OVERNIGHT MONEY: Obama sells payroll tax cut in Pennsylvania

WEDNESDAY'S BIG STORY: 

On the road again: President Obama, for the second time in a week, is heading out to a swing state to talk up his plan to extend and expand the payroll tax cut.

On Wednesday, the president will head to Scranton, Pa., where he will tell voters that the average family's tax bill will rise by $1,000 unless lawmakers extend payroll tax relief. 

At the White House and at the Capitol on Tuesday, Democrats continued to press the case for expanding the current payroll tax cut, which lowered the rate from 6.2 percent to 4.2 percent. The Democratic proposal for 2012 would reduce the rate even further, to 3.1 percent.

Democrats, armed with polling data showing that voters are open to higher taxes on the wealthy, have proposed paying for the tax break with a surtax on millionaires. Jay Carney, the White House press secretary, also did not close the door to not offsetting the tax break at all.

But Republicans on Tuesday continued to cast the surtax proposal as a political stunt, with no chance of passing. And while GOP lawmakers are not totally on the same page over whether or how to pay for continued payroll tax relief, Senate Minority Leader Mitch McConnell (R-Ky.) did say that Republicans would offer their own offset for payroll tax relief. 

Last Tuesday, the president lobbied for the payroll tax cut in New Hampshire, saying that Republicans would essentially violate their "no new taxes" pledge if they allowed the payroll tax cut to expire at the end of December.

WHAT ELSE TO WATCH FOR 

Beige look: The Federal Reserve will offer up its latest anecdotal take on the economy when it rolls out its "beige book" tomorrow, as Federal Reserve officials across the country tap business contacts for what they're seeing on the ground when it comes to the economy.

Tweaking Dodd-Frank: The House Financial Services Committee is set to consider a handful of bills tomorrow, including several that will tweak or otherwise clarify aspects of the Dodd-Frank financial reform law. On the agenda is a bill that would exempt end users of financial derivatives from certain requirements, another that would tweak the definition of a "swap execution facility" when it comes to Dodd-Frank regulations on said derivatives, and finally, one that would exempt inter-affiliate swaps from certain Dodd-Frank requirements. It's quite the handful.

LOOSE CHANGE

Tax extenders: As you might have heard, lawmakers have a lot on their plate — appropriations bills, the payroll tax, the Medicare doc fix and unemployment benefits, to name a few — before they hit the Capitol exits for 2011. 

With all that in mind, it appears that the so-called tax extenders might spill into 2012. Senate Majority Leader Harry Reid (D-Nev.) told reporters Tuesday that he hoped the extenders, which include tax credits for tuition and other provisions, could be dealt with by year's end. 

But Sen. John Thune of South Dakota, a member of the GOP leadership, wasn't exactly confident that would happen: "I think there's a chance that that gets kicked into next year. But it'd be nice if we could get it done."

More frankness on Frank: Karl Rove took several shots at retiring Rep. Barney Frank on Tuesday, saying the Massachusetts Democrat should provide the real reason why he's leaving Congress — "out of shame for all he did to stop reform of Fannie and Freddie while there was still time to avert the disaster that almost took down the American economy."

In 2003, he called Fannie and Freddie “fundamentally sound financially” and accused the Bush administration of trying to “exaggerate a threat of safety ... [to] conjure up the possibility of serious financial losses to the Treasury, which I do not see."

Who knew ... looks like Hank Paulson: Former Treasury Secretary Hank Paulson told a group of hedge fund managers in 2008 that he was considering a plan "for placing Fannie and Freddie into conservatorship — a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets," Bloomberg reports. 

Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock, he said.

A fund manager says he was shocked that Paulson would furnish such specific information — to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information. 

BREAKING TUESDAY

Put a little balance in the budget: The Senate in the coming weeks will take up two versions of the balanced-budget amendment, Senate Majority Leader Harry Reid (D-Nev.) said Tuesday. One version will be a GOP version chosen by Senate Minority Leader Mitch McConnell (R-Ky.) and the other will be one authored by Sen. Mark Udall (D-Colo.), Reid said. Under the terms of the August debt-ceiling deal, the Senate must vote on a balanced-budget amendment (BBA) to the Constitution by the end of this year.

Show your cards: Senate Majority Leader Harry Reid (D-Nev.) on Tuesday expressed his impatience with colleagues who call for major deficit reduction without offering detailed proposals.

"I'm stunned by the Gang of Six," Reid said of the bipartisan group of senators that reached an agreement to cut the deficit by nearly $4 trillion but has yet to introduce legislation. Reid said if any of them has ideas for reducing the deficit, they should put them in legislation. Otherwise, Reid said, they are wasting time.

ECONOMIC INDICATORS 

MBA Mortgage Index: The Mortgage Bankers Association releases its weekly report on mortgage application volume. 

ADP Employment Change: The group measures private-sector employment for November two days before the government releases its monthly report on the labor market. 

Challenger Job Cuts: A measure of how many jobs cuts are planned by U.S. employers in November. 

Pending Home Sales: The National Association of Realtors will release its index that is a forward-looking indicator based on contract signings for September. 

Productivity-Unit Labor Costs: The Department of Labor releases third quarter measures of the productivity of workers and the costs associated with producing a unit of output.

WHAT YOU MIGHT HAVE MISSED

— Democrats ramp up lobbying for payroll tax cut

— Seniority shouldn’t guarantee top committee spot

— Dems worried over Obama proposal to implement WTO ruling

— SEC asks Congress to let it hand out heftier fines

— Reed pushes amendment to protect military families from abusive financial practices

— Clyburn splits with Obama, open to deal on sequester to extend payroll tax cuts

— Consumer confidence picks up in November

— Home prices slide slightly

— Grassley praises judge in Citigroup case

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