Sen. John Kerry (D-Mass.) said Wednesday that many families will see increased incomes under the climate and energy bill that he is unveiling with Sen. Joe Lieberman (I-Conn.).

Kerry’s comments – made during one of several morning TV appearances to tout the bill – are his latest effort blunt GOP allegations that capping greenhouse gas emissions will create major new costs for consumers and businesses.

Kerry noted that revenues from sale of carbon emissions permits are eventually cycled back to consumers through rebates on their energy bills. The lowest 40 percent of earners would see incomes actually increase, he said.

Lawmakers are looking to include in a single bill an extension of the middle-class tax cuts enacted under President George W. Bush and a fix for the estate tax. 

Senate Finance Chairman Max Baucus (D-Mont.) told reporters the combination could happen since extending the Bush tax cuts and tax legislation aimed at small businesses will be separate measures, and the small business bill is too big to include an estate tax fix. 

Goldman Sachs and Morgan Stanley may ultimately avoid a ban on bank proprietary trading under the Wall Street overhaul.

As part of the Senate financial regulatory debate, Democrats want to bar big banks from proprietary trading. Large non-banks would face potentially higher capital standards under the legislation to account for their trading activities. The restrictions are part of an amendment sponsored by Sens. Carl Levin (D-Mich.) and Jeff Merkley (D-Ore) that has yet to come up for a Senate vote.

Julie Edwards, spokeswoman for Merkley, said on Tuesday that two of Wall Street's heavyweights -- Goldman Sachs and Morgan Stanley -- would not fall under the explicit prohibition in the future if they decided to no longer function as bank holding companies.

Goldman Sachs and Morgan Stanley converted to bank holding companies during the financial crisis in 2008.

Senate Banking Committee Chairman Chris Dodd's (D-Conn.) Wall Street overhaul legislation includes a provision, known as "Hotel California," that would increase Federal Reserve oversight of firms that decide to convert away from bank holding companies.

Dodd's provision covers financial companies that as of Jan. 1, 2010 were bank holding companies with at least $50 billion in assets and that received capital from the $700 billion bailout package. That provision would cover Goldman Sachs and Morgan Stanley.

In the future, if the companies convert away from bank holding companies and are no longer depository institutions, they would be considered non-banks. Edwards said that the two firms would then face potentially higher capital requirements but not the blanket ban.

An amendment to exempt certain small businesses from additional regulations under a proposed consumer protection agency could help pave the way for agreement on the unresolved provisions. 

Senate Small Business and Entrepreneurship Chairwoman Mary Landrieu (D-La.) and the panel's ranking member Olympia Snowe (R-Maine) have teamed up to limit the scope of the planned Consumer Financial Protection Bureau, ensuring that businesses such as dentists aren't wrapped into new regulations. 

Although Snowe said her amendment wouldn't completely allay her concerns about the consumer protection agency provisions but it's a good step forward. 

"Hopefully it will draw broad support," she told The Hill on Tuesday. "I think it would be widely supported in the Senate."

Tweaking the section could help mitigate some Republican and moderate Democrat concerns that the new consumer agency goes too far and would affect anyone dealing in consumer credit. 

She's trying to get a vote on that amendment soon and she was "hopefully there's enough time to take it up."

A second amendment aimed at small businesses would apply the Regulatory Flexibility Act to the proposed consumer protection bureau, providing a better gauge of how the regulations are affecting small businesses and ensuring regulations are applied fairly, she said. 

The new regulations could "suffocate small businesses with paperwork" so oversight is needed to avoid those unintended consequences, she said. 

The first amendment would exempt small businesses if they sell nonfinancial products, don't securitize consumer debt and are classified within the North American Industry Classification System code's definition of a "small business."

House Ways and Means Chairman Sandy Levin (D-Mich.) told reporters on Tuesday that his chamber would vote next week on legislation extending several measures that have either expired or are on the verge of doing so. 

A value-added tax would damage the economy and hamper job creation, House Republicans said Tuesday. 

Several House leaders along with more than 80 other lawmakers introduced a nonbinding "sense of the House" resolution today opposing a VAT on top of the current tax code. The Senate recently approved a similar resolution.

"A European-style VAT will only further the catastrophic cycle of tax and spend government in Washington," House Ways and Means Committee member Wally Herger (R-Calif.) said in a release today. 

Herger, Minority Leader John Boehner (R-Ohio), Republican Whip Eric Cantor (R-Va.) and Republican Conference Chairman Mike Pence (R-Ind.) are responding to several recent comments by the Obama administration that the VAT is still on the table as a potential revenue raiser. 

Former Sen. Alan Simpson (R-Wyo.) and former Clinton chief of staff Erskine Bowles, who are heading up President Barack Obama's financial commission, said late last month that nothing is off the table when it comes to dealing with the nation's deficits and debts. 

Simpson said a value-added tax couldn't be done without first dealing with income taxes.

Boehner argued that the tax -- which would be added to certain goods and services -- would raise the cost of every product made in the United States and "destroy jobs." 

"Democrats have already made it clear that more tax increases on income, capital gains and dividends are on the way," Cantor said. 

Sen. Sam Brownback (R-Kansas) wants to exempt small banks and credit unions from a new consumer financial regulator part of the Wall Street overhaul.

Brownback is supporting an amendment that would carve out banks and credit unions with less than $10 billion in assets from the consumer regulator's rulemaking, examination and enforcement reach.

It is unclear if the amendment will come up for a vote.

"Everyone keeps recognizing and saying, small institutions like credit unions didn't cause the crisis...now the Senate has an opportunity to vote on that fact," said Dan Berger, executive vice president of the National Association of Federal Credit Unions (NAFCU). "We strongly prefer no arbitrary threshold line but this is a tremendous first step for Senators to vote to prevent additional regulatory burden costs on small institutions."

The first task for a new alliance of two market regulators is an investigation into possible factors last week that caused stocks to drop rapidly.

The Securities and Exchange Commission and the Commodity Futures Trading Commission announced Tuesday the formation of a joint panel that will provide recommendations for what happened May 6 along with examining emerging market issues. 

Next week, the Joint SEC-CFTC Advisory Committee on Emerging Regulatory Issues will examine preliminary results from the market free fall that sent stocks tumbling about 1,000 points last week. 

SEC Chairman Mary Schapiro and CFTC head Gary Gensler told a House panel today that the effort between their agencies has been "very collaborative" in the time before and since the market experienced an unusually large drop and quick recovery during trading last week. 

Regulators told a congressional panel Tuesday they are ruling nothing out as the cause for last week’s market free fall.