–President Sends $3 Trillion Deficit Cut Plan To Deficit Panel
–House, Senate Expected To Pass Stop-Gap To Fund Gov Until Nov. 18
–Senate To Take Up Worker Aid Bill As Prelude To Trade Accord Votes
–Senate Finance Committee To Hold Another Tax Reform Hearing
–House Budget Committee To Hold Hearing On Broken Budget Process

By John Shaw

WASHINGTON (MNI) – The House and Senate are poised to pass a fiscal
year 2012 stop-gap spending bill this week to fund the government until
November 18.

The stop-gap bill is needed because Congress has passed none of the
12 spending bills for FY’12 which begins Oct. 1.

Congressional leaders have said they don’t expect the debate over
the FY’12 budget to be as contentious as it has been in recent years.
The White House and congressional leaders have reached an agreement that
limits discretionary spending for FY’12 to $1.043 trillion.

There is still some dispute over emergency spending with the Senate
endorsing about $7 billion for disaster spending while the House backs
$3.65 billion in emergency funds.

President Obama formally unveiled a $3 trillion 10-year deficit
reduction plan Monday. The package cuts deficits by raising $1.5
trillion in revenues, secures $1.1 trillion by winding down the Iraq and
Afghanistan wars, $580 billion in entitlement savings and $430 billion
in interest savings.

In comments Monday morning at the White House, Obama said the
package would “finish what we started this summer” when Congress and the
White House negotiated $1.2 trillion in discretionary savings.

Obama repeated that a “balanced approach” is needed to cut the
deficit, including spending cuts and additional revenues. He said his
plan has $2 in spending cuts for every $1 in tax increases.

Obama said he is sending his ideas to Congress’ so-called Super
Committee which will hold its second substantive meeting Thursday at 10
a.m. on tax reform.

The panel, officially called the Joint Select Committee on Deficit
Reduction, is charged with submitting a report to Congress by Nov. 23,
2011 that reduces the deficit by $1.5 trillion between 2012 and 2021.

The final package, if one is agreed to by the majority of the
panel’s 12 members, must be voted on without amendment by the House and
Senate by Dec. 23, 2011.

If the panel fails to agree on a spending cut package or Congress
rejects its plan, a budget enforcement trigger would secure $1.2
trillion in budget savings through across-the-board cuts.

The cuts would be equally divided between defense and non-defense
programs but would exempt Social Security, Medicaid and low-income
programs.

In other action this week, the Senate will begin a complex
procedural process to take up the three pending U.S. bilateral trade
agreements.

Those pending U.S. trade agreements are with Panama, Colombia and
South Korea.

Senate Majority Leader Harry Reid has said the Senate will not
consider any of the three pending U.S. bilateral trade agreements until
the Senate passes a bill providing training funds for workers displaced
by international trade.

The Senate will hold a procedural vote on the so-called Trade
Adjustment Act Monday.

The Senate Finance Committee will hold another hearing Tuesday on
tax reform options. It held three hearings on the topic last week.

One of the Senate Banking panel’s subcommittees will hold a hearing
Tuesday at 10 a.m. on proposals to clear out foreclosed properties.

Another Senate Banking subcommittee will hold a hearing Thursday at
2:30 p.m. on the European debt crisis. Several think tank experts will
testify.

The Senate Budget Committee will hold a hearing Tuesday at 9:30
a.m. on policy steps that can be taken to bolster the economy.

The House Budget Committee is holding hearings Wednesday and
Thursday at 10 a.m. on the broken congressional budget process.

The House Ways and Means Committee will hold a hearing Wednesday to
review methods used to analyze tax legislation.

Several subcommittees of the House Financial Services Committee
will hearings this week. One subcommittee will hold a hearing Wednesday
at 2 p.m. on the role of development banks. Lael Brainard,
undersecretary of Treasury for international affairs, will testify.

Another of the panel’s subcommittees is holding a hearing Thursday
at 2 p.m. on SEC oversight.

Reid, the Senate Majority Leader, has said the Senate will take
currency legislation this fall related to China.

“We’ll do that at the right time,” Reid said Thursday.

There are several versions of currency legislation that have been
circulated. One would prevent the Commerce Department from using a
long-standing rule that makes it more difficult to designate an
undervalued currency as an illegal export subsidy that would result in
economic sanctions.

The White House remains cool to currency legislation.
Administration officials believe that currency matters pertaining to
China are best addressed in talks led by the Treasury Department.

House Republican leaders are also cool to China currency bills
saying they address only one aspect of the complex bilateral
relationship. They say that a much more comprehensive approach is
needed.

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

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