Ben Bernanke said the central bank “will gradually reduce” its bond purchases as economic conditions improve.

Federal Reserve Chairman Ben Bernanke warned Congress that the central bank's actions will be insufficient to stave off a drag on the economy caused by rising taxes and spending cuts. 

Bernanke told the Joint Economic Committee on Wednesday that a bevy of fiscal policy issues are creating headwinds and will "exert a substantial drag on the economy this year." 

The expiration of the payroll tax cut, other tax increases, budget caps on discretionary spending, billions in sequestration and the declines in defense spending will weigh on the economy, and the Fed won't be able to stop the effects. 

"Taking them all together, they have the effect of being a drag on economic growth, perhaps more than necessary," he said. 

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Citizens for Responsibility and Ethics in Washington (CREW) is suing the Internal Revenue Service, demanding the agency change its requirements for the 501(c)(4) tax-exempt status.

Congress’s probe into the inappropriate scrutiny applied to Tea Party groups by the Internal Revenue Service will continue in earnest this week, headlining a busy stretch before the Memorial Day recess.

The House Ways and Means Committee kicked off the grilling with a hearing Friday, and the Senate Finance Committee is next up with a Tuesday hearing on the matter.

The House Oversight Committee will tackle the matter Wednesday, hearing from former IRS Commissioner Douglas Shulman. Lois Lerner, the IRS official who apologized for the practice and set off the scandal, has also been invited to testify.

Meanwhile, the Senate is slated to take up the 2013 farm bill this week.

Majority Leader Harry Reid (D-Nev.) hopes to complete the bill before the Memorial Day recess. The Senate Agriculture Committee reported out the $955 billion bill on Tuesday with a bipartisan 15-5 vote.

Chairwoman Debbie Stabenow (D-Mich.) predicted a strong vote in line with the 64-35 vote the farm bill enjoyed last year. That 2012 bill died after House GOP leaders refused to take up a farm bill in the last Congress.

The floor action is expected to feature amendments on the U.S. sugar program, as well as ones targeting $4 billion in food stamp cuts included in the bill, with liberals looking to reverse the cuts and conservatives looking to deepen them.

The Senate is also slated to vote on the nomination of Richard Cordray to continue as director of the Consumer Financial Protection Bureau (CFPB).

Republicans have vowed to block the nomination as they demand structural changes to the agency.

A Senate panel will chat on Thursday with President Obama's nominee to lead the Commerce Department.

Penny Pritzker, the billionaire Chicago businesswoman, faces her first hurdle toward confirmation in a nomination hearing. The Senate Commerce, Science and Transportation Committee will discuss a broad swath of issues, from creating jobs and increasing exports to manufacturing and weather forecasting.

Pritzker has garnered broad support from Democrats and groups such as the U.S. Chamber of Commerce and the Business Roundtable.

Top regulators will also be appearing before committees this week to discuss a range of economic issues.

The Joint Economic Committee will hear testimony from Federal Reserve Chairman Ben Bernanke, who will give members an update on the nation’s economic picture.

Bernanke will once again face critiques from Republicans wary of the Fed’s efforts to boost the economy, which they warn are ineffective and encourage inflation.

Treasury Secretary Jack Lew will also be testifying on the Hill next week, as he delivers the annual report for the Financial Stability Oversight Council.

He will appear before the Senate Banking Committee Tuesday, followed up by a House Financial Services Committee visit Wednesday.

While the topic at hand is the state of financial markets, Lew will likely also have to field questions about the ongoing dissection of the IRS scandal.

The House Appropriations Committee will meet Tuesday to approve a controversial outline for its 12th annual spending bill. A leaked copy of the so-called 302b allocations shows labor and health programs getting cut 18 percent below sequester levels and the State Department getting a 16 percent cut below the sequester.

In the Senate, appropriators have a number of hearings lined up to discuss spending for military, agriculture and foreign operations needs.

On Tuesday, the House Agriculture Committee will discuss the reauthorization of the Commodity Futures Trading Commission.

