This week: Congress takes on tax rates, Wall Street reform

By Peter Schroeder - 07/23/12 06:38 AM ET

Senate Democrats will continue working on advancing a contentious tax package this week, as Capitol Hill teems with economic events.

The proposal would extend for one year lower tax rates for the middle class, while allowing them to expire for family incomes above $250,000 annually. The measure would also extend stimulus tax breaks while raising the top tax rate on investment income, although Democrats recently trimmed a provision that would raise the estate tax. Republicans are staunchly opposed to the measure, but it might get a floor vote this week as GOP members push for consideration of their own competing tax plan.

Treasury Secretary Timothy Geithner will be making the rounds on Capitol Hill — he’s scheduled to testify before both House and Senate panels as he delivers the annual report of the Financial Stability Oversight Council (FSOC), which gathers financial regulators to oversee the entire financial system. Among its jobs is to identify what firms should be deemed “systemically significant,” and thus merit heightened oversight.

However, Geithner will likely also face questions on his role in an ongoing scandal surrounding the London Interbank Offered Rate (Libor). Geithner was head of the Federal Reserve Bank of New York in 2008 when concerns about whether banks were trying to manipulate the benchmark rate first emerged, and members will want to learn from him about what has been done to address the matter since then. The president’s top economic adviser will appear before the House Financial Services Committee on Wednesday, followed by the Senate Banking Committee Thursday.

The House Ways and Means Committee will mark up legislation to grant permanent normal trade relations (PNTR) to Russia this week. Panel Democrats and Republicans agreed on Thursday to take up a bill that mirrors the one approved by the Senate Finance Committee.

The bill will likely be tied to human-rights legislation known as the Magnitsky bill, which will be merged before the bill goes to the floor.

Lawmakers need clear the bill for President Obama's signature before leaving for the August recess so that U.S. businesses can take advantage of the benefits of joining the World Trade Organization next month.

On Tuesday, the Senate Banking Committee will be discussing ways to handle housing partnerships in Native American territories, while the Senate Judiciary Committee will be holding a hearing on a bill to establish an online sales tax.

The House Agriculture Committee will devote a hearing Wednesday to the integrity of the derivatives marketplace, following the meltdown of the futures broker PFGBest. The revelation that the company had for years been spending protected customer funds and deceiving regulators has thrown fresh doubt on that market, just months after another major collapse at MF Global.

That same day, two panels will be discussing the fate of the nation’s education system. The Senate Finance Committee will discuss tax reform in the context of education, while a Senate Appropriations subcommittee will debate what impact the pending sequester spending cuts will have on it.

One area that won’t be seeing action is on the farm bill. After clearing the full Senate and the House Agriculture Committee, GOP leaders have not slated it for floor consideration this week.

Rep. Ron Paul’s (R-Texas) legislation, which would mandate a full review of the operations of the Federal Reserve, is slated for a House floor vote on Tuesday. A majority of the House is already a co-sponsor on the bill, but Fed Chairman Ben Bernanke has pushed back against it, warning it could expose the central bank to political pressure.

Sen. Pat Toomey (R-Pa.) will discuss his view on the upcoming “fiscal cliff” in a speech at the Brookings Institution on Tuesday.

And the week will wrap up with a key piece of economic data, as the Commerce Department will provide a first look at the nation’s economic growth in the second quarter of the year. Following a run of disappointing reports highlighted by months of weak jobs numbers, markets will be on high alert for indications of where the economy is headed.