OVERNIGHT FINANCE: House panel pushes tax breaks

TOMORROW STARTS TONIGHT: There were no surprises this morning at the House Ways and Means markup, where the committee approved six of the 50 tax breaks that expired in 2013 — known as "extenders" in wonk world. The House GOP pushed through a $287 billion tax break for business write-offs on a 23-11 party line vote. 

Two points:

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1.) Democrats on the Committee are opposing the tax breaks because of deficit concerns.

2.) All eyes now move to the Senate. Republicans have blocked an extenders bill in the Senate because they don't like Democrats' handling of amendments and floor procedure. But in a mid-term election year, will Senate Republicans really risk blocking tax breaks? The Hill's Bernie Becker has the gamer from this morning's hearing: http://bit.ly/1tUQMmG.

THIS IS OVERNIGHT FINANCE, where we’ve almost made it to the weekend. Tweet: @kevcirilli. Email: kcirilli@thehill.com. Back to work...

ECONOMISTS GOT IT WRONG: GDP SHRANK WORSE THAN EXPECTED. The U.S. economy shrank 1 percent last quarter, the Commerce Department said today. That’s double the amount of shrinkage all you wonks and economists predicted.

What gives? Most are blaming the wacky winter weather, while others pointed to the lackluster housing recovery.

WHAT’S BAD IS GOOD? Some economists, including Jason Furman at the White House, are pushing that the shrinkage is actually a good thing. They’re pointing to data showing a decline in inventories and an increase in consumer spending.

—Put simply: Businesses couldn’t meet consumer demand, and now will have to boost spending in Q2.

We shall wait and see...

FIRST LOOK – BOUSTANY TO CONGRESS: ACT ON TRADE. Rep. Charles Boustany (R-Louis.) will deliver a speech Friday at the American Enterprise Institute, renewing a push for Congress to grant Obama trade promotion authority (TPA).

“There are Democrats who support trade and believe the TPA is a good bill but will not sign on or encourage their colleagues to support it without having the political cover to go against the party line,” Boustany will say, according to prepared remarks. “Until the White House becomes serious about trade, the TPA bill will not move forward.”

The speech will also spark speculation that Boustany is positioning himself to be chairman of the House Ways and Means Trade subcommittee.

—Back story: Senate Majority Leader Harry Reid (D-Nev.) didn’t grant floor time for a trade bill that former Senate Finance Committee Chairman Max Baucus (D-Mont.) saw through with bipartisan support. New Finance Committee Chairman Ron Wyden (D-Ore.) has also signaled that he will not fast track the Baucus’ bill.

What the bill does: It gives the president more powers to conduct trade deals without Congressional approval, something Reid has opposed in the past. The issue has put the Senate majority leader at odds with President Obama.

SPORTS BLINK – GOLDMAN BETS ON BRAZIL FOR WORLD CUP. The economists over at Goldman picked host-country Brazil to win the upcoming World Cup. Read the 60-page, detailed analysis here: http://bit.ly/1kJViRQ.

—CHEAP SHOT, via Fox News Latino’s online story: “After betting – and profiting on the subprime mortgage crisis – Goldman Sachs decided it was time to start betting on sports, particularly the World Cup.” http://bit.ly/1pBReUs.

QUOTABLE: Former Reagan economic adviser Arthur B. Laffer at Heritage earlier today, on Jon Corzine, whom he taught at the University of Chicago: “He was a C-student. And with some of the recent disclosures of MF Global – I’m not even sure he earned a C.”

Corzine, the former Democratic governor of New Jersey, was forced to resign from MF Global in 2011 after the brokerage firm collapsed. 

ISSA BLASTS DOJ ON ‘OPERATION CHOKE POINT.’ “House Republicans are accusing the Justice Department of pushing banks to cut ties with legitimate businesses operating in unsavory areas.

“In a new report, the House Oversight Committee blasted the Justice Department for its ‘Operation Choke Point.’ The secretive initiative, begun in 2013, is aimed at pushing banks to shut off services to legally questionable fields as a way of stifling fraud.

“But Chairman Darrell Issa (R-Calif.) and other panel Republicans say the plan forces banks to ‘act as the moral arbiters and policemen of the commercial world.’ They called on the Justice Department to scrap the program, saying it is locking entirely legal businesses out of banking services due to government pressure.” Story: http://bit.ly/1hCXEOa.  Report: http://1.usa.gov/1mM6GNf.

—WHY THIS MATTERS: If Issa can inject “Operation Choke Point” into the national political debate, it could be a headache for Democrats in a mid-term year. OCP fits nicely into GOPers’ claims that agencies like the IRS and the Consumer Financial Protection Bureau grossly overstep their powers and hinder economic growth.

But is Issa’s strategy working?

