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.”

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.

For the bulls and inflation hawks:

Home prices rose in July.

Toys"R"Us and Macy’s announce plans to increase hiring for the holidays.

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

For the bears and those worried about deflation:

Atlanta Fed President Dennis Lockhart warns of deflation risk.

Consumer confidence fell in September. Fox Business:

CEOs expect uptick in layoffs. The Hill:

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.

Republicans, centrist Dems block offshoring bill in Senate on Tuesday (as expected). 

China currency bill likely to pass House on Wednesday.

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.

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.

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."

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.

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."

Mike Bloomberg to address House Republicans on Thursday.

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.

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.

The full CBO report is here:

Don't forget the Bush tax cuts on investment income -- Nearly four dozen House Dem centrists urge extension of those, too.

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

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

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.

Weigel says Sen. Thune will have a hard time in 2012 GOP primaries because of his vote for TARP.

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.
Elizabeth Warren served as expert witness in lawsuit against credit card companies this year, according to financial disclosure forms.