On Tuesday, the Senate Budget Committee will discuss the nomination of Brian Deese to be deputy director of the Office of Management and Budget (OMB).

The agency is rife with vacancies: it lacks both deputy directors, an executive associate director and an office of information and regulatory affairs head. Starting this week, the OMB won’t have a controller since Danny Werfel is set to become acting IRS Commissioner.

The Senate Finance Committee on Wednesday will discuss bipartisan legislation that would strengthen the trade facilitation and enforcement efforts of U.S. Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE).

The legislation reauthorizes CBP and ICE and directs them to dedicate resources to customs facilitation and trade enforcement, while establishing new tools and high-level trade positions to bolster trade efforts.

The Senate’s permanent investigatory subcommittee will delve into offshore tax shelters Tuesday. Top Apple executives will be on hand to defend their business practices, which include extensive offshore activity.

A House Financial Services subcommittee will discuss qualified mortgages and the ability of borrowers to repay their loans in a Tuesday hearing.

The new rules from the Consumer Financial Protection Bureau require lenders to compile documentation from potential homeowners to determine their ability to repay a loan.

A separate subcommittee for the panel will discuss Wednesday whether big Wall Street banks are effectively “too big to jail.”

Attorney General Eric Holder told Congress that the Justice Department faces challenges in bringing charges against large banks, but later said he was misunderstood, and did not mean it is impossible to prosecute big banks.

The job market is showing sustained signs of improvement with the unemployment rates in 40 states dropping in April, the most in six months. 

The jobless rate rose in only three states — Louisiana, Tennessee and North Dakota — and was unchanged in seven, the Labor Department reported on Friday. 

No state reported double-digit unemployment in April. 

At 9.6 percent, Nevada had the highest unemployment rate but it has dropped from 10.7 percent over the last year, the steepest decline of any state.

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House Democrats are putting their weight behind President Obama's nominee to lead the Labor Department. 

Nearly 140 House Democrats urged Senate leaders on Thursday to confirm Thomas Perez, the head of the Justice Department's Civil Rights Division, as the next secretary of Labor amid stiff resistance from Republicans. 

After several weeks of delays, a Senate panel approved Perez's nomination on Thursday morning on a party-line vote. 

“The Senate should waste no time in scheduling a vote to confirm Tom Perez as the next secretary of Labor," said House Democratic Whip Steny Hoyer (Md.) in a statement. 

After weeks of delays, a Senate panel approved President Obama's nominee to lead the Labor Department on Thursday in a party line vote.

Thomas Perez, the head of the Justice Department's Civil Rights Division, cleared the Senate Heath, Education, Labor and Pensions Committee on a 12-10 vote. 

Perez is facing stiff resistance from Senate Republicans, and his nomination remains in jeopardy as it heads to the full Senate. 

Panel chairman Tom Harkin (D-Iowa) said Perez's nomination "couldn't be more timely and important" as the nation's economic recovery limps along. 

First-time jobless claims jumped sharply last week, a possible signal that businesses are laying off workers over concerns about the effects of across-the-board spending cuts and tax hikes from the sequester.

The number of workers seeking unemployment benefits increased 32,000 to a seasonally adjusted 360,000, the highest level since the end of March, after hitting a five-year low the previous week, the Labor Department reported on Thursday. 

But the four-week moving average, a figure that provides a better trajectory of where the labor market is headed, rose 1,250 to 339,250, a level that reflects steady hiring. 

President Obama's nominee to head up the Labor Department is expected to finally get a vote in a Senate committee after weeks of delays. 

Thomas Perez, head of the Justice Department's Civil Rights Division, is expected to get a vote on Thursday in the Senate Heath, Education, Labor and Pensions Committee after weeks of delays by Republicans who have said they needed more time to sort through documents and continue to gather answers to their questions. 

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President Obama's nominee to lead the Commerce Department will face her first hurdle next week. 

Penny Pritzker, the billionaire Chicago businesswoman, will sit down next Thursday with the Senate Commerce, Science and Transportation Committee to discuss a broad swath of issues from creating jobs, increasing exports, to manufacturing, fisheries and weather forecasting. 

