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OVERNIGHT MONEY: Senate Finance moving to open up Russia trade
WEDNESDAY'S BIG STORY:
Russia rising up the agenda: The Senate Finance Committee will mark up a compromise measure on Wednesday that would grant permanent normal trade relations (PNTR) to Moscow as the country edges closer to joining the World Trade Organization.
Panel Democrats and Republicans have crafted a deal that would require the Obama administration to boost its monitoring of Russia's trade practices and legal system, which the GOP argues strengthens the legislation.
Another bill, aimed at punishing those accused of killing Russian whistleblower Sergei Magnitsky, also is on the agenda. Committee Chairman Max Baucus (D-Mont.) has said he intends to link the two bills.
The Magnitsky bill was reported out of Senate Foreign Relations last month even though Chairman John Kerry (D-Mass.) said he had concerns about its scope, which could apply to human-rights abuses outside of Russia.
The U.S. Chamber of Commerce and other business groups have ramped up their efforts in recent weeks to convince lawmakers to grant PNTR to Russia before the nation officially becomes a member of the WTO in August.
Businesses make the case that U.S. companies will be at a competitive disadvantage if Congress can't complete a deal before leaving for the month-long August recess.
The Chamber sent a letter to members of Congress on Tuesday, urging them to act swiftly to approve PNTR.
“It’s a common mistake to think Jackson-Vanik gives the United States leverage over Russia," said Bruce Josten, the Chamber's executive vice president for Government Affairs.
U.S. companies see huge potential in Russia, which boasts the ninth largest economy in the world and a growing middle class, the letter said.
Because no other WTO member has a law similar to Jackson-Vanik, all of Russia’s trading partners except the United States will immediately benefit from Russia membership.
PNTR does not extend any “trade preferences” to Russia.
"Rather, it exclusively benefits U.S. workers, farmers, ranchers, and companies selling their goods and services in the Russian market," Josten said.
"The United States gives up nothing — not a single tariff — in approving PNTR."
As John Murphy, the Chamber's vice president for International Affairs, said in a Free Enterprise blog post on Tuesday: "Momentum is building ... With Russia’s accession to the WTO set for August, we can’t afford to wait."
The committee will also consider legislation affecting trade benefits for the Dominican Republic, sub-Saharan Africa and a bill renewing sanctions on Burma.
WHAT ELSE TO WATCH FOR
Ben's back: Federal Reserve Chairman Ben Bernanke will wrap up his two-day whirlwind tour of the Capitol by giving an encore performance of his semi-annual monetary policy report before the House Financial Services Committee. On Tuesday, Bernanke told members of the Senate Banking Committee that the economy and job market were losing steam, and that he would really appreciate it if Congress would do something about this "fiscal cliff" business. He'll do the same tomorrow before the House, and will likely field and fend off similar inquiries from members.
Bernanke will rebut attempts by members in both parties to get him to pick one side of the tax increases v. spending cut debate, and he'll tread lightly on GOP critiques of potential moves to boost the economy and Democrats urging for the central bank to do more. As with the Senate hearing, Bernanke will also have to defend the Fed's actions during the financial crisis, when it became aware of potential rigging of the key London Interbank Offering rate (Libor) and notified other regulators of the issue.
China challenges: Lael Brainard, the Treasury Department's under secretary for international affairs, will visit the Center for American Progress on Wednesday. The topic du jour will be the unique challenges the United States faces in establishing an economic relationship with China.
FSOC chat: The Financial Stability Oversight Council, the new panel that gathers top regulators from across the financial sector, will meet again tomorrow. The Dodd-Frank creation is charged with overseeing the broad stability of the financial system, and will spend Wednesday's public meeting to attend to some business, including approving the panel's annual report.
Solid gold: Lloyd Blankfein, chief of Goldman Sachs, pays a visit to the Economic Club of Washington to have a chat about global economic issues including the financial crisis in Europe, U.S. job creation and the outlook for capital markets in this election year.
Fleet feet: U.S. footwear manufacturer New Balance and the Rubber and Plastic Footwear Manufacturers Association (RPFMA) will hold a press conference on Capitol Hill to talk about supporting domestic footwear manufacturing within the context of ongoing negotiations for the Trans-Pacific Partnership. A slew of lawmakers from New England will join the head of New Balance, plant managers and store owners.
Sizing up the sequester: Two top Virginia Republicans — House Majority Leader Eric Cantor and Gov. Bob McDonnell — are scheduled to hold a Wednesday news conference on how the automatic sequester cuts could be a drain on the Old Dominion.
That event will come a day after former Vice President Dick Cheney briefed Republicans in both the House and the Senate on the looming defense cuts.
Laboring over labor: A House Appropriations subcommittee will mark up a long-awaited, controversial labor, health and education spending bill on Wednesday.
The $150 billion measure comes in $6.3 billion below current funding and $8.8 billion lower than President Obama's budget request.
The bill defunds implementation of Obama’s healthcare reform law and contains a number of anti-abortion riders, including one defunding Planned Parenthood unless it certifies it has stopped providing abortions.
LOOSE CHANGE
Tax time: Senate Majority Leader Harry Reid (D-Nev.) officially filed the Democrats’ one-year tax plan, priced at $272 billion, which is expected to get a floor vote next week.
The proposal includes many of President Obama’s ideas, including allowing Bush-era tax rates to expire for those with household income north of $250,000 a year. But Senate Democrats did break with the White House on taxing dividends — placing the top rate at 20 percent, instead of the 39.6 percent the White House wants.
In any event, the expected Senate vote on the Democratic plan — much like a scheduled House vote in the coming weeks to extend all current tax rates — appears to be more about scoring political points than getting legislation passed.
Practically everyone expects the broader tax and fiscal cliff issues to be decided after the election, when Congress returns for a lame-duck session.
After a second failed vote on a campaign finance measure, Senate Democrats moved on to another tax bill on Tuesday: one that looks to entice companies to move jobs to the United States.
A cloture vote on the measure would happen Thursday, unless Republicans allow it to happen sooner.
The measure seeks to strip away tax benefits from companies that move jobs abroad, and give tax breaks to those that shift production back to the United States.
Organized labor in particular is a big fan of the proposal, with Richard Trumka of the AFL-CIO suggesting that Mitt Romney, the presumptive GOP nominee who Democrats have are labeling as an outsourcer, wouldn’t get on board.
Still, much like other bills floating around Capitol Hill these days, the measure is not expected to find its way to the president’s desk any time soon, if at all.
ECONOMIC INDICATORS
MBA Mortgage Index: The Mortgage Bankers Association releases its weekly report on mortgage application volume.
Housing Starts-Building Permits: The Commerce Department releases its June 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 where the sector is headed.
Fed's Beige Book: The Federal Reserve releases it summary on current economic conditions ahead of the Federal Open Market Committee's next meeting at the end of the month.
WHAT YOU MIGHT HAVE MISSED
— Senate sees stalemate on flame-retardant furniture safety regs
— Reid: Cheney motivated to stop defense cuts because of Halliburton ties
— Hoyer: Dems' 'fiscal cliff' threat different than last year's Republican default ploy
— States need to act on long-term budget crises
— Business leaders press for 'fiscal cliff' solution
— Study: High-end tax increases would cost 700K jobs, reduce wages
— Homebuilder confidence is on the rise
Catch us on Twitter: @VickoftheHill, @peteschroeder, @elwasson and @berniebecker3
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