Mortgage applications decreased last week despite record-low loan rates but the purchase index was up 6.3 percent.

House Ways and Means Committee ranking member Dave Camp (R-Mich.) on Wednesday supported the call by House Minority Leader John Boehner (R-Ohio) to continue the George W. Bush-era tax cuts for the next two years.

Senate Finance ranking member Chuck Grassley (R-Iowa) offered tepid support for the tax proposals President Obama is expected to outline later Wednesday. 

"It's the old saying, the devil is in the details," Grassley said in prepared remarks. "Business investment incentives sound fine, but will they be paid for in a way that hurts job creation?" 

OBAMA TO PUSH BACK ON TAX CUT EXTENSION FOR WEALTHY

WaPo lede: “President Obama will argue personally Wednesday against extending the Bush-era income tax cuts for the nation's wealthiest families even for a year or two, White House officials said Tuesday — a message aimed at wavering Democrats who have been swayed by arguments that the economy is too weak to raise anyone's taxes...

“The officials added that Obama would not threaten to veto any compromise which extends the upper-bracket cuts, a position that has gained ground in recent weeks among moderates in both the House and Senate. But congressional sources said they were told to expect the president to try to stiffen Democratic spines in expectation of a showdown over income tax rates before the November midterm elections.” http://bit.ly/dBFRAX

The president will also use his speech in Cleveland to call for a slew of new measures to boost the economy. His proposals will cost about $180 billion over the next decade.

What he’s proposing — a six-year transportation act reauthorization plus a $50 billion infusion for transportation projects; an expansion and permanent extension of the research and development tax credit (cost: $100 billion); and an extension of the bonus depreciation for businesses that buy new equipment through 2011 ($30 billion).

The White House is looking for bipartisan backing, but any action isn’t coming soon, writes WSJ’s Jonathan Weisman. The administration has reached out to Sen. George Voinovich (R-Ohio), a fan of infrastructure projects, about the president’s infrastructure plan and the Business Roundtable on the business tax breaks. http://bit.ly/cJ182Y

Weisman finds the response from business lobbyists has been “tepid”:

“Bruce Josten, the chief lobbyist for the U.S. Chamber of Commerce, said that businesses were not going to invest in new plants and equipment if managers saw no consumer demand for their products, no matter how generous the tax incentive was.

“Mr. Josten added that because Democrats insisted on offsetting the cost to the Treasury of any tax cuts, the Chamber could not back any White House proposal before seeing how it would be paid for.”

Pundit pre-game report

Former Bush White House economist Greg Mankiw says letting businesses write-off investments is “a small step in the right direction.” http://bit.ly/bqHzGA

Kudlow says the write-offs are the right idea, but the infrastructure spending is a “laughing stock.” http://bit.ly/bhyueu

Krugman says the infrastructure spending is a good idea but too small and won’t pass. http://nyti.ms/bIv7TC

Indiana Gov. Mitch Daniels (R) calls for a payroll tax holiday, plus some other moves already backed by the Obama administration (tax breaks for businesses, enhanced presidential rescission powers) or Republicans (rescinding TARP and stimulus funds, freezing new regulations). http://bit.ly/dhZE1v

Obama plan might miss most important mark: Jobs. Reuters analysis: http://bit.ly/bJj2OL

More from Catherine Rampell. http://nyti.ms/9BRtiX

Nugget from NYT’s pre-Obama speech story: WH considered a payroll tax holiday, but dismissed it because it would reduce Social Security and Medicare revenues. http://nyti.ms/cNHtx6

The president’s speech is set for 2:10 p.m at Cuyahoga Community College.

From the WH daily guidance:  “The President will update the American people on the state of the economy, talk about the progress we have made, and discuss some targeted proposals to keep the economy growing including extending tax cuts for the middle class, and investing in the areas of our economy where the potential for job growth is greatest. It took years to create our economic problems, and it’ll take more time than any of us would like to fully repair the damage. There are no silver bullets and anyone who is promising them is not being straight with the American people. But there are some ideas that will help the economy and help American families that are hurting and those proposals will be a part of the President’s remarks. Speaking in the city where Minority Leader Boehner recently detailed the Republican economic agenda, the President will lay out the choice between his ideas and the failed policies and failed philosophy that led us into this mess.”

Midterm forecast: Republicans will get more votes than Democrats in the midterms, but it’s going to be closer than polls suggest, according to Yale economist Ray Fair. His model predicts Democrats will get 49.3 percent of the national vote in November. The formula he used has been accurate in forecasting presidential races, getting only three elections wrong since 1916. http://bit.ly/b2Mxgy

Stress test fallout: Eurozone fears send investors to havens. FT: http://bit.ly/cmyTqK

Also: NFL wants stress tests for their teams. CNBC: http://bit.ly/demb7O

Deficit commission debate: Glenn Greenwald says the panel has no accountability as it goes after programs that help ordinary Americans. http://bit.ly/ajMtWb

Daniel Indiviglio says it’s not as strong or as secretive as Greenwald thinks it is. http://bit.ly/cSo7tu

The Senate Banking Committee will hold a hearing this month on creating a fund that would help pay for transportation infrastructure projects. 

Panel Chairman Chris Dodd (D-Conn.) announced the Sept. 21 hearing that will explore the need for a National Infrastructure Bank that would providing funding for national and regional projects for roads, bridges, transit and water systems.

"A significant investment in our ailing national infrastructure will create jobs, boost long-term economic growth, and improve safety," Dodd said in a statement Tuesday. "With a National Infrastructure Bank we could leverage state, local and private funds to ensure our infrastructure systems are equipped to meet the demands of the 21st Century."

Dodd originally introduced the National Infrastructure Bank Act in 2007 with former Republican Sen. Chuck Hagel (Neb.), shortly before the bridge collapse in Minneapolis. 

The $50 billion for new infrastructure projects proposed by President Obama is unlikely to pass Congress before November's election, said House Majority Leader Steny Hoyer (D-Md.). 

"We'll be looking at it," he told reporters. "[But] I think it will be very difficult to get a very broad agenda through."

The Senate Budget Committee will hold a hearing on Jacob Lew's nomination to be the next White House budget director on Thursday, Sept. 16.

House Majority Leader Steny Hoyer (D-Md.) on Tuesday reiterated his opposition to continuing tax cuts for the wealthy that were enacted by President George W. Bush while continuing those measures that benefit the middle class. 

Eliminating the estate tax would be a "major mistake" and "would only benefit the wealthiest estates in the country," a policy analyst said Tuesday. 

"Our country is facing very large budget deficits," said Chuck Marr, the director of federal tax policy for the left-leaning Center for Budget and Policy Priorities in a blog post. "If we repeal the estate tax, deficits and debt will go up even more, pressure will grow to cut health care, education, and other key programs that people rely on. Sacrificing these priorities in order to give a tax cut to people who already are extremely wealthy is not a wise trade-off.

"We need a robust estate tax, and at a minimum we should keep the law as it was in 2009, which essentially exempted more than 99 percent of estates," Marr wrote.

Before Congress passed legislation in 2001, the exemption was a $1 million per-person tax-free exemption. The legislation gradually raised the exemption of $3.5 million per person and $7 million for a couple with a rate of 45 percent in 2009. The tax was repealed this year. 

Lawmakers have been trying to work out an agreement on the estate tax for 2011 but have yet to reach an accord.