–President Obama To Meet With Hill Leaders Tuesday
–Senate Banking Committee to Hold Hearing On Mortgage Servicing
–Admin, Hill In Talks On Expiring Stop-Gap Spending Bill
–Bowles-Simpson Deficit Panel Faces Wednesday Deadline For Report

By John Shaw

WASHINGTON (MNI) – This week could provide some clarity on the
future of pending tax cut and spending legislation as lawmakers return
to Washington for the Lame Duck session of Congress that began haltingly
two weeks ago.

The fate of Bush era tax cuts is expected to be the key issue when
President Obama meets with congressional leaders Tuesday.

The president and congressional leaders are also expected to
consider for how long to extend a stop-gap spending bill that expires
Friday.

This stop-gap bill is funding most of the federal government while
work continues on the 12 regular spending bills for the 2011 fiscal
year. None of the 12 bills has been passed by Congress.

Congress is expected to pass another stop-gap spending bill by the
end of the week that funds the government, probably until February.

On the tax cut front, Senate Majority Leader Harry Reid has said
that he wants the Senate to hold “some votes” on alternative tax
cut packages in the coming weeks.

Reid said Senate Democrats continue to support extending the Bush
era tax cuts for those individuals making $200,000 or less and couples
making $250,000 or less. He said he is not certain if the Democratic
plan would extend these tax cuts permanently or for a shorter
time.

Reid has said he would like to schedule Senate votes on the
Democratic plan and the Republican alternative which would extend all
the Bush era tax cuts, including those for higher income people.

The Senate Republican plan would cost $4 trillion over a decade,
while the Senate Democratic plan would cost about $3.2 trillion over the
same period.

House Democratic leaders, who will retain their majority in the
Lame Duck session, also support extending the middle class portion of
the Bush era tax cuts.

Obama has been sending signals since the mid-term elections that he
is willing to back down from his long-held position that the Bush tax
cuts be extended only for those individuals making $200,000 or less and
couples making $250,000 or less.

Incoming House Speaker John Boehner and Senate Minority Leader
Mitch McConnell have said that all Bush era tax cuts should be extended.

Some congressional Democrats have suggested extending the so-called
middle class tax cuts permanently, but extending those for upper income
earners for a year or two.

Congressional leaders have not yet laid out the full schedule for
the rest of the Lame Duck session, but lawmakers have said they expect
to be in session for three weeks, perhaps concluding by Dec. 17.

The Senate Banking Committee will hold a hearing Wednesday at 9:30
a.m. on problems related to mortgage servicing. The panel will receive
testimony from Sheila Bair, chairwoman of the FDIC, Daniel Tarullo, a
governor on the Federal Reserve Board, John Walsh, acting comptroller of
the currency, and others.

The Senate Finance Committee will hold a hearing Thursday at 10
a.m. on the history of tax reform. Doug Elmendorf, the director of the
Congressional Budget Office, will testify.

As Congress works on its agenda, the National Commission on Fiscal
Responsibility and Reform will try to reach agreement on a deficit
reduction plan by Wednesday, its deadline.

The two chairmen of the panel, former senator Alan Simpson and
former White House chief of staff, Erskine Bowles, are revising a
discussion draft they released several weeks ago.

President Obama created the commission in February by executive
order after an attempt by lawmakers to create a panel by statute failed
in the Senate.

The commission is charged to issue a report by Dec. 1 that would
cut the deficit to about 3% of gross domestic product by fiscal year
2015 and begin slowing the growth of debt over the long term. In order
for the panel to issue recommendations, 14 of the 18 members need to
reach an agreement.

The draft budget plan Simpson and Bowles released earlier calls for
more than $4 trillion in budget savings over a decade.

Their draft plan would bring the federal budget deficit down to
2.2% of gross domestic product by 2015. It would reduce the nation’s
debt to 60% of GDP by 2024 and to 40% of GDP by 2037.

The plan would wring deep savings out of every corner of the
federal budget, including defense and Social Security.

** Market News International Washington Bureau: 202-371-2121 **

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