Sen. Evan Bayh (D-Ind.) reiterated his support Wednesday to extend all of the Bush-era tax cuts while the economy continues to rebound. 

Raising taxes while the economy is still weak would lower consumer demand "at a time we want people putting more money into the economy," Bayh said this afternoon on MSNBC. 

Income tax rates should only be increased as part of a comprehensive deficit reduction package combined with enforceable spending restraints, he said.

"To just go out and raise taxes with no spending restraint, particularly during a recession, is just not the right time to do that," he said. 

The Obama administration on Wednesday announced it is directing another $2 billion in financial bailout money to battered housing markets.


The money is the third payout from the administration’s “Hardest Hit Fund,” which was created earlier this year to fund programs in parts of the country with severe housing market problems.

The program, which now sports a $4.1 billion price tag, has come under fire from Republicans, who say the program puts taxpayer money at risk. The special inspector general over the Wall Street bailout is auditing the program.


Assistant Treasury Secretary Herbert Allison said Wednesday that the $2 billion is the third round of foreclosure aid under the program so far, coming on the heels of an initial funding round of $1.5 billion and a second round of $600 million. The money has so far gone to state housing finance agencies in 10 states.

Forty of the nation's wealthiest American families and individuals have agreed to give away at least half of their fortunes to charity, providing the potential for billions of dollars to be pumped into charitable organizations. 

In June, Warren Buffett and Bill and Melinda Gates invited American billionaires to pledge their fortunes within their lifetimes or after their deaths. 

If everyone on the Forbes 400 list of richest Americans followed through and pledged half their net worth to charity, that would amount to $600 billion, according to Fortune magazine.

Many of the 400 already signed up have agreed to give away more than 90 percent of their wealth. 

Gates and Buffett launched "The Giving Pledge" in June after hatching the plan during the course of several dinners where they discussed the effects of the recession on charitable giving. 

Two of the world's richest, Gates and Buffet, are worth a combined nearly $100 billion. 

Rep. Brad Sherman (D-Calif.) wants MFN status revoked until Obama negotiates a “more level playing field between our two nations."

Senate Minority Leader Mitch McConnell will press President Obama to extend the Bush tax cuts during a White House meeting on Thursday.

The meeting was scheduled to discuss which of Obama's nominations can be voted on before the August recess, but an aide to McConnell (R-Ky.) said the senator will also use the opportunity to push Obama on intensifying debate over the Bush tax cuts.

“While [McConnell will] discuss those appointments here in Washington, he will also raise his very real concerns about the looming tax hikes that will kill jobs outside the Beltway,” the aide said.

Obama will use the time to push McConnell to allow votes on his judicial nominees.

Treasury Secretary Tim Geithner will try out a more political line of attack on Wednesday, whacking Republicans over their economic record.

Geithner will go after the GOP in a speech Wednesday afternoon, joining with President Obama and congressional Democrats in underscoring the differences between their approach and Republicans' approach to the economy.

"In the 1990s, the government put an end to budget deficits, and America enjoyed a period of growth led by the private sector where prosperity was widely shared and job creation was robust," Geithner will say this afternoon during a speech at the Center for American Progress, a liberal think tank. "Over the next decade, Washington tried a new path, running up huge debts, while incomes for most Americans stagnated and job creation was anemic."

Geithner has been giving a number of interviews and making speeches this week to promote the administration's accomplishments on Wall Street reform. But he's also taken a more prominent role in defending President Obama's stewardship of the economy during an election season in which Republicans have targeted the administration on that very issue.

The Treasury secretary said the U.S. is suffering from the damage caused by "misguided policy" that the GOP had sought when they were last in power. He warned of a "false prosperity" that would be fostered by Republicans' plans, which he said would create debt and stifle growth.

Geithner's words are well in line with what Democrats and the president himself have warned in recent weeks, which is that a return to Republican control of Congress in this fall's elections would mean a reversion to past policies.

But Republicans have shot back by blaming Obama and Democrats' policies for running up the deficits. They've argued Democratic lawmakers would raise taxes on small businesses by letting income taxes for top earners spring upward when they expire at the end of the year.

Geithner will take direct aim at that argument in his speech.

“Borrowing to finance tax cuts for the top 2 percent would be a $700 billion fiscal mistake," he'll say. "It’s not the prescription the economy needs right now, and the country can’t afford it.”

The Senate voted 61-38 Wednesday morning to end debate on a bill that would provide $26 billion in aid to states. 

Backed by the two Republican senators from Maine — Susan Collins and Olympia Snowe — the measure got the votes it needed to move forward as the Senate prepares to wrap up work before the August recess. 

The measure aims to help state governments cover Medicaid expenses and prevent layoffs of teachers and first responders would reduce the budget deficit by $1.4 billion over the next 10 years, according to a new report by the Congressional Budget Office.

Senate Budget ranking member Judd Gregg (R-N.H.) raised a budget point of order against the measure saying it would increase the deficit by $22 billion next year.

The ADP private sector jobs report came in Wednesday slightly better than expected, showing an increase of 42,000 as well as a revision upward from May to June. 

July's increase was the sixth straight month of gains but the increases have only averaged 37,000, with "no evidence of acceleration" as the job market continues to struggle to create jobs, ADP said in a release. 

