OVERNIGHT MONEY: Sequester busting

THURSDAY’S BIG STORY:

Weighing in on the sequester: The Senate Appropriations Committee will take a closer look at exactly what might happen if $85 billion in automatic spending cuts go into effect on March 1.

Lawmakers will hear from top officials from the Office of Management and Budget, as well as Education Secretary Arne Duncan, Homeland Security Secretary Janet Napolitano, Department of Housing and Urban Development Secretary Shaun Donovan and Deputy Defense Secretary Ashton Carter.

{mosads}Whether the hearing will provide the sense of urgency needed to actually move a bill before the end of the month remains to be seen. 

There aren’t exactly many positive vibes floating about Capitol Hill in regard to the spending cuts, which no one seems to want but lawmakers also can’t seem to stop.

There have been plenty of reports saying that the consequences for the economy are dire.

The nonpartisan Congressional Budget Office estimates 750,000 lost jobs by the end of 2013 and a loss of 0.6 percent off economic growth. 

Speaker John Boehner (R-Ohio) on Wednesday said the House will not act unless the Senate goes first.

Boehner expressed frustration that the Senate didn’t take up any of the House-passed measures last Congress that replaced the spending with other cuts. 

So, he said, it is now “incumbent” on President Obama and Senate Democrats to approve a plan by March 1.

Senate Democrats said Wednesday they are still planning to unveil a proposal by Thursday, although differences remain. 

Senate GOP Leader Mitch McConnell (Ky.) said on Tuesday he thinks the sequester will go into effect. 

He joined Boehner and other Republicans in calling for a replacement bill without any new taxes. 

Obama has called for Congress to replace the sequester with different spending cuts and tax increases.

Whether lawmakers can find a way forward is yet to be seen. But without any action everyone will find out the effects of the sequester. 

WHAT ELSE TO WATCH FOR

Take time to stretch your legs: House Ways and Means holds its first tax reform hearing of the year on Thursday — and strap in, it’ll be a doozy.

Seven different panels — more than 40 witnesses in all — will discuss the current tax deduction for charitable contributions, a preference that nonprofits have felt for years is under threat.

The witness list includes think tank staffers, and both national and local nonprofit officials.

Charitable groups have felt under the gun since President Obama called for capping itemized deductions at 28 percent, and have said they will be on their toes until the tax reform and deficit reduction debates are over.

Nonprofits were also no big fan of the proposal, floated by Mitt Romney, to limit itemized deductions to a certain dollar amount. Charitable groups say they would bear the brunt of the pain under that plan, as opposed to backers of the mortgage interest deduction and other big-ticket items.

Digesting Dodd: The Senate Banking Committee better be hungry for information because lawmakers are starting off its workload for the 113th Congress with something big. 

The panel on Thursday is gathering all the top financial regulators from across the spectrum to testify, and what else could be the topic du jour in such a gathering but the implementation of the Dodd-Frank financial reform law? Top officials from the Treasury, SEC, CFTC, FDIC, Federal Reserve and CFPB will be on hand to offer their updates on the overhaul, which was signed into law in July 2010 and is still being implemented. 

Tomorrow’s hearing will also mark the first time Consumer Financial Protection Bureau Director Richard Cordray will appear before the Senate since the recess appointment used to put him in place has come into question, after a court ruling tossed out three similar appointments made on the same day. 

Senate Republicans have renewed their vow to block Cordray’s bid to become the confirmed director of the bureau, demanding structural changes to the agency in exchange for consideration — changes CFPB backers have been unwilling to consider. Ergo, stalemate.

Examining unemployment: The House Oversight and Government Reform Committee is taking a closer look at what, if any, unintended consequences have been caused by the government’s handling of the jobless crisis, which has created persistently high unemployment since 2008. 

The hearing features economists and a business owner. 

BREAKING NEWS

Getting warmer: House appropriators are nearing completion of a spending bill to prevent a government shutdown after March 27.

The bill could get a vote before the end of February, even though time is tight. 

