Senate Majority Whip Dick Durbin (D-Ill.) has introduced legislation providing an incentive for U.S. multinational companies that return jobs to American shores.

House Ways and Means Committee Republicans on Wednesday will join the National Taxpayer Union in delivering a letter to Democratic leaders urging them to extend all George W. Bush-era tax cuts.

Roughly 300 economists have signed the letter, which warns that a tax increase at this moment will wreak havoc on the economy.

SUMMERS STEPPING DOWN

Lawrence Summers, President Obama's most prominent economic adviser, will be leaving the White House at the end of the year. He's the third big name to leave the White House economic team, after Peter Orszag and Christina Romer, and he's the biggest name of the three. The question becomes: Who will replace him as director of the WH National Economic Council?

WH aides give a preview of the search to Bloomberg’s Hans Nichols (who broke the Summers’ news Tuesday afternoon): “Administration officials are weighing whether to put a prominent corporate executive in the NEC director’s job to counter criticism that the administration is anti-business, one person familiar with White House discussions said. White House aides are also eager to name a woman to serve in a high-level position, two people said. They also are concerned about finding someone with Summers’ experience and stature, one person said.” http://bit.ly/bISz5P 

Obama’s next economic appointment will be huge, says Ezra Klein: “[Summers’] departure leaves a tremendous power vacuum in the Obama administration's economic policy team -- and at the exact moment that the recovery seems to be slowing. With Orszag, Summers and Romer gone, the administration is without three of its strongest voices.” http://bit.ly/bD2yzN

Klein's possible replacements: Ann Fudge, former Young & Rubicam CEO and current member of the White House fiscal commission; and Summers’ deputies on the National Economic Council, Jason Furman and Diana Farrell.

Felix Salmon says a corporate executive as NEC director would be “weird,” since this is an economist’s post. Salmon also doubts that an executive in the WH would do anything to counter the “anti-business” criticism. http://bit.ly/b2F4pp

Liberals rejoiced Tuesday... Progressive Change Campaign Committee co-founder Stephanie Taylor: "This is a big victory for anyone who voted for change in 2008 only to see Summers work from the inside to water down Wall Street reform, block President Obama's promise to protect Net Neutrality, and urge other pro-corporate positions. While we feel bad for Harvard students and faculty who have to deal with Summers again, Harvard's loss is America's gain.”

Summers had his clashes with the left -- he had dismissed a bigger stimulus and was seen as too centrist for the Democratic base. But he also sometimes took the more liberal position, championing the auto bailouts and nationalization of banks during the financial crisis.

Summers will return to Harvard University, where he's a professor.

FED PUNTS, BUT MAY ACT SOON

The Federal Open Market Committee said Tuesday it was ready to act to support the economy, but it decided not start buying up Treasury bonds or mortgage-backed assets to provide a boost.

Fed statement: "The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate." http://bit.ly/brEHLO

Reax:

Bloomberg: “The Fed’s statement indicates that U.S. central bankers are now focused on inflation that’s below their preferred long-term range as central reason to provide additional monetary stimulus.” http://bit.ly/9qJ2F2

Econ bloggers questioned why the Fed didn’t act now...

Paul Krugman said the Fed “decided to do nothing” after it acknowledged that inflation and unemployment are below their targets. http://nyti.ms/cHp9XE

Mark Thoma: Fed waits, but once the bad news comes, it’ll be too late to act. http://bit.ly/cWio7U

The Economist’s Ryan Avent: “Frustrating” Fed sounds like it wanted to do more, yet didn’t do much of anything. http://bit.ly/ckEt6S

Wall Street reaction is mixed...

WSJ’s David Reilly: Bernanke has “loaded the gun” for inflation, but he needs to be careful that “he doesn’t shoot himself in the foot.” http://bit.ly/bY7rEl

Art Hogan, Jeffries & Co. chief market strategist (via Fox Business): “I think we got what we wanted. We didn’t want the Fed to say it needed to get (more) aggressive with monetary policy. We did want to hear the Fed say it’s ready if it needs to... It’s kind of the perfect news for us.” http://fxn.ws/9WYc1C

The markets went up early Tuesday then down after the Fed statement. http://bit.ly/9QA6xt

TAX CUTS -- Sen. Baucus says Senate Finance Committee won’t mark up tax cuts because there’s not enough time. http://bit.ly/aCAYKC

Sen. Lieberman wants a “bipartisan gang” of centrists to extend the high-income cuts temporarily and the middle-class cuts permanently. http://bit.ly/aDrL40 

The Senate could wrap up work after next week, Majority Whip Durbin says. http://bit.ly/cf3tzY

CHINA -- Yuan revaluation is crucial to the world economy, but don’t think it’s a quick fix, argues David Leonhardt. http://nyti.ms/9QNBlc

Summers will be the third top economic official to leave the Obama administration in recent months.

The White House confirmed Tuesday night that Larry Summers will leave his post and return to Harvard by the end of the year. 

Summers, director of the National Economic Council, said he'll return as a professor at Harvard. He served as the university's president from 2001 to 2006 and is a former Treasury Secretary during the Clinton administration, from 1999 to 2001. 

"I will miss working with the president and his team on the daily challenges of economic policy making," Summers said in a statement. "I’m looking forward to returning to Harvard to teach and write about the economic fundamentals of job creation and stable finance as well as the integration of rising and developing countries into the global system."

President Obama, who signaled Monday that a change in the economic team was possible in the near future, praised Summer's tenure. 

"I will always be grateful that at a time of great peril for our country, a man of Larry’s brilliance, experience and judgment was willing to answer the call and lead our economic team," he said today in a statement. "Over the past two years,  he has helped guide us from the depths of the worst recession since the 1930s to renewed growth.  And while we have much work ahead to repair the damage done by the recession, we are on a better path thanks in no small measure to Larry’s wise counsel."

The Federal Reserve expressed concern Tuesday over the slowing economic recovery, giving a stronger signal that it may need to take additional steps to accelerate growth and prevent prices from falling too far. 

No new policies were announced today at the end of the Federal Open Market Committee's last meeting before the November mid-term elections. 

Officials said they "will continue to monitor the economic outlook and financial developments" and be "prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate." 

The economy is a major issue for voters in the upcoming elections and the high unemployment rate and lack of job growth could hurt Democrats' chances of hanging on to the majority in both chambers. 

The committee also voted to kept the federal funds rate at 0 to 0.25 percent and economic conditions "are likely to warrant exceptionally low levels for the federal funds rate for an extended period."

A fix for the estate tax and extending at least a portion of the Bush-era tax cuts could be combined and travel through Congress as a single piece of legislation, a spokesman for Senate Majority Leader Harry Reid (D-Nev.) told reporters on Tuesday. 

The Service Employees International Union (SEIU) released a poll on Tuesday showing that a majority of voters in midterm battleground states support President Obama's proposal on tax cuts enacted by former President George W. Bush.

Senate Finance Chairman Max Baucus (D-Mont.) on Tuesday removed all doubt that his chamber would not host a markup to extend the tax cuts enacted under President George W. Bush. 

"I wish we could, but time is not on our side," he told reporters.