DOJ DEFENDS ‘OPERATION CHOKE POINT.’ Justice Department officials are hitting back. They’re claiming that the financial firms they’ve put out of business were breaking the law and perpetuating consumer fraud.

"When financial institutions choose to process transactions, even though they know the transactions are fraudulent or are willfully ignorant of that fact, they are breaking federal law and we will not hesitate to hold them accountable," DOJ spokeswoman told Emily Stephenson forReuters.

DEFEATED: HOUSE BILL THAT NIXED COMMERCE AGENCY. Cristina Marcos reports for The Hill: "The House on Wednesday defeated a proposal backed by the Club for Growth that would defund the Economic Development Administration." http://bit.ly/1mMrvbq

PAGING BILL ACKMAN: HOSTILE TAKEOVERS SOAR. Olivia Oran for Reuters: “Hostile and unsolicited mergers and acquisitions so far this year has accounted for about 7 percent of announced worldwide dealmaking, the most since 2007, according to Thomson Reuters data.” http://reut.rs/1jy3iRt

THE HONEYMOON IS OVER FOR DFA's C.D. Democracy For America's comms director Neil Sroka was on his honeymoon on the island of Ko Samui in Thailand during the military coup. 

He's back in the U.S. safe and sound, telling OVERNIGHT FINANCE: "While it was sad to see a country filled with such amazingly kind people taken over by the military, as a tourist honeymooning in Thailand for the last two weeks, the coup had almost no impact on our day-to-day experience of the country... honestly, the coup really didn't impact my wife and I at all.

"Other than the night markets closing early for the mandatory 10 p.m. curfew and most cable news channels being blocked, my wife and I might not have even known something had happened if we weren't reading the newspapers."

Neil is married to Christine Jacobs, communications director for the governance studies program at Brookings.

Welcome back, Neil. 

THE BOTTOM LINE — DOES FED BALANCE SHEET MATTER? Harvard economic historian Niall Ferguson is out with a new study this week arguing that the Fed’s soaring balance sheet doesn’t really matter.

Ferguson argues that central banks around the world had seen their balance sheets shrink as a percentage of GDP during the lead-up to the 2008 financial crisis.

“Relative to the size of the financial sector, moreover, central bank balance sheets had shrunk dramatically in the three decades preceding the global financial crisis. By that yardstick, their recent expansion partly marks a return to earlier levels.

Conservatives have been pouncing on the central bank for months, particularly as it begins easing off its economic stimulus policies. The Fed’s balance sheet exceeds $4 trillion. In 2007, the Fed’s balance was $870 billion. Full study: http://bit.ly/1polGUN.

FIRST LOOK: PETRI TO PUSH FOR STUDENT LOAN DEFAULT REFORM. Rep. Tom Petri (R-Wis.) will keynote at The American Bankruptcy Institute (ABI) tomorrow at The Georgetown University Law Center.

The veteran GOP lawmaker will tout his student loan proposal that would link student loan payments to income. Read the bill: HR1716. It’s failed to gain much traction in the past. Register for the Student Debt Symposium here.

NOTABLE: Reps. Jared Polis (D-Colo.) and Brad Schneider (D-Ill.) joined Thomas A. Stewart, executive director of the National Center for the Middle Market (a partnership of GE Capital and OSUs Fisher College Business), on the Hill earlier today. 

Polis and Schneider are teaming up with Reps. Steve Stivers (R-Ohio) and Tom Rice (R-S.C.) as part of The Congressional Caucus for Middle Market Growth, emphasizing the 3 percent of businesses that make the U.S. middle market but are responsible for a third of U.S. private sector jobs.

They haven't pushed for legislation -- yet.

ON-TAP FOR TOMORROW: House Appropriations FY2015 Defense markup at 8:30 a.m.... Rep. Ami Bera (D-Calif.) talks India’s economy at 8:30 a.m. in the Capitol... Incoming Cleveland Fed chief Loretta Mester speaks at 12:30 p.m.... Richmond Fed President Jeffrey Lacker speaks at 2 p.m.... Philly Fed President Charles Plosser speaks are 5 p.m.

MORE FROM THE HILL’s FINANCE TEAM:

—Pending home sales up for second straight month: http://bit.ly/SiLhk0

—Senate panel to move on terrorism insurance extension: http://bit.ly/RHrYjG

—Report: Justice eying $10B bank penalty: http://bit.ly/1ozDHiK

—Panel defies first lady on school lunch standards: http://bit.ly/1jy5YP5

CONNECT WITH THE HILL’s FINANCE TEAM – Write us with tips, suggestions and news: vneedham@thehill.com; pschroeder@thehill.com; ewasson@thehill.com; bbecker@thehill.com; kcirilli@thehill.com.

—Follow us Twitter: @VickofTheHill; @PeteSchroeder; @elwasson; @BernieBecker3; and @kevcirilli.

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