OVERNIGHT MONEY: Debt blame game

THURSDAY’S BIG STORY:

Doug Elmendorf, the chairman of the Congressional Budget Office, is scheduled to discuss his office’s new (and dire) picture of the nation’s long-term debt with the House Budget Committee tomorrow. 

The CBO’s outlook presented two possible forecasts, both of which showed the nation’s finances deteriorating over the next quarter century. In the more likely scenario, the Bush tax rates and rising Medicare payments to doctors continue, with the federal debt reaching 109 percent of GDP by 2023 and approaching 190 percent in 2035.

At Thursday’s hearing, Republicans on House Budget, including the dozen or so hard-line GOP freshmen, will likely go scold Democrats for not putting forth a budget alternative that would cut entitlement costs. For their part, Democrats are sure to point to the Bush tax cuts, and their role in the current fiscal situation.

All this CBO talk will go down as the Biden deficit/debt-ceiling talks enter their third straight day of meetings, with that self-imposed July 1 deadline looming. 

So far, participants have been extraordinarily tight-lipped about the talks, although what they have said has been on cuts – and not the stimulus spending being sought by Senate Democrats.

WHAT ELSE TO WATCH FOR:

Watch out for some fireworks: Political ones, at least. The House Appropriations Committee is set to mark up its 2012 spending bill for financial services and general government tomorrow. And beyond slashing nearly $2 billion from last year’s version, the measure also aims to lasso in the Consumer Financial Protection Bureau’s (CFPB) budget by bringing it under the control of appropriators. 

As it stands, the CFPB is set to get its cash from the Federal Reserve. Consumer groups have blasted the proposal as an attempt to kneecap the agency.

The appropriations measure also would block hikes to the Securities and Exchange Commission that President Obama requested in his 2012 budget to ease the implementation of Dodd-Frank. And a handful of national advocacy groups are crying foul over policy riders tucked in the measure that affect the District of Columbia, including one restricting the use of funds to fund abortions.

On the floor: Sen. Jim DeMint’s (R-S.C.) office is telling folks to stay tuned for a vote that would limit the IMF’s power to use American funds in bailouts of countries like Greece.

A nod to Healthwatch: The Senate Finance Committee is set to focus Thursday on the issue of Medicare and Medicaid and the deficit, giving Deval Patrick, Massachusetts’s Democratic governor, the chance to tout the success of RomneyCare (ObamneyCare?) in his state. 

On the other side of the ideological spectrum, Douglas Holtz-Eakin, the president of the conservative American Action Forum and a former director of the Congressional Budget Office, gets to sell the GOP approach of “premium support” for Medicare recipients.

{mosads}On that note: The liberal Center on Budget and Policy Priorities will hold a call with Peter Orszag, the former director of the Office of Management and Budget, on other ways to get healthcare savings.

One step closer?: Commerce Secretary Gary Locke’s nomination to be ambassador to China is set to be considered by the Senate Foreign Relations Committee. (As you may have heard, John Bryson, Locke’s would-be replacement, has a set of congressional roadblocks to worry about.)

And speaking of China, former Treasury Secretary Henry Paulson – a.k.a., William Hurt in “Too Big to Fail” – has signed on to write a book about the U.S.-China economic relationship. 

Your day in FinServ: A House Financial Services subcommittee will spend its morning discussing a measure to reform the Section 8 housing program, which provides voucher assistance to low-income people.

And in the afternoon, Rep. Ron Paul (R-Texas) will go mining for information about the state of the nation’s gold reserves from his spot as chair of another FinServ panel tomorrow. Specifically, he’ll be asking Treasury and GAO officials about the transparency of the nation’s gold reserves and how the government oversees said holdings.

A quick Ron Paul tangent: Rep. Barney Frank (D-Mass.) is scheduled to discuss his legislation, with the Texas Republican, to get the federal government out of marijuana policy in a Thursday conference call. 

Back to Banking: Senate Banking is scheduled to host a hearing on the National Flood Insurance Program — its second — as lawmakers are engaged in an effort to reauthorize the program. The program, which supplies insurance nationwide, is set to expire in September, and FinServ has already passed a measure reupping it.

Farming without pork?: The Senate Agriculture Committee on Thursday is expected to discuss ways to whip the farm bill into shape. So stay tuned for clues on how that longtime home for all sorts of pork products fares in the era of deficit-targeting.

Changing the view: Sen. Tom Coburn not only sits down as a witness tomorrow – he does so in a totally different chamber. The Oklahoma Republican returns to his old stomping grounds to discuss federal grants with a House Oversight subcommittee.

Not to be outdone, a quartet of senators – Pat Roberts (R-Kan.), Olympia Snowe (R-Maine.), David Vitter (R-La.) and Mark Warner (D-Va.) – are set to give their two cents at a Senate Homeland Security hearing on government regulations. Cass Sunstein, the administration’s top regulatory voice, is also set to weigh in during a separate panel.

The hearing roundup:

— Senate Health, Education, Labor & Pensions is set to dive into the economic debate tomorrow, with a hearing devoted to the financial struggles of the middle class.

— A House Ways and Means subcommittee continues the panel’s deep look into the need for tax reform, this time with a concentration on spurring foreign investment. Rep. Dave Camp (R-Mich.), the full committee chairman, this week expressed a sort of (very) cautious optimism about the chances to overhaul the tax code this Congress.

— Another Ways and Means subcommittee is expected to look into Social Security’s finances – as some Democrats attempt to draw the line in the sand on the entitlement program, while others in the party push to continue using a Social Security tax holiday to stimulate the economy. 

Economic indicators:

— For the latest peek at where the economy stands, the Labor Department is set to unveil the latest weekly figures on initial unemployment claims.

— And Commerce releases new home sales for May, with the early forecast calling for a lower figure than April. 

BREAKING WEDNESDAY:

Bernanke speaks: And confirms that, yes, the economy’s hit a rough patch. The Federal Reserve downgraded its economic growth estimate to between 2.7 percent and 2.9 percent on Wednesday, with Ben Bernanke, the central bank’s chairman, adding that unemployment is expected to drop at a “painfully slow” rate. 

Our Peter Schroeder has more details on the second Bernanke news conference of its kind. 

All over but the counting: It’s Christine Lagarde at the IMF, the Wall Street Journal reports. 

Bipartisanship? In Congress?: So it is. Forty-five members of the House Financial Services Committee on Wednesday voted for legislation that would craft a market for covered bonds, something the White House is also behind. 

WHAT ELSE TO WATCH FOR:

On the Money’s Wednesday:

— Strange bedfellows? Evan Bayh and Andy Card get ready to hit the road.

— Darrell Issa to Elijah Cummings: You haven’t been so helpful on foreclosures.

— Mark Zandi to policymakers: If you want job creation, get something figured out on deficits.

— Tim Geithner to small businesses: Help is on the way. 

— Drops in the bucket: Lawmakers respond to USPS cost-saving measure.

— Kevin Brady on a debt-ceiling hike: I’m going to need some sort of spending cap.

— Bipartisan group says Dodd-Frank rule will freeze out some potential homeowners.

— Tom Coburn’s latest bugaboo: Extraneous federal vehicles. 

— Home prices bump up a bit – for the first time in six months. 

— But mortgage applications drop.