US CongressWatch: To Probe Obama Budget, Explore Payroll Deal

–President Obama To Offer Budget That Claims $3T in Deficit Reduction
–Hill Panels To Question Tsy’s Geithner, OMB’s Zients
–House-Senate Conference On Payroll Tax Cut To Resume Talks
–Senate Banking Panel To Hold Hearing on European Debt Crisis Thursday

By John Shaw

WASHINGTON (MNI) – Congress will spend the week probing President
Obama’s fiscal year 2013 budget that is being formally unveiled Monday
morning and which will claim $3 trillion in deficit reduction over 10
years.

White House Chief of Staff Jack Lew said Sunday that the budget is
a continuation of last year’s effort to secure $4 trillion in deficit
savings over a decade.

Lew said the Obama budget will call for about $3 trillion in
deficit reduction over a decade, with about half coming from spending
savings and half from additional revenues.

Obama is scheduled to release his FY’13 budget at 11:15 a.m.
Monday.

The administration will project a $1.33 trillion deficit for FY’12.
This is slightly above the actual FY’11 deficit of $1.296 trillion. The
Congressional Budget Office estimated a few weeks ago that the FY’12
deficit will be $1.08 trillion.

Obama’s budget will argue that if his policies are approved, the
deficit will fall to about $900 billion in FY’13.

Obama’s budget is set to call for $1.5 trillion in additional
revenues, with higher taxes proposed on some corporations, upper income
earners and hedge funds. Much of revenue will come from allowing many of
the Bush era tax cuts to expire at the end of the year for those with
annual incomes of more than $250,000.

Obama’s budget will also propose a $60 billion “financial crisis
responsibility fee” on large corporations that was outlined in his State
of the Union speech.

The president’s fiscal outline is expected to call for about $350
billion in short-term stimulus measures, with about half of this coming
from a year-long extension of the payroll tax cut and unemployment
insurance benefits.

The plan is expected to call for about $640 billion in spending
savings from programs such as Medicare, Medicaid, and agriculture
subsidies.

After the release of Obama’s budget Monday, the administration’s top
fiscal officials will defend the plan on Capitol Hill in a week-long
series of congressional hearings.

Treasury Secretary Tim Geithner is scheduled to testify to the
Senate Finance Committee at 10 a.m. Tuesday, the House Ways and Means
Committee at 10 a.m. Wednesday, the Senate Budget Committee at 10 a.m.
Thursday, and the House Budget Committee at 2 p.m. Thursday.

Jeff Zients, the acting White House budget director, will testify
to the Senate Budget Committee at 10 a.m. Tuesday and the House Budget
Committee at 10 a.m. Wednesday.

After lawmakers have gone over the president’s budget, the House
and Senate Budget Committees are tasked to draft congressional budget
resolutions. These are congressional fiscal blueprints that set spending
and revenue goals and make deficit estimates. They will be unveiled in
March.

In other action this week, the House-Senate conference committee to
draft a payroll tax-cut extension policy will meet this week, but no
public sessions have yet been scheduled. Some congressional leaders have
said private sessions are now needed to hammer out an agreement.

The panel is trying to draft a $160 billion package to extend the
payroll tax cut, renew unemployment insurance benefits, and prevent a
deep cut in Medicare reimbursements for doctors.

Congress passed a two-month extension of these programs which will
expire at the end of February. Both Obama and congressional leaders say
they want to pass a one year extension of these programs, but there are
scores of policy details to resolve as well as a budget offset package
of at least $160 billion.

House Republicans recommend paying for the package by extending a
federal employee pay freeze, increasing Medicare premiums for upper
income beneficiaries, and cutting funds from the new health care law.

Senate Democrats prefer to pay for the package by imposing a surtax
on those with incomes over $1 million.

In other action this week, both the House and Senate will consider
their own surface transportation bills.

The Senate Banking Committee will hold a hearing Thursday at 10
a.m. on the European debt crisis. Lael Brainard, Treasury’s
undersecretary for international affairs, and Robert Hormats, the State
Department’s undersecretary for economic affairs, will testify.

A subcommittee of the House Financial Services Committee will hold
a hearing Wednesday at 10 a.m. on the Consumer Financial Protection
Bureau. The CFPB’s director, Richard Cordray, will testify.

Another subcommittee of the House Financial Services Committee will
consider legislation Thursday at 10 a.m. that would repeal a provision
of the Dodd-Frank law that prohibits any federal bailout of swap dealers
or participants.

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

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