Noted for her business acumen, Pritzker has garnered broad support from Democrats and groups such as the the U.S. Chamber of Commerce and the Business Roundtable.

Panel Chairman Jay Rockefeller (D-W.Va.) told The Hill that he believes she has enough support to gain the panel's approval and be confirmed by the Senate.

British Prime Minister David Cameron wants a global standard under which petroleum and mining companies will report their payments to governments, calling it a way to curb corruption in resource-rich nations.

Cameron, who is meeting with President Obama at the White House on Monday, called for the Group of Eight leading industrial nations to work on the effort at its June gathering in Ireland.

The prime minister, in a broader Wall Street Journal column backing free trade, said greater “transparency” must accompany more open global markets.

“[W]e must lift the veil of secrecy that too often lets corrupt corporations and officials in some countries run rings around the law. The G8 must move toward a global common standard for resource-extracting companies to report all payments to governments, and in turn for governments to report those revenues,” Cameron writes.

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Both chambers will dig into the farm bill this week as lawmakers look to strike a deal.

The Senate Agriculture Committee is set to mark up its version of the bill on Tuesday, while its House counterpart will follow suit on Wednesday. 

The biggest difference between the two bills is how they handle food stamps. The House would cut $23 billion from food stamp programs, while the Senate bill would trim just $4 billion.

Leaders in the House and Senate have both committed to floor action in the coming weeks. Farmers are currently operating under an extension of the 2008 farm bill.

The new economic atmosphere might help advance some of Obama’s agenda, but could dim hopes of fiscal reform.

The Treasury Department is confident the debt limit will not need to be raised until at least after Labor Day.

Treasury Secretary Jack Lew told CNBC on Friday that recent cash flow data is showing the government will be able to pay all its bills at least through the beginning of September, but he still urged Congress to act quickly to hike the nation's borrowing cap.

"Because of the extraordinary measures and the cash flow, that we now can predict, it will not be until at least after Labor Day," he said.

Fannie Mae is making significant strides toward paying back its debt to taxpayers, probably giving the White House and Congress more breathing room on raising the nation's debt-limit. 

The mortgage giant announced Thursday that it would make a $59.4 billion payment to the Treasury Department next month as its balance sheet continues improving along with the housing market. 

The payment, combined with a $7 billion dividend payment from Freddie Mac, which was announced Wednesday, could give Congress and the White House more time to increase the debt limit, which is expected to be reached sometime this fall. 

Prioritizing bond and Social Security payments is no replacement for raising ceiling, agencies say.

The White House announced on Thursday that it is launching a competition for millions of dollars in federal funding to create several more manufacturing innovation institutes across the country as part of an effort to add jobs in the sector. 

The Obama administration said it will provide $200 million across five federal agencies — Defense, Energy, Commerce, NASA and the National Science Foundation — to add three more regional manufacturing-focused hubs, which are designed to accelerate the development and use of cutting-edge manufacturing technologies, boost the nation's competitiveness and strengthen state and local economies. 

The White House calls the hubs "teaching factories" that provide education and training to students and workers.

President Obama included a $1 billion request in his 2014 budget to create 15 institutes across the country as part of the National Network for Manufacturing Innovation (NNMI). 

First-time jobless claims continued their descent last week, falling to their lowest level in more than five years and providing another sign that the labor market is healing. 

The number dropped by 4,000 last week to a seasonally adjusted 323,000, the best showing since November 2007, a signal that employers are laying off fewer workers, the Labor Department reported on Thursday. 

The four-week moving average, a figure that provides a better trajectory of where the labor market is headed, dropped 6,250 to 336,750.

The partisan battle over President Obama's Labor Department nominee ran hot again on Wednesday as Republicans used an obscure Senate rule to postpone a committee vote. 

Senate Republicans invoked a procedural rule to delay a vote scheduled for Wednesday afternoon on Thomas Perez, head of the Justice Department's Civil Rights Division, further ratcheting up tensions with Democrats.  

The rule says that all hearings must begin within two hours after the upper chamber gavels into session, according to a Senate aide. 

