Money in the Morning

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:

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. 

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

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.

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."

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.