OVERNIGHT MONEY: Turning back to taxes

TUESDAY'S BIG STORY: 

Time for taxes again: This week, it looks like the Senate's turn to join in all the tax reform fun. 

Senate Finance Committee members are scheduled to huddle on Tuesday morning to discuss tax reform, after Chairman Max Baucus (D-Mont.) postponed the get-together last week amid GOP concerns. 

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Baucus had been hoping to release bipartisan discussion drafts on a range of tax reform topics in the coming weeks, including on the key area of international tax law.

But the chatter on K Street is that Finance will instead circulate as many three staff drafts this week, releases which will likely carry less weight than drafts that were signed on to by Baucus and the Finance Committee's top Republican, Sen. Orrin Hatch (R-Utah). Still, the drafts would help give at least a little more attention to the tax reform discussion in the Senate, after Baucus had originally sought to mark up legislation this fall.

K Street sources say they expect an international staff draft to drop Tuesday, and that staff drafts on tax administration and cost recovery could also be released this week. 

Lobbyists had earlier said that they expected any international draft from Baucus to propose higher tax rates on corporate income stashed offshore than a draft released in 2011 by House Ways and Means Chairman Dave Camp (R-Mich.)

Hatch said last week that the committee was still a long way off from finding an agreement on potential discussion drafts, and his office said he told Baucus that Republicans thought it best to hold off on discussion drafts until after the current budget conference is over. 

The House-Senate budget conference has a Dec. 13 deadline. But, at this point, conferees don't seem to be making much progress, and haven't scheduled any meetings for this week. 

Top House and Senate appropriators are calling for a budget deal — at least top-line spending levels for 2014 and 2015 — before the Thanksgiving holiday so they can start the process of working toward crafting a massive omnibus spending bill. 

The Utah Republican and other GOP senators on the panel have expressed concerns that moving forward with discussion drafts would just allow Sen. Patty Murray (D-Wash.), chairwoman of the Budget Committee, to latch on to potential revenue raisers for that conference.

For their part, Democrats have said that eliminating some tax breaks to help roll back the sequester would be far from a death knell for tax reform.

The Senate action comes a week after Camp acknowledged that he might not meet his deadline to mark up a tax reform bill this year, a marker he laid a year ago. An aide to Camp did say on a conference call Monday that the chairman might release draft legislation before January, according to someone on the call. 

 

WHAT ELSE WE'RE WATCHING

Virtual currency: A Senate Banking subcommittee will continue the virtual currency debate on Tuesday.

In a Monday hearing, federal law enforcement officials told a Senate panel that virtual currencies like bitcoin have legitimate uses and should not be banned.

They argued that existing law should be strong enough to stop criminal activity.

Jennifer Shasky Calvery, the director of the Treasury Department's Financial Crimes Enforcement Network, said law enforcement will inevitably worry about criminal abuses.

"But it's also important that we step back and recognize that innovation is a very important part of our economy," she told the Senate Homeland Security and Government Affairs Committee.

Bitcoins exist only online, and owners are mostly anonymous. But their value has been increasing recently with the hope that it could become an alternative to the dollar. 

"Virtual currencies, perhaps most notably bitcoin, have captured the imagination of some, struck fear among others and confused the heck out of many of us," said Sen. Tom Carper (D-Del.), the chairman of the committee.

Carper said Congress and federal officials should keep a close watch on virtual currencies. 

Disparate impact: A House Financial Services subcommittee will discuss on Tuesday the use of disparate impact, a contentious method used by the Justice Department to build discrimination cases, especially in housing and lending policy. 

Flood insurance: Another House Financial Services subpanel on Tuesday will talk to Craig Fugate, head of the Federal Emergency Management Agency, on the implementation of the National Flood Insurance Program. 

The National Association of Federal Credit Unions (NAFCU) expressed concerns in a letter to panel leaders on Monday about the program's scheduled premium increases starting this year. NAFCU wants the increases to be delayed until FEMA completes its affordability impact study outlined in the legislation and Congress reviews the findings. 

Business leader chat: President Obama and several other top White House officials will address The Wall Street Journal's CEO Council meeting on Tuesday. Treasury Secretary Jack Lew, Commerce Secretary Penny Pritzker and U.S. Trade Representative Michael Froman all will talk about top economic issues. In addition, House Budget Committee Chairman Paul Ryan (R-Wis.), Jim Yong Kim, president of the World Bank, and Lawrence Summers, a former top official in the Obama and Clinton White House, will speak. 

Bernanke chat: Federal Reserve Board Chairman Ben Bernanke will deliver remarks at the National Economists Club's dinner on Tuesday at the U.S. Chamber of Commerce. Bernanke's term is up at the end of the January and he is expected to be replaced by Janet Yellen, the current No. 2 at the Fed whose nomination is up for a vote on Thursday at the Senate Banking Committee. Bernanke and his colleagues have decided, for now, to continue pumping $85 billion in monthly stimulus into the economy. The economy's recovery has yet to reach a pace where they want to pull back. That is unlikely to happen until early next spring. 

 

LOOSE CHANGE

Stocks hit records: Stocks hit record highs on Monday before closing slightly under those milestones.

The Dow Jones industrial average cleared 16,000 for the first time, while the Standard & Poor's 500 index crossed 1,800, an all-time high.

Both indexes closed below their record-high levels.

The S&P 500 closed at 1,791 while the Dow finished at 15,976.

The yield on the 10-year Treasury note fell to 2.67 percent.

 

ECONOMIC INDICATORS

Employment cost index: The Labor Department will release third-quarter figures on the compensation costs for workers. Wages and salaries make up about 70 percent of compensation costs while benefits make up the remaining 30 percent.

 

WHAT YOU MIGHT HAVE MISSED

— Senate Banking to vote Thursday on Yellen

— Trade talks spur fears of unchecked drug prices

— Congressional Democrats press for details of foreclosure review program

— Biden pushes Congress to finish $8.2B port bill

— Home builder confidence held steady in November

— MF Global to pay $1.2 billion to former investors

— In spending, financial marketing trumps education

— Members urge adoption of House farm bill dairy provisions

— US Air, American select new stock symbol

 

Catch us on Twitter: @VickoftheHill, @peteschroeder, @elwasson and @berniebecker3

Tips and feedback, vneedham@thehill.com

 

This post was updated at 8:52 p.m.

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