The Senate's top Republican sharply criticized President Obama's nominee to head the Labor Department on Wednesday saying he is willing to go around the law to achieve his objectives.  

Senate Republican Leader Mitch McConnell (Ky.) cited several examples of the actions of Thomas Perez, head of the Civil Rights Division in the Justice Department, that he says proves that he "does not merely push the envelope; all too often, he circumvents or ignores a law with which he disagrees."

“Taken together, all of this paints the picture, for me at least, not of a passionate liberal who sees himself as patiently operating within the system and through the democratic process to advance a particular set of strongly held beliefs, but a crusading ideologue whose conviction about his own rightness on the issues leads him to believe the law does not apply to him," McConnell said on the Senate floor.

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The head of the Senate Banking Committee said Tuesday he intends to move quickly to confirm President's Obama's nominee to lead the Export-Import Bank to avoid a possible shutdown. 

Panel Chairman Tim Johnson (D-S.D.) argued that nominee Fred Hochberg, who is up for a second four-year term, has broad support across business and labor groups, and his confirmation is "imperative to assure the bank's leadership."

"If we do not again confirm Mr. Hochberg before July 20, we run the risk of leaving the bank without a quorum to act on many of the transactions before it, which will hurt American workers and exporters," Johnson said. 

The White House said the legislation would "threaten the full faith and credit of the United States."

Tensions ran high during a House joint hearing on Tuesday over the alleged actions in several discrimination cases of President Obama's nominee to head the Labor Department.

Democrats argued that Republicans were using the hearing to derail Thomas Perez's nomination on the eve of a Senate committee vote.

But House Government Reform and Oversight Chairman Darrell Issa (R-Calif.) argued that, despite the timing, the motive for the hearing is part of his panel's long-running investigation, which started well ahead of Perez's nomination. 

He said a series of letters dated from early last year "clearly show" that the examination of Justice's handling of the cases started long before "anyone could've imagined" that Perez would be tapped to head Labor. 

The fireworks started early when Rep. Matt Cartwright (D-Pa.) said that Republicans' only motive is to "discredit" Perez.

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Federal regulators settled with Harrisburg, Pa., over “reckless” securities fraud charges, saying the city filed “misleading” financial statements.

The House will turn this week to a bill that Republicans say would prevent the United States from defaulting on its debts.

The Full Faith and Credit Act is a preemptive attempt by Republicans to defuse the warnings from the White House and Democrats about holding the debt ceiling “hostage” in fiscal negotiations. The bill would give the Treasury Department the ability to borrow above the limit to cover bond and Social Security payments.

While the Treasury insists it cannot prioritize payments and avoid a default if its borrowing capacity is reached, Republicans disagree, and say their bill should assure markets that the country will always pay its debts.

Lawmakers will likely have to increase the debt ceiling sometime in the late summer or early fall.

Job growth in April was better than expected, while February and March numbers were revised upward. 

Projecting the monthly jobs numbers is no easy task.

Worries about the payroll tax increase and the $85 billion sequester cut are starting to emerge.

Business groups and lawmakers expressed support for President Obama's choices to complete his second-term economic team that is focusing heavily on expanding U.S. trade opportunities. 

Obama announced on Thursday that he wants Chicago businesswoman Penny Pritzker to head up the Commerce Department and Mike Froman to take the helm as the next U.S. Trade Representative before heading out of town for a three-day trip to Mexico and Costa Rica that will include talks about trade with the nation's third-largest trading partner. 

"In both instances, I'm going to be working to deepen our economic and trade relationships across Latin America — relationships that create jobs and growth here at home and offer our businesses growing markets where they can sell more American-made goods and services abroad," the president said. 

Those filing for first-time unemployment benefits hit a five-year low last week, another signal that the labor market is recovering. 

Weekly claims fell 18,000 to a seasonally adjusted 324,000, the lowest level since January 2008, reflecting fewer layoffs by businesses, the Labor Department reported on Thursday. 

The four-week moving average, which better forecasts the trajectory of the job market, also registered a sharp drop, falling by 16,000 to 342,250.

