, hackers claiming to be Iranian defaced the Federal Depository Library Program website. And the Department of Homeland Security has reissued previous alerts about malicious Iranian cyber activities. — Mike Farrell
DEMOCRATS REVIVE 'FOREVER CHEMICAL' BILL: After the spectacular failure of end-of-year negotiations to strike a deal on PFAS regulations in December, House Democrats are wasting no time in reviving the issue and have teed up a sweeping measure as the first substantive legislation to be considered in the new year. The measure that was passed by the House Energy and Commerce Committee, the PFAS Action Act (H.R. 535), would require EPA to set a health-protective drinking water limit for the two best-studied chemicals in the class, designate them as hazardous under the Superfund law, and regulate air emissions. But Senate leaders have signaled they have no intention of taking it up. — Annie Snider
Bloomberg's tax agenda: Former New York Mayor Michael Bloomberg is expected to flesh out a tax plan in the coming weeks for his nascent campaign for the Democratic presidential nomination. So far, he's outlined ideas for expanding the Earned Income and Child tax credits. Bloomberg has also criticized wealth taxes like the one proposed by Sen. Elizabeth Warren (D-Mass.), one of his rivals for the nomination. At the same time, he said he supports higher taxes for "wealthy people like me." — Toby Eckert
737 MAX LIMPS INTO THE NEW DECADE: Boeing's flagship 737 MAX, intended to be its answer to competitor Airbus' fuel efficient new plane, will enter the new year having been grounded almost 10 months, with no concrete end in sight. Just before Christmas, Boeing CEO Dennis Muilenburg was ousted in an effort to clean house, after months of telling regulators that he had no plans to leave his post. Boeing will spend much of January attempting to plug holes in the software that's at the heart of several ongoing crash probes, including a DOT inspector general audit and a review of the FAA's certification process by a DOT-chartered panel of aviation experts. — Kathryn Wolfe