OVERNIGHT MONEY: IRS head Koskinen returns to Capitol Hill

by Vicki Needham and Bernie Becker - 02/04/14 5:58 PM ET

WEDNESDAY’S BIG STORY:

Welcome back, Mr. Koskinen: The new IRS commissioner, John Koskinen, returns to Capitol Hill on Wednesday to testify for the first time since taking over the top slot at the tax agency — just in time to answer questions about his decision to green-light bonuses for agency staffers.

Republicans were quick to criticize the bonus decision in the wake of last year’s targeting controversy, and GOP members of the House Ways and Means Oversight subcommittee are sure to ask Koskinen to explain himself.

“To provide for bonuses for an agency that has violated the trust of the American people is irresponsible and reckless,” Rep. Tom Price (R-Ga.), a Ways and Means member, said Tuesday.

{mosads}Koskinen and the IRS argue that the bonuses will be good for morale, and that rewarding staffers who worked through a trying 2013 was the best use of the roughly $62 million now earmarked for bonuses. Koskinen’s predecessor, interim commissioner Danny Werfel, had moved to scrap bonuses last year.

The agency reached the $62 million figure, which is significantly below the bonus figure for 2012, after negotiations with the National Treasury Employees Union.

The new IRS commissioner could also likely field questions on the new proposed federal rules overseeing political activity by tax-exempt 501(c)(4) groups, which administration officials have said could provide new clarity to a hazy field but are despised by Republicans.

Just Tuesday, for instance, Reps. Darrell Issa (R-Calif.) and Jim Jordan (R-Ohio) called on Koskinen to withdraw the regulations released by the IRS and the Treasury Department in November. (Koskinen was confirmed as commissioner in December, and has stressed he was not involved in crafting the rules.)

The status of the IRS’s implementation of the Affordable Care Act could easily come up as well.

WHAT ELSE WE’RE WATCHING

Volcker Rule: The House Financial Services Committee on Wednesday will chat with federal regulators about the implementation of the Dodd-Frank financial reform law.

The heads of the Securities and Exchange Commission, Commodity Futures Trading Commission, Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Federal Reserve will talk with lawmakers about the effects of the Volcker Rule on jobs and the U.S. economy.

They’re back: The Congressional Budget Office, which rattled some cages on Tuesday with its latest economic analysis of ObamaCare, among other economic issues, will zip over to the House Budget Committee on Wednesday to chat about a similar slew of issues.

CBO Director Douglas Elmendorf will break down the numbers with lawmakers. On Tuesday, the CBO released a report that said the healthcare law will cost the nation the equivalent of 2.5 million workers in the next decade and noted that its negative effects on the economy would be “substantially larger” than what it had previously anticipated.

The White House pushed back against the findings.

BREAKING NEWS

Farm bill heads to Obama’s desk: The Senate passed a $956 billion farm bill on Tuesday — 68-32 — that reduces food stamp payments by $8 billion over the next decade.

President Obama is expected to sign the bill, which was the first new farm legislation passed since 2008.

The White House said he would travel to Michigan State University on Friday to sign the bill, the home state of Senate Agriculture Committee Chairwoman Debbie Stabenow.

The bill would save $16.6 billion in spending over 10 years, according to the Congressional Budget Office.

LOOSE CHANGE

Coming soon: The Senate Banking Committee is expected to hold a nominations hearing the last week of February for three Federal Reserve Board nominees, an aide said Tuesday. In January, the White House nominated Stanley Fischer to move into the No. 2 slot under Janet Yellen.

He also tapped former Treasury Department official Lael Brainard and renominated Jay Powell for the seven-member Fed Board.

Closing up shop: The Treasury Department’s Bureau of the Fiscal Service announced Tuesday that is it suspending the sales of state and local government series (SLGS) nonmarketable Treasury securities until further notice because the nation is close to hitting the debt ceiling. The debt limit deadline is Friday.

ECONOMIC INDICATORS

MBA Mortgage Index: The Mortgage Bankers Association releases its weekly report on mortgage application volume.

ADP National Employment Report: Automatic Data Processing (ADP) will release its January report for private-sector job growth.

ISM Services Index: The Institute for Supply Management will release its January index that measures the service sector’s pace of growth. The sector employs 90 percent of all workers, including those at restaurants, hotels and retailers.

WHAT YOU MIGHT HAVE MISSED

— Dems slam Treasury for excluding them from O-Care meeting

— Cornyn blasts Obama for missing budget deadline again

— CBO: Troubled ObamaCare rollout to reduce sign-ups by 1M

— Government will pocket $8B profit from ObamaCare ‘bailout’ program, CBO says

— CBO: O-Care will cost 2.5M workers

— IRS, employee union strike deal on bonuses

— Senate panel clears Baucus for China post

— Hoyer ‘not optimistic‘ about trade bills

— Poll: GOP would shoulder blame in debt ceiling fight

— Boehner: No GOP consensus on debt limit

— House Transportation chairman opposes gas tax hike