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The central bank said it could potentially increase the size of bond purchases aimed to stimulate the economy. 

The nation's manufacturing sector grew at a slower pace in April driven by reductions in hiring and inventories. 

The Institute for Supply Management reported on Wednesday that factory activity dropped to 50.7 down from 51.3 in March, the slowest pace since December. 

A reading above 50 indicates expansion.

The pace of hiring fell to 50.2, the lowest level this year, and below the 54.2 reported in March. 

The Treasury Department is not ready to provide a detailed timeline for when the debt limit needs to be raised.

Matthew Rutherford, the Treasury's assistant secretary for financial markets, said Wednesday that there are still too many variables at play to determine how long the Treasury could avoid a default on obligations once it reaches its borrowing limit. Rather, he simply said the government would have "a period of time" to avoid default once the debt limit is re-established on May 19.

"There are a number of forecast factors, including the effect of higher tax rates on households earning more than $450,000 a year on estimated income tax payments, a strengthening economy, the impact of sequestration on the timing of outlays, the timing of other sizable cash flows, and other forecasting uncertainty which make it difficult to provide a precise estimate," he said.

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Private-sector employers added 119,000 jobs in April, below expectations and another indication that hiring is slowing through the spring. 

While last month's figure came in weaker than expected, March gains were revised down to 131,000 jobs from 158,000, according to the ADP's National Employment Report released on Wednesday. 

“Job growth appears to be slowing in response to very significant fiscal headwinds," said Mark Zandi, chief economist of Moody’s Analytics. 

"Tax increases and government spending cuts are beginning to hit the job market. Job growth has slowed across all industries and most significantly among companies that employ between 20 and 499 workers.”

Almost half the people in the U.S. have gone out of their way to purchase products made in the United States recently, according to a new poll from Gallup.

The 45 percent who did “buy American,” Gallup found, did so more for patriotic reasons than anything else. Fifty-four percent said they had made no extra effort recently to obtain U.S.-made products.

Of those who bought items made in the U.S., around a third each said their purchase was to support the country, or to help the American job market.

A federal court on Tuesday swatted down complaints from financial and tech giants who demanded a regulatory intervention by the Securities and Exchange Commission (SEC) on stock market fees.

Consumer confidence rebounded in April on the expectation of better wages and improving economic conditions. 

The Conference Board reported on Tuesday that its monthly index increased to 68.1 from an upwardly revised 61.9 in March.

“However, consumers’ confidence has been challenged several times over the past few months by such events as the fiscal cliff, the payroll tax hike and the sequester," said Lynn Franco, director of economic indicators at The Conference Board, in a statement. 

"While expectations appear to have bounced back, it is too soon to tell if confidence is actually on the mend.”

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Archived under: Economy

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U.S. home prices continue to surge, as nationwide home values have climbed the most in nearly seven years.

Home prices have climbed 9.3 percent in the 12 months leading up to February, according to the latest data from the S&P/Case-Shiller home price indices, released Tuesday. Half of the 20 cities tracked by the index posted double-digit gains in that year, and every city is up at least 5 percent during that time, as the housing market continues to make a comeback.

“Home prices continue to show solid increases across all 20 cities. The 10- and 20-City Composites recorded their highest annual growth rates since May 2006,” said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. “Despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy."

As of February, home prices have returned to the levels seen in the fall of 2003. However, when compared to the peak seen in the summer of 2006, home values still linger roughly 30 percent below that high.

The government will pay off $35 billion in debt during the second quarter of 2013.

First lady Michelle Obama on Monday announced a partnership between the military and IT companies to help veterans more easily find jobs in the tech sector.

About 161,000 service members would gain the necessary certifications for 12 high-demand technology professions with the new program, according to the White House.

Obama has made helping veterans one of her signature issues through her Joining Forces program. In addition to announcing the IT Training and Certification Partnership, Monday's event was also designed to explore other areas where the hiring process can be eased for veterans.

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Budget analysts say lawmakers will likely have more time to haggle over the debt limit.

A two-year high in consumer spending boosted growth from January to March, but growth was slightly below estimates.