–Congress Seeks Formula To Extend Payroll Tax Cut, UI Benefits
–Lawmakers Also Seek Plan To Finish Work On FY’12 Budget By Dec. 16
–Senate Banking Panel To Hold Hearing on Dodd-Frank Implementation
–Hill To Begin Hearings On MF Global This Week

By John Shaw

WASHINGTON (MNI) – With congressional leaders expressing hope that
they complete legislative work for the year by December 16, intense
efforts are now underway on Capitol Hill to craft a package that allows
for passage of critical tax and spending items.

The Obama administration and congressional leaders are looking for
a way to renew the payroll tax cut, extend unemployment insurance
benefits, prevent scheduled cuts in Medicare payments to doctors, and
adjust the alternative minimum tax.

At issue are the specific elements of this package and, critically,
how it would be paid for.

The White House and its Democratic allies in Congress differ with
Republicans on how to extend the payroll tax cut and how to fund the
extension.

Last year, the White House and Congress agreed on a tax cut package
that included reducing for one year the employee paid share of the
Social Security tax from 6.2% to 4.2%.

Obama and most Democrats in Congress want to further reduce the
employee payroll tax to 3.1% and to cut the employer share of the
payroll tax from 6.2% to 3.1% for the first $5 million of a company’s
wage costs.

Last week, Senate Democrats failed to pass legislation that would
have enacted this extension and paid for it by imposting a surtax on
individual income over $1 million.

A Senate Republican plan to extend the payroll tax cut by a freeze
on federal salaries and hiring also failed.

Senate Budget Committee Chairman Kent Conrad has said Senate
Democrats will offer a new funding package for the payroll tax extension
this week.

While congressional leaders seek to resolve these various tax and
unemployment insurance extension issues, there is a parallel effort
underway to complete work on the 2012 fiscal year budget.

Much of the federal government is operating under a stop-gap
spending bill that expires Dec. 16. Work is underway to craft an omnibus
spending package that would include the 9 unfinished FY’12 spending
bills. The 2012 fiscal year began on Oct. 1.

While an agreement reacher earlier this year by the White House and
Congress to limit discretionary spending for FY’12 to $1.043 trillion
appears to be holding, there are still partisan disagreements on whether
the final package can include various policy riders.

Some Republicans are pushing for policy riders that would block
full implementation of the 2010 health care and financial reform laws.
The White House and congressional Democrats oppose these policy riders.

In other action this week, the Senate Banking Committee will hold a
hearing Tuesday at 10 a.m. ET on implementing the Dodd-Frank law. Those
testifying before the panel include Neal Wolin, the deputy Treasury
secretary, Dan Tarullo, a Federal Reserve Board governor, Mary Schapiro,
chairwoman of the SEC, and Gary Gensler, the chairman of the CFTC.

A subcommittee of the Senate Banking Committee will hold a hearing
Wednesday afternoon at 2 p.m. ET on regulating large financial
institutions. Various think tank experts will testify including former
FDIC chairwoman Sheila Bair, who is now a senior advisor with the Pew
Charitable Trusts.

The Senate Finance and House Ways and Means Committees will hold a
joint hearing Tuesday at 10 a.m. ET on the tax treatment of financial
products. Thomas Barthold, chief of staff of the Joint Economic
Committee, will testify as will other academic experts.

The House Financial Services Committee will hold a hearing Tuesday
at 10 a.m. ET on a bill to prevent members of Congress from engaging in
a form of insider trading based on knowledge about pending legislation.

One subcommittee of the Financial Services Committee will hold a
hearing Wednesday morning at 10 a.m. ET on proposals for legislation
that would overhaul the secondary mortgage market while another
subcommittee of the panel will hold a hearing Wednesday afternoon at 2
p.m. ET on whether a subpoena should be issued for a hearing next week
to examine the MF Global bankruptcy.

The House Agriculture Committee will hold a hearing on the
bankruptcy of MF Global on Thursday at 9:30 a.m. ET. The Agriculture
panel has jurisdiction over some derivatives.

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

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