Week ahead: Congress sprints to finish omnibus, tax deal before Christmas; Fed could hike rates Wednesday

As many Americans rush to finish up their holiday shopping, Congress expects to roll out a year-end omnibus spending bill Monday, following weeks of negotiations. Lawmakers have haggled over policy attachments, but say they’ve made slow progress toward a deal.

{mosads}Funding for the federal government runs out at midnight Dec. 11, but President Obama is expected to sign a five-day deadline extension to keep the lights on until Dec. 16. That gives Congress until midnight Wednesday to nail down a deal.

Finishing by then requires sprinting over Senate procedural hurdles, but Republicans said they don’t anticipate that causing a crisis.

“We may be dumb, but we’re not as dumb as people think,” said Sen. Orrin Hatch (R-Utah), the chamber’s longest-tenured Republican.

Tax deal on the horizon

Lawmakers are also trying to wrap up a package of tax break extensions in addition to the spending bill. Members are closing in on a deal to continue dozens of expired and expiring credits, and to make a few permanent. Those include a research and development tax credit and a small-business expense deduction, along with expansions of the earned income tax credit, the child tax credit and a credit for college expenses.

The deal would also include a freeze on two ObamaCare taxes: the “Cadillac tax” for high-cost insurance plans and the medical device tax.

Senate sources told The Hill that they give a major tax deal a 50 percent chance of succeeding, but House Democratic Leader Nancy Pelosi (Calif.) pulled herself out of negotiations and on Friday called the proposed package “a massive, permanent, real giveaway” that’s “destructive of our future.”

Congress will likely extend the expiring credits for two years without changes if the deal falls through.

Fed rate hike expected 

The Federal Reserve is