OVERNIGHT MONEY: House GOP budget lowers spending cap, includes tax code overhaul

TUESDAY'S BIG STORY:

Put up your dukes — er, I mean budget proposals: House Budget Committee Chairman Paul Ryan (R-Wis.) starts off the next round of budget bickering on Tuesday with the introduction of his fiscal 2013 proposal. 

Ryan is expected to offer a discretionary spending limit that falls below last summer's agreed-upon $1.047 trillion cap and puts forth a tax overhaul proposal that would cut individual and corporate tax rates and zap the brackets down from six brackets to two — to 10 percent and 25 percent. 

The proposal would also lower the top corporate tax rate from 35 percent to 25 percent, and end the Alternative Minimum Tax.

Democrats already are raising the specter of a government shutdown if the GOP lowers the discretionary spending cap. The figure is expected to come in at $1.028 trillion, a compromise number with the conservative wing of the party that wants even deeper spending cuts than Ryan is willing to put forward. 

That has already ruffled the feathers of the Senate's Democratic bean counters — Senate Budget Committee Chairman Kent Conrad (N.D.) and Sen. Daniel Inouye (Hawaii) have suggested that diverging from the debt-limit agreement is going to lead to a stalemate over the spending bills this year, and possibly a government shutdown before the new fiscal year begins Oct. 1. 

Reaction to the tax proposal was just filtering in at press time. 

Without specifics — the Ryan plan does not detail the income thresholds for the two proposed individual tax brackets — the proposal is likely to face a harsh backlash from, at the very least, congressional Democrats. 

Lawmakers have discussed the possibility of tax reform — the White House proposed a 28 percent corporate tax rate — but many Republicans said the plan didn't go far enough.

The Obama administration has said the proposal is designed to start the conversation toward crafting a bill where an agreement could be reached between a majority of lawmakers on both sides of the Capitol and the White House. 

Some lawmakers and tax experts have suggested that tax reform could be done next year, although they concede the there is a high level of difficulty in overhauling the tax code. 

Ryan will unveil his “Blueprint for American Renewal” on Tuesday and discuss it publicly at the American Enterprise Institute. His Budget panel is expected to follow that up Wednesday with a mark-up of the package. The plan is to have it on the House floor next week, before Congress takes a two-week Easter recess.

Protestors are expected to assemble outside AEI over Ryan's Medicare proposals. 

The details in the House GOP’s 2013 budget were first reported by The Wall Street Journal.

WHAT ELSE TO WATCH FOR

Going global: Treasury Secretary Timothy Geithner will hang his hat at the House Financial Services Committee tomorrow, where lawmakers will pick his brain on the state of the international financial system. With Europe still knee-deep in a debt crisis, expect Geithner to get probing questions about how much of a risk that threat poses to the economy back home, whether it be through the nation's banking system or the broader economy.

Geithner could also get some push-back from Republican lawmakers concerned about U.S. contributions to the International Monetary Fund (IMF) going to help bail out European countries. The United States is the largest contributor to the organization, which just signed off on a $37 billion contribution to a broad bailout package for the former home of Aristotle.

And if that weren't enough to entice you, consider Tuesday's hearing a bit of an appetizer to a similar event Wednesday, when Geithner will be joined by Federal Reserve Chairman Ben Bernanke to discuss the European debt crisis before the House Oversight Committee.

Posturing posteriors move into position: Head over to the Senate Banking Committee on Tuesday, where lawmakers will consider putting some posteriors in some empty seats at key financial regulators. Tuesday's nominee hearing will be on whether a pair of Obama picks — Jerome Powell and Jeremy Stein — should join the Federal Reserve Board.

Stein is a Harvard economist, and Powell previously served in the Treasury Department of former President George H.W. Bush, which has some hoping the always contentious nomination process could be a bit more bipartisan this time around. Other nominees on tap will be Jeremiah Norton to join the Federal Deposit Insurance Corporation, Christy Romero to head up the government's bailout watchdog and Richard Berner to serve as the first-ever director of the Office of Financial Research, which was created as part of the Dodd-Frank overhaul.

Keeping up a frenetic pace: House appropriators will be keeping busy on Tuesday with a slew of hearings. Lawmakers will hear from top officials including Commerce Secretary John Bryson, Jeffrey Zients, acting director, Office of Management and Budget, United Nations Ambassador Susan Rice and the heads of the Smithsonian, National Park Service, the National Institutes of Health and the National Archives.

Ex-Im Bank faces Senate vote: The battle continues Tuesday as the Senate takes up a four-year reauthorization of the Export-Import Bank as an amendment to the House-passed JOBS Act. 

House Majority Leader Eric Cantor (R-Va.) on Monday called on the Senate to drop an attempt, calling it a distraction. The Senate amendment is backed by Republicans and Democrats. 

Cantor supports a one-year reauthorization with a $113 billion loan limit — a position strongly backed by Delta Airlines. Last November, Delta sued the Ex-Im Bank for loan guarantees it made in connection with airplane sales to Air India. The Senate amendment would set the loan limit at $140 billion.

The Senate effort is backed heavily by Boeing, the largest beneficiary of Export-Import Bank financing, and the National Association of Manufacturers and the Chamber of Commerce. These groups note that Ex-Im makes money for the government. 

Where's the stimulus spending: Energy Secretary Steven Chu will head over the House Oversight and Government Reform Committee to talk about how his agency spent funding from the 2009 economic stimulus. Chu is likely to face tough questioning as the memory of the Solyndra backruptcy lingers, leading congressional Republicans to ramp up pressure on the Obama administration to account for its stimulus spending.

BREAKING NEWS

Treasury turns a profit: The Treasury Department has sold off all the mortgage-backed securities it bought during the financial crisis, reaping a profit along the way. The government made $25 billion from roughly $225 billion of debt backed by Fannie Mae and Freddie Mac. The securities were purchased in the midst of the financial crisis, as the government tried to keep credit flowing in the housing market.

Let's make another deal: Two Senate Democratic chairmen say House Republicans will risk a government shutdown if they cut spending deeper than the caps set in last summer's debt-ceiling deal.

Senate Budget Committee Chairman Kent Conrad (N.D.) and Senate Appropriations Committee Chairman Daniel Inouye (Hawaii) sent a letter on Monday urging House leaders not to lower the $1.047 trillion spending cap, something they are expected to do when the GOP budget is released on Tuesday.

Apple wants a tax holiday: Apple made an aggressive pitch for a corporate tax holiday Monday, stressing that it plans to keep more than $60 billion parked offshore until Congress makes it easier for companies to bring those profits home. 

The warning from the nation’s most valuable company came as Apple announced it would pay a dividend to shareholders and buy back stock, moves that will cost about $45 billion over three years, relying exclusively on domestic cash reserves for the transactions.

ECONOMIC INDICATORS

Housing Starts-Building Permits: The Commerce Department releases its report on the number of residential units under construction along with building permits, which allow work to start and are a forward looking indicator of the sector's activity.

WHAT YOU MIGHT HAVE MISSED

— Wyden ‘can’t imagine’ voting for Ryan budget, despite partnership on Medicare
— Homebuilder confidence unchanged in March
— House GOP ramps up pressure on Senate to act on capital bill
— Geithner, Bernanke to discuss European debt crisis with Congress
— Senators ask to tweak insider-trading bill

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