The head of the Social Security Administration testified Wednesday that cuts in the House-passed 2011 spending bill will affect the ability of his agency to provide benefits this year.

The Democratic head of the Senate Appropriations Committee seized on the testimony to blast the House bill and employ the “third rail” of American politics against it.

SSA Administrator Commissioner Michael Astrue testified that failing to receive $12 billion President Obama requested for the agency in fiscal 2011 means the agency will not be able to eliminate long backlogs in paying disability payments.

“Suddenly reducing funding halfway through the fiscal year could eliminate the progress we have made,” in doing so already, he said. Before 2007, many claimants were waiting up to 1,400 days to have a hearing on their disability claims, he testified. The SSA is now dealing with those waiting 775 days and longer.

He said that due to the fact appropriations bills were not passed last year, SSA has cut 3,500 employees this fiscal year and discontinued service at remote sites.

“I regret we may not be able to meet our commitments to the American people,” he said. "We are barely above the level where we need to furlough."

Tom Harkin, chairman of the Senate Appropriations Committee's Labor, Health and Human Services subcommittee said it was clear “adequate funding for the Social Security Administration to properly administer its program is at risk.”

New applications for mortgage grew 15.5 percent last week, driving hopes that the housing market might be beginning to dig itself out as the economy recovers.

The new numbers from the Mortgage Bankers Association (MBA) indicate the increase was the largest since June.

"Taking into account typical seasonal patterns, purchase applications rose to their highest level of the year last week. On an unadjusted basis, purchase application activity is the highest since last May," said Michael Fratantoni, MBA's Vice President of Research and Economics. "An improving job market is beginning to pave the way for an improving housing market."

A wide majority of the public prefers a bipartisan deal on a long-term federal spending bill over a government shutdown, a new poll found.



The poll, released Wednesday by Bloomberg News, found that 77 percent want Democrats and Republicans to find a compromise rather than allow a federal shutdown.

Additionally, 45 percent think Republicans would benefit more, in terms of their legislative agenda, from a compromise than by allowing a shutdown.

Panel co-chairman Alan Simpson told the Senate Budget Committee that both plans are “light” budget proposals.

Alan Simpson and Erskine Bowles – the co-chairs of President Obama’s fiscal commission – found some receptive ears for their panel’s plan to overhaul the nation’s tax code during a Capitol Hill appearance on Tuesday. 

Sen. Kent Conrad (D-N.D.), the chairman of the Budget Committee and a member of the debt panel, complimented the commission’s plan that would, among other things, reduce tax rates, tax capital gains and dividends as ordinary income and repeal the Alternative Minimum Tax. 

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Wednesday's Big Story:

After a day of threats of 1 a.m. votes, charges of reneged agreements and a host of other senatorial intrigue, here’s where we stand: the Senate is now scheduled to vote on Wednesday on both the House GOP spending measure for FY 2011 that cuts an additional $57 billion this year and the Democratic bill that cuts $6.5 billion more.

House Republicans are pushing a series of bills that would eliminate relief programs that they say are costly and ineffective.

Senate Majority Leader Harry Reid (D-Nev.) suggested Tuesday that he prefers the pay-for included in the House version of a 1099 repeal that many House Democrats oppose. 

"The 1099 is something we're going to look at," Reid told reporters Tuesday. "Me, personally, I like the House pay-for better than ours, so we'll have to see."

The debate isn't whether to repeal the provision, which requires businesses to file 1099 forms to the IRS for any vendor purchases of $600 or more, it's how to pay for it. 

Reps. Scott Garrett (R-N.J.) and Carolyn Maloney (D-N.Y.) have introduced a bill that would encourage American financial markets to embrace covered bonds as an alternative way

The legislation comes as House Republicans are pushing hard to force the government out of the nation's housing market, starting with the dissolution of government-sponsored enterprises Fannie Mae and Freddie Mac. 

Garrett, who chairs the House Financial Services Committee's subcommittee overseeing Fannie and Freddie, said covered bonds can give markets a new vehicle for securitizing residential mortgages.