OVERNIGHT MONEY: Tax writers explore reform options

But with both parties looking for ways to revamp the tax code, Camp and Tiberi have said they are taking a more methodical look at the extenders, which include well-known incentives for research and development and alternative energy.

Generally speaking, at least some targeted tax incentives would be spiked to pay for lower tax rates in an overhaul of the tax code.

{mosads}But in a new op-ed for The Hill, two House tax-writers also underscored the difficulty policymakers have in making those trade-offs, especially in an era of steep deficits and a struggling economy and slowly recovering labor market. 

In the piece, Reps. Jim Gerlach (R-Pa.) and Richard Neal (D-Mass.), the ranking member at the Ways and Means subcommittee on taxes, urge their colleagues to extend the New Markets Tax Credit through 2016.

That incentive, the bipartisan pair wrote, helps encourage development in more downtrodden areas, and its $5 billion price tag spurred more than eight times as much community development between 2003 and 2010.

“There are some who believe that, in the name of deficit reduction, we need to eliminate tax credits so that more money will flow into the federal treasury,” Gerlach and Neal wrote. 

“They need to dig a little deeper and understand what is gained from the federal government’s relatively small investment in the NMTC.”

WHAT ELSE TO WATCH FOR

Well-fed watchdogs: Rep. Barney Frank (D-Mass.) will continue his campaign for beefed-up funding for financial regulators on Friday, holding a press conference to push for more cash for the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

The presser comes days after a House Appropriations subcommittee advanced a GOP spending bill that would provide the regulators with millions less than requested in the president’s fiscal 2013 budget. The regulators have pressed hard for more funding as they work to implement the massive Dodd-Frank financial reform law.

Following JPMorgan’s high-profile trading loss, Frank is renewing his case for fatter wallets for those watchdogs, as he contends that those budget boosts are a fraction of the billions the bank lost in a bad trade on corporate debt.

Shoring up housing: Housing and Urban Development Secretary Shaun Donovan will announce enhancements on Friday to a Federal Housing Administration program that sells pools of mortgages headed for foreclosure and seeks to avoid a lengthy, costly foreclosure process during remarks at the Clinton Global Initiative in Chicago.   

Stimulus not out of the question: Federal Reserve Chairman Ben Bernanke on Thursday said the central bank is “prepared to take action” to protect the economy from the European debt crisis and other threats.

Bernanke did not provide any indication of whether the Fed is considering further stimulus for the economy. He held firm, however, when GOP lawmakers pressured him to rule out a third round of quantitative easing in the wake of the turmoil in Europe and May’s disappointing jobs report.

Rep. Kevin Brady (R-Texas), vice chairman of the Joint Economic Committee, said he wished Bernanke would rule out “QE3,” arguing that the uncertainty over the Fed’s future course is holding the economy back.

“No actions from the Fed will get this recovery moving in a way I think we all would be satisfied,” he said.

Student loan jabs: President Obama accused congressional Republicans on Thursday of stalling legislation that would prevent student loan rates from doubling, and urged them to “get to work” during remarks at the University of Nevada Las Vegas.

With less than a month to go before federally subsidized student loan rates double from 3.4 percent to 6.8 percent, Obama said lawmakers “can’t just sit on their hands.” 

Meanwhile, back in Washington: Senate Majority Leader Harry Reid (D-Nev.) made a new offer to Republicans to break the deadlock over the student loan legislation. 

In a letter to GOP leaders on Thursday, Reid forwarded on a pair of pension-related proposals that he said could cover the roughly $6 billion cost of extending current 3.4 percent student loans rates for a year, and also help finance surface transportation programs.

ECONOMIC INDICATORS

Trade Balance: The Department of Commerce releases the latest data for April on exports and imports of U.S. goods and services. 

Wholesale Inventories: The Commerce Department will release its wholesale trade report for April that includes sales and inventory statistics from the second stage of the manufacturing process. The sales figures say close to nothing about personal consumption and therefore do not move the market.

WHAT YOU MIGHT HAVE MISSED

— Study projects automatic cuts could cost US 1 million jobs
— Pelosi unfazed by Clinton comments on upper-class tax breaks
— Boehner on Europe crisis: ‘I don’t see any light at the end of the tunnel’
— White House supports farm bill but will seek deeper subsidy cuts
— Fitch: Downgrade still possible in 2013
— Senators say tweak to tax code would boost renewable energy
— Fed signs off on heightened capital proposal for banks
— Coburn: $70 billion in federal funds can’t reach target
— Conrad denies supporting extension of all Bush-era tax rates
— Jobless claims fall by 12,000
— Russian human rights bill sails through House panel
— Sens. Sessions and Paul seek big cuts to food stamps program in farm bill
— CBO: Yearly budget deficit reaches $845 billion

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