OVERNIGHT MONEY: Back to the drawing board for the CR, supercommittee talks taxes

THURSDAY'S BIG STORY:

The suspense builds as the House Republican leadership heads back to the drawing board and may take another shot on Thursday at passing a continuing resolution to keep the government running. 

Wednesday's surprising defeat of the first version of the $1.043 trillion stopgap measure at the hands of Democrats and tea party Republicans is sending lawmakers scrambling to make changes to appease concerns. All told, 48 Republican broke with GOP leaders and only six Democrats voted for the measure.

Rejection of the bill could mean that Congress works into next week -- a scheduled recess -- inching closer to the start of the new fiscal year on Oct. 1 and risking a government shutdown, The Hill's Pete Kasperowicz reports. 

Democratic concerns with the GOP proposal were three-fold. First, they contend the $3.7 billion in disaster relief is insufficient to address the series of natural disasters that have hit the country in recent weeks. Second, they oppose the very concept of offsetting emergency funding, saying it sets a dangerous precedent that could delay needed relief for victims of future disasters. And third, they object to the GOP's particular offset, which would gut a program designed to bolster fuel efficiency technologies for the nation's auto manufacturers.

Conservative Republicans were unhappy with the spending rates set by the measure, which are in line with levels set by last month's budget and debt agreement with President Obama. 

It also raises the possibility that the government's disaster relief fund could run out of money early next week -- the Federal Emergency Management Agency has only a few days' worth of funding left. The agency has put other projects on hold to address the mounting number of emergencies throughout the country this year. 

The continuing resolution would keep the government chugging along through Nov. 18, giving lawmakers more time to try to reach agreement on the 12 unfinished spending bills.

On the other side of the Capitol a Senate panel agreed to provide $400 million to fund Community Development Block Grants (CDBG) to provide additional funding for disaster relief.

Senate Majority Leader Harry Reid (D-Nev.) wants the $7 billion FEMA funding measure passed by his chamber to be attached to the CR. 

Tax man cometh: With the parties still vastly divided on taxes, Thomas Barthold, the Joint Committee on Taxation’s chief of staff, is set to address the supercommittee on their options in dealing with the tax code.

Observers who remember the last successful overhaul of the tax code, in 1986, advise that the 12 lawmakers on the supercommittee don’t have nearly enough time to do a full-scale reform themselves. But several top officials, like President Obama and House Speaker John Boehner (R-Ohio), have called on the panel to at least lay a groundwork for reform, with the details to be filled in later.

But, as illustrated by Obama’s new deficit-reduction plan, and the response to it, the two parties still have different conceptions of how a tax reform package should look. The president wants to tax reform to reduced deficits by $1.5 trillion right away, while GOP lawmakers continue to rail against tax increases.

WHAT ELSE TO WATCH FOR:

Considering Krueger: Princeton economist Alan Krueger, the president's choice to lead his economic advisors, will step into the Senate Banking Committee spotlight on Thursday, as lawmakers mull his nomination. President Obama tapped Krueger, who previously served in his Treasury Department, to head his Council of Economic Advisers, but is unclear how strong the GOP headwind against the selection will be, especially with the 2012 election around the corner. Krueger will be considered alongside the nominations of David Montoya to be inspector general of the Department of Housing and Urban Development and Cyrus Amir-Mokri to be an assistant secretary of the Treasury.

Later in the day, a subcommittee will hold a hearing to discuss the European debt crisis, and what it means for the U.S. and global economy.

SEC under a microscope: David Becker is in for a long Thursday. The former general counsel for the Securities and Exchange Commission (SEC) is the subject of a scathing new report from the agency's inspector general that found Becker had a conflict of interest while working on the case of notorious Ponzi schemer Bernie Madoff. Specifically, Becker helped craft the SEC's response to Madoff, even though those efforts could have directly affected his personal finances, since he and his brothers inherited funds that had once been invested with Madoff. Those findings have been referred to the Justice Department to see if Becker broke any criminal conflict-of-interest laws.

Now, Becker will appear before a joint hearing held by the House Financial Services and Oversight Committees to discuss that work and the report. 

SEC Chairman Mary Schapiro, who previously said Becker should have recused himself from that work and SEC IG David Kotz will also be on hand to testify.

Geithner watch: Treasury Secretary Timothy Geithner will attend a summit on the global economy in the morning before heading to the State Department for a U.S-India forum with a few chief executives. U.S. Trade Representative Ron Kirk also is scheduled to hit the forum along with Deputy National Security Adviser Michael Froman, Planning Commission of India Deputy Chairman Montek Singh and Co-Chairmen Ratan Tata and David Cote; Indian Finance Minister Pranab Mukherje; Indian Commerce and Industry Minister Anand Sharma; and Robert Hormats, undersecretary of State for Economics, Energy and Agricultural Affairs.  

Presidential daybook: 

President Obama will sell his $447 billion jobs plan to the Brent Spence bridge in Cincinnati as a way to illustrate the urgent need for an injection of infrastructure spending to create jobs and repair the nation's aging infrastructure. 

The hearing roundup:

The House Financial Services Committee meets to discuss the availability of credit for consumers with several representatives from federal agencies and banking groups. 

The House Ways and Means Select Revenue Measures Subcommittee and Oversight Subcommittee hold a joint hearing energy tax policy and tax reform and will chat with Treasury Inspector General for Tax Administration J. Russell George, Richard Byrd Jr., commissioner of the Internal Revenue Service's Wage and Investment Division among other think tank and trade association representatives. 

The House Budget Committee continues exploring problems with the federal budget with former Sen. Phil Gramm, former chairman of the Senate Banking, Housing, and Urban Affairs Committee, and vice chairman of investment bank UBS AG along with former Rep. Jim Nussle, who also served as a chairman of the House Budget Committee and at the White House budget office. 

Also ...

Several lawmakers will hold a roundtable discussion to address the role of minority-owned businesses in eliminating the wealth gap, including Senate Small Business Chairwoman Mary Landrieu (D-La.); Sen. Ben Cardin (D-Md.), Rep. Chaka Fattah (D-Pa.), Rep. Yvette Clarke (D-N.Y),  and Rep. Cedric Richmond (D-La.).

Economic indicators:

Initial claims: The Department of Labor releases its weekly filings for jobless benefits. Claims have been trending up recently as the economy struggles to add jobs and bring down the unemployment rate. 

FHFA Housing Price Index: The Federal Housing Finance Agency will release its measure of prices for July on single-family homes.  

Leading indicators: The Conference Board will release a batch of previously announced economic indicators: new orders, jobless claims, money supply, average workweek, building permits and stock prices. 

• Mortgage rates: Freddie Mac will announce the interest rates on fixed-rate mortgages. 

BREAKING WEDNESDAY:

More stimulus: The Federal Reserve is going to try again to provide a spark to the floundering economy, ignoring GOP pressure to avoid more stimulus. The Fed plans to reorganize its portfolio and attempt to lower long-term interest rates. In the next nine months, the Fed will buy $400 billion of longer term securities while selling off the same amount in short term bonds, The Hill's Peter Schroeder reports. 

WHAT YOU MIGHT HAVE MISSED:

• Existing home sales show a nice increase

A report finds an IRS volunteer program often missed the mark. 

• Hoyer says Republicans have the 'right' to pressure the Fed.

Mortgage applications increased, too. 

• Durbin hits GOP for Fed letter. 

Frank will reject Ponzi poker haul.

• House lacks effective internal financial reporting.

• Business groups oppose China currency legislation.

For tips and feedback email vneedham@thehill.com