OVERNIGHT MONEY: The blame game

by Bernie Becker, Erik Wasson and Peter Schroeder - 01/26/11 11:26 PM ET

However, the report will also carry a partisan tint. The official version being released earned the approval of just the six Democratic members of the panel, while the four Republicans plan to dissent from the report’s findings.

What Else to Watch For:

Budget Chat: A day after a Congressional Budget Office estimate put this fiscal year’s deficit at $1.5 trillion, Douglas Elmendorf, the office’s director, will discuss those projections with the Senate Budget Committee.

The CBO’s projection for this fiscal year would mean the growth of the federal debt would have widened this year, as the budget deficit was $1.3 trillion in 2010. The budget office — which makes its projections under the assumption that current laws don’t change — also estimated that unemployment would be at 8.2 percent in the fourth quarter of 2012 and that, at the current rate, the deficit would be 77 percent of gross domestic product in 2021.

Also on the Senate side…: In an important development for technology industries, the Senate Judiciary Committee will hold a markup on legislation that would radically transform the U.S. patent system from a first-to-invent to a first-to-file system. The bill, sponsored by the panel’s chairman, Sen. Patrick Leahy (D-Vt.), is aimed at reducing what Leahy calls runaway damages awarded in patent lawsuits.

And the Senate Armed Services Committee will hold a hearing on a Pentagon screw-up that might affect the largest military contract out for bids. The Defense Department is looking to replace its aging fleet of aerial refueling tankers — a contract that could be worth upward of $100 billion. EADS and Boeing are in competition for the contract, but, late last year, Pentagon functionaries accidentally sent Boeing secret bid information from EADS. The Pentagon awarded the contract in 2008 to an EADS-Northrop Grumman joint bid in 2008, but Boeing challenged the award and it was overturned.

Economic Indicators:

The Commerce Department is set to drop data on durable goods orders for December.
The Labor Department is expected to release weekly jobless claims, as well as mass layoff figures for December.
Freddie Mac is slated to outline weekly mortgage rates.
And the National Association of Realtors is scheduled to circulate an index of pending home sales for November.

Breaking Wednesday:

Staying the Course: The Federal Reserve will continue to move forward with its so-called QE2 — the plan to buy back $600 billion of Treasury bonds, The Hill’s Peter Schroeder reports.

The Federal Open Market Committee, the Fed’s policymaking body, decided unanimously to stick with its initiative to help the economy, even as this round of quantitative easing has come under criticism from Republicans. Prominent lawmakers such as Reps. Mike Pence (R-Ind.) and Paul Ryan (R-Wis.) have even suggested limiting the Fed’s focus to just price controls.

The belt’s getting tighter: Bumping up the amount of good behavior time for federal prison inmates. Eliminating a gang intelligence program. Keeping more of the proceeds from confiscated property.

The Wall Street Journal reports on cuts for the Justice Department that could be included in the president’s upcoming budget. The department itself has already cut back, doing away, for instance, with a U.S. Marshals program that urges fugitives to turn themselves in for minor crimes.

What You Might Have Missed:

On the Money’s Wednesday:

Earmarks? Dick Durbin says the Senate is done with those.
Max Baucus wanted President Obama to give a timeline for the Colombia and Panama trade deals.
Orrin Hatch and John Cornyn dropped a balanced budget amendment.
Doug Elmendorf gets four more years.
Kent Conrad says the GOP plan for the debt ceiling is no good … and that Republicans need to take the lead on the continuing resolution.
Revenue-neutral tax reform? Try revenue-positive, a labor-linked group says.
And the stock market hit 12k for the first time since 2008. (And then fell back.)