June numbers were revised up to 19,000 from 13,000, according to today's report. ADP's report doesn't including federal government hiring or firing for the 2010 Census. 

The government's monthly employment numbers for July are due out Friday. 

The ADP report showed that hiring by large employers — those with 500 or more workers — was flat while medium-size businesses added 21,000 workers to their payrolls and small businesses added another 21,000. 

Second try for state aid — The Senate will vote on cloture Wednesday morning at 10:40 on the Democrats' latest effort to save jobs, a $26.1 billion measure with state and local government fiscal aid. An earlier version of the bill was tabled Monday after Senate Democrats overestimated the savings they'd get from spending cuts included to offset the package's cost.

The measure, which Democratic leaders are trying to attach to a federal aviation safety bill, sends $10 billion to states, counties and municipalities facing teacher cutbacks, and another $16.1 billion to help with state Medicaid obligations. Senate Majority Leader Harry Reid (D-Nev.) said the new version cuts the deficit by $1.4 billion. GOP leaders see it as a payoff to unions.

States cutting public worker pay to avoid layoffs. NYT, A1: "Local and state governments, as well as some companies, are squeezing their employees to work the same amount for less money in cost-saving measures that are often described as a last-ditch effort to avoid layoffs."

Obama to tout economic efforts to labor — The president will speak at 11:05 a.m. at the AFL-CIO executive council meeting in Washington.

From the White House: "The President will discuss the steps we have taken to rebuild the economy and create jobs, and the fact that while we have a long way to go, we are headed in the right direction. The President will continue to lay out the choice we face on the economy today: whether to move forward on new ways to create jobs and strengthen our recovery, or go back to the failed policies of the past that led to a decade of economic insecurity for the middle class, culminating in a recession that has cost 8 million jobs."

The speech comes as the president's poll numbers have fallen to new lows. The economy is a big problem, Charlie Cook tells The Hill's Sam Youngman: “It’s a millstone around Democrats’ necks, and there’s not a lot they can do about it."

Geithner speech on tax cuts — Wednesday at 4 p.m., Treasury Secretary Timothy Geithner will "outline a pro-growth strategy on tax and fiscal policy for the 21st century American economy" at the Center for American Progress. The speech will be followed by a bipartisan panel, Clinton White House Chief of Staff John Podesta and former Congressional Budget Office director and McCain-Palin '08 adviser Douglas Holtz-Eakin.

Live webcast: http://bit.ly/bIjmo3

Lame duck update — Both Geithner and House Majority Leader Steny Hoyer (D-Md.) said Tuesday that the Bush-era tax cut extension legislation could slip into a post-midterms session.

Geithner on ABC: "... most people don't think you're going to see the legislative outcome finished on this until after the election."

Hoyer, on a CAP conference call Tuesday, said House Democrats want to wrap it up before November, but he acknowledged the tight time frame. Hoyer said Democrats in the House are considering going first; he said last month that House Dems were looking to the other chamber to act. http://bit.ly/dcNNqg 

Macroeconomic Advisers recommend partial extension. The private forecasting firm said GDP growth would be 4.2 percent in 2011 and 4 percent in 2012 if all the tax cuts are extended. Under the Obama plan to extend just the middle-class cuts, economy would be slightly slower — 4 percent in 2011 and 3.8 percent in 2012. If all tax cuts expired: 3.3 percent in 2011 and 3.7 in 2012.

Macro Advisors blog: "... an intermediate, and safer, near-term strategy is to let expire in 2011 just those provision affecting high-income individuals while extending the other provisions until they can be considered in the context of a healthier economy..."

FDR's deficit fix: Beer — NPR Planet Money's latest podcast: "Part of the Democrat platform when Roosevelt was running for office was, 'If only given a chance, Americans might drink themselves into a balanced budget.' "

GOP REPORT GOES AFTER STIMULUS WASTE — The report by Republican Sens. John McCain (Ariz.) and Tom Coburn (Okla.) targeted 100 projects in the Democrats' $862 billion stimulus. They took specific aim at science projects, like one for international ant research and another studying Neptune's atmosphere, that they didn't consider to be "an investment in long-term priorities."

WH pushes back — Half of the claims are "flat-out false or misleading," said Jared Bernstein, top economic adviser to Vice President Joe Biden, on WH.gov.

DODD ON FOREIGN FINANCIAL REFORMS — Senate Banking Committee Chairman Chris Dodd (D-Conn.) headlines an “in-depth discussion” on “Reforming Global Finance for the Economic Recovery” at the Atlantic Council at 5 p.m. http://bit.ly/9N5Lb7

WSJ editorial: Whither Freddie/Fannie reform? — "Mr. Geithner blamed much of the 2008 financial panic on the growth of the so-called shadow-banking system. But Fannie Mae and Freddie Mac were the biggest shadow bankers in the game." http://bit.ly/9OjB6x

ORSZAG GONE, OMBLOG LIVES ON — ICYMI: Interim Office of Management and Budget Director Jeffrey Zients, shepherding the budget office through the Orszag-Lew transition, blogs on the new evaluations of government agencies to save taxpayer money. Former White House budget director Peter Orszag had brought his wonky blog over from the Congressional Budget Office, where he served before joining Obama's Cabinet.