OVERNIGHT MONEY: Obama ramps up push for payroll tax extension

TUESDAY'S BIG STORY:

Road trip: On day one PSC (post-supercommittee), President Obama is heading to New Hampshire to lobby for the extension and expansion of the payroll tax cut, one of the signature planks of the president's jobs bill.

The tax-cut compromise enacted late last year cut the payroll tax by two percentage points for this year, from 6.2 percent to 4.2 percent. Now, with that provision about to expire, the president has proposed further reducing the 2012 payroll tax, down to 3.1 percent, and extending payroll tax breaks to the employer side. 

There had been some hope that the supercommittee, which officially announced it was unable to reach an agreement on Monday, would be able to extend the payroll tax cut and other provisions scheduled to expire at the end of 2011, like the patch for the Alternative Minimum Tax and the Medicare "doc" fix.

But with the supercommittee falling short, lawmakers will have to add those policies to an already long to-do list.

The president has so far called the payroll tax cut one of the best ways to spark economic growth in the face of 9 percent unemployment, and said extending it would save the average family a $1,000 tax increase. 

But the proposal has some skeptics on both sides of the aisle, with some GOP lawmakers calling for more permanent tax changes and some Democrats concerned because the payroll tax funds Social Security.

"Democrats and Republicans have traditionally supported these kinds of tax cuts," Obama said Monday. 

"Independent economists from across the political spectrum have said this proposal is one of the best ways to boost our economy and spur hiring," he said. "So let’s keep at it. No politics. No delays. No excuses. Let’s keep doing everything we can to get America back to work."

SUPERCOMMITTEE

The walking dead: Zombies are hot right now, and Monday's announcement from the supercommittee that its 12-members couldn't reach an agreement by its deadline — technically tonight — probably means that another gang or three will eventually spring to life in an effort to solve the debt crisis. 

Just when you think a budget panel is dead on Capitol Hill, lawmakers resuscitate otherwise lifeless deficit-reduction plans. 

Lawmakers did make a last-ditch effort to put together a deal on Monday, but they couldn't make any headway. 

"After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee’s deadline," the two chairmen of the panel, Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Texas), said in a joint statement. 

The announcement followed a final flurry of negotiating activity, which saw Sen. John Kerry (D-Mass.) put forward a revised tax code overhaul. The proposal was rejected by the GOP as a “gimmick” designed to secure a trillion-dollar tax increase.

The failure means that $1.2 trillion in across-the-board cuts will take effect in 2013. Secretary of Defense Leon Panetta has called the $600 billion in cuts to defense devastating. House Armed Services Committee Chairman Buck McKeon (R-Calif.) said Monday he will be introducing legislation to scrap the automatic defense cuts, but President Obama has said he will veto any effort to do that. 

Had the supercommittee agreed on a plan, its report would have enjoyed a rare up-or-down vote in Congress. The report could not have been amended or filibustered. Budget experts had hoped that the supercommittee could come up with at least $3 trillion in additional cuts to the deficit in order to stop the exponential growth of the national debt.

House Speaker John Boehner (R-Ohio) blamed Obama for the failure of the congressional supercommittee, saying in a memo that the panel “was unable to reach agreement because President Obama and Washington Democrats insisted on dramatic tax hikes on American job creators, which would make our economy worse.”

While some lawmakers will insist on trying to change the $1.2 trillion trigger for cuts, Sen. Max Baucus (D-Mont.) said Monday it is “very important” that automatic spending cuts be allowed to proceed.  

Obama said Monday that he would veto any attempt by Congress to eliminate those automatic spending cuts.

ECONOMIC INDICATORS 

GDP: The Commerce Department will release its second estimate for the third quarter of the measure of the nation's economic activity. The first estimate was 2.5 percent. 

FOMC minutes: The Federal Open Market Committee issues the minutes from its Nov. 1-2 meeting. The FOMC is the policy-making arm of the Federal Reserve.

BREAKING MONDAY:

Veterans jobs: Obama signed off Monday on a bill that provides tax credits to businesses that hire veterans and repeals a requirement that federal, state and local governments begin withholding 3 percent of payments to contractors in 2013. The measure includes a package of tax breaks for companies that hire unemployed veterans, a small part of Obama's $447 billion jobs bill. 

Rain, snow, heat, gloom or budget doom: The postal service continues delivering the mail under difficult circumstances, although there's nothing weather-related plaguing them right now. A major postal union, calling itself willing to do its part to boost the U.S. Postal Service’s finances, said Monday it is negotiating major changes to worker’s healthcare benefits.

The National Association of Letter Carriers says those healthcare changes could save the agency up to $20 billion over a decade — and could include having retirees use Medicare as their primary insurance.


Billion-dollar suit: Starr International, the company run by the former head of insurance giant American International Group (AIG), has filed a $25 billion lawsuit against the federal government, arguing that the takeover of the insurance company at the height of the financial crisis was unconstitutional.

Dropping barriers: Obama administration officials said Monday that the Chinese government has agreed to take additional steps to remove trade barriers they say will help boost U.S. exports and create jobs. Removing barriers for electric vehicles, strengthening measures to eliminate indigenous innovation policies and providing stricter enforcement of intellectual property rights in China are part of the agreement reached during meetings in Chengdu, China, over the weekend. 

WHAT YOU MIGHT HAVE MISSED

— Europe’s woes drag on US recovery

— Stock market dives as debt panel fails 

— Sales of existing homes increased last month but remain depressed

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