House Appropriations Committee Chairman Hal Rogers (R-Ky.) said Thursday he is crafting a continuing resolution at the current level of spending of $1.043 trillion for the entire fiscal year that began Oct. 1.

It would specify that the $85 billion sequestration is allowed to take place unless it is separately turned off.

Heating up: Bipartisan legislation to help the struggling U.S. Postal Service could be enacted and sent to President Obama’s desk within months, top lawmakers said Wednesday.

Reps. Darrell Issa (R-Calif.) and Elijah Cummings (D-Md.) said they nearly completed a deal in the last Congress. 

“We spent some time in the red zone,” Cummings said. “But America expects us to get into the end zone.”

Manufacturing a boost: President Obama said proposals to boost American manufacturing would keep the nation’s middle class “growing” and “thriving.

At the start of a three-day road trip to sell ideas in his State of the Union address, Obama told workers in Asheville, N.C., that his plan would spur economic growth by creating good-paying jobs in struggling communities. 

“I believe in manufacturing,” Obama said at the plant, speaking without his suit jacket, and with his sleeves rolled up. “I believe it makes our economy stronger.”

Working toward a deal: Business groups and U.S. trade officials are optimistic that a comprehensive trade agreement with the European Union can be completed within the next two years.

Negotiators on both sides of the Atlantic said the talks would seek the elimination of all duties, greater market access for goods and services and better cohesion on regulations.

President Obama joined European Union leaders Wednesday to officially launch talks he announced during his State of the Union address.

CABINET WATCH

Let’s make a deal: Jack Lew, the president’s nominee to head the Treasury Department, touted his lengthy bipartisan deal-making credentials on Wednesday before the Senate Finance Committee.

Lew vowed to take into consideration all perspectives if given the executive branch’s top economic spot, noting that his lengthy Washington career was full of such efforts.

“Forging bipartisan consensus is not an abstract idea for me,” he said. “It is the fundamental thread that spans my professional life.”

He also defended his $56,000 investment in a Cayman Islands fund, saying he was unaware of its location.

More Hagel-ing: Republican senators are blocking a vote on former Sen. Chuck Hagel (R-Neb.) unless he provides more financial information, in what Democrats are saying is the first-ever filibuster of a Defense secretary nominee.

Senate Majority Leader Harry Reid (D-Nev.) filed cloture on Hagel’s nomination when he said it was clear Senate Armed Services ranking Republican James Inhofe (Okla.) and others would block a motion to proceed to a vote.

Blocking Brennan: Sen. Rand Paul (R-Ky.) on Wednesday threatened to hold up John Brennan’s nomination for CIA director unless he gets more answers on the administration’s drone program.

LOOSE CHANGE

Balancing act: All 45 Senate Republicans have now signed on to a constitutional amendment to balance the budget. 

Senate Minority Leader Mitch McConnell (R-Ky.) and Whip John Cornyn (R-Texas) introduced the amendment, which has no chance of passage given the need to find a two-thirds majority in support, on Thursday.  

The balanced-budget amendment is designed to get to balance through spending cuts rather than further tax increases. It caps spending at 18 percent of gross domestic product down from 23 percent and requires a supermajority to raise taxes again. 

The GOP is using the proposal to blast President Obama for failing to take the debt seriously. 

“Everyone agrees that our nation is on an unsustainable path, but unfortunately as we saw last night, President Obama is incapable of tempering his appetite for more and more spending,” Cornyn said. 

ECONOMIC INDICATORS

Initial Claims: The Labor Department releases its weekly filings for jobless benefits a day ahead of January job numbers. 

Mortgage Rates: Freddie Mac is releasing weekly data on fixed-rate mortgages, which have been hovering around historic lows.  

WHAT YOU MIGHT HAVE MISSED

— Ryan: Obama delusional on debt

— Republicans: Obama State of the Union dims hopes for deficit-reduction deal

— Warren: GOP senators ‘fundamentally wrong’ on consumer bureau

— CFPB moves to help consumers, banks with regulation compliance

— Obama renominates NLRB members who were ruled invalid in court

— Boehner balks at Obama’s push to hike minimum wage

— Dems: Postal schedule must protect Rx deliveries

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