Money in the Morning

Now what for the economy? -- With Congress’ bags packed for the campaign trail, all eyes are turning to the Fed for some sort of economic stimulus. WaPo’s Neil Irwin has a primer on the big questions the Fed faces if/when it decides to boost the recovery.

Irwin’s big four questions:
-How much quantitative easing?
-Shock-and-awe or dribs-and-drabs?
-Treasuries or mortgage-backed securities?
-Cut the interest rate on excess reserves?

“It is not a given that the Fed will take action at all at its the Nov. 2-3 meeting. If economic data come in surprisingly good over the coming weeks -- or inflation shows signs of rising -- the Fed may not intervene. But... [t]hese are the questions that have already started to occupy both officials within the Fed and the outside analysts who scrutinize their every move.” http://bit.ly/apoU4G

The latest forecasts by analysts and economic data are a mixed bag. The markets, which were up on Tuesday, took that to mean more Fed aid is coming. http://bit.ly/9sJnf3

For the bulls and inflation hawks:

Home prices rose in July. http://bit.ly/dvpdUn

Toys"R"Us and Macy’s announce plans to increase hiring for the holidays. http://nyti.ms/bhSBwa

Hedge fund manager John Paulson expects housing market bounceback but double-digit inflation and just 2 percent growth over next couple years. http://bit.ly/cwhI2P

For the bears and those worried about deflation:

Atlanta Fed President Dennis Lockhart warns of deflation risk. http://bit.ly/98GQUO

Consumer confidence fell in September. Fox Business: http://fxn.ws/bXHtbh

CEOs expect uptick in layoffs. The Hill: http://bit.ly/92TxNm

WEDNESDAY FINALE? -- Congress could be gone by this afternoon. The continuing resolution to make sure government keeps running through the Friday start of the fiscal year advanced in the Senate Tuesday and could come up for a final vote Wednesday. The House plans to take up the CR as soon as the Senate is done with it. http://bit.ly/a0gqgk

Republicans, centrist Dems block offshoring bill in Senate on Tuesday (as expected). http://wapo.st/9B7mUi 

China currency bill likely to pass House on Wednesday. http://nyti.ms/bQyUCZ

House vote on tax cuts still on the table, says Majority Leader Hoyer. "There's a possibility that we will," he told reporters Tuesday evening. http://bit.ly/dqnpRQ

Sen. Durbin hints at a recess appointment for OMB nominee Jack Lew, who’s being held up by Sen. Landrieu. She wants the administration to lift the Gulf drilling moratorium. http://bit.ly/9bFePi

Also Wednesday -- the WH fiscal commission at 9:30 a.m. holds its last public meeting before its final pow-wow on Dec. 1. Reuters hed: “Amid doubts, deficit panel eyes retirement, tax.” "Analysts are skeptical about the bipartisan group's ability to agree on a formula in an election year that would tilt Washington back into the black. ... Failure to meet this mandate could spook the bond markets, although some analysts believe such a credit event is unlikely as expectations for the panel have been low all along." http://bit.ly/cvlz0v

It's not quite Elmo and Katy Perry, but... The Frances Perkins Center questions the fiscal panel's focus on Social Security using cartoon avatars. http://bit.ly/aflwsB

NYT's David Leonhardt piles on the House GOP's "Pledge" for not being serious about the deficit. "... remember, when politicians tell you that they are opposed to tax increases, Medicare cuts, Social Security cuts and military cuts, they’re really saying that they are in favor of crippling deficits." http://nyti.ms/cbcBrp

Mike Bloomberg to address House Republicans on Thursday. http://bit.ly/cybeMY

DEBATE OF THE DAY: CBO's projection of tax cut effects

One CBO model shows that a permanent extension of all the Bush-era tax cuts would hurt the economy less than a permanent extension of just the cuts for those below the $200k/$250k brackets, notes National Review’s Josh Barro. http://bit.ly/dfSDtJ

Ezra Klein says the real takeaway from CBO’s model is that none of the cuts should be made permanent, because they would add too much debt and restrain growth. http://bit.ly/bNttbs

The full CBO report is here: http://cbo.gov/doc.cfm?index=11874

Don't forget the Bush tax cuts on investment income -- Nearly four dozen House Dem centrists urge extension of those, too. http://yhoo.it/9sjH2N

Larry Summers calls for more stimulus, says that last year’s $814 billion stimulus was actually smaller than what the administration wanted. Fiscal Times: http://bit.ly/deEvVm

WSJ/NBC Poll: Proportion of Americans blaming Obama for bad economy rises, but most still say he inherited it. http://bit.ly/c7ZR3P 

FINREG -- Bernanke and bank regulators to testify before Senate Banking Committee on Thursday, then will hold the first meeting of the new Financial Stability Oversight Committee on Friday. http://bit.ly/cD3jC2

Weigel says Sen. Thune will have a hard time in 2012 GOP primaries because of his vote for TARP. http://bit.ly/a04omp

Tying up loose ends... Chief Justice Roberts sells Pfizer stock so he can hear two upcoming cases on the drug maker. Both suits involve Pfizer liability. http://bit.ly/aCEw2O
 
Elizabeth Warren served as expert witness in lawsuit against credit card companies this year, according to financial disclosure forms. http://wapo.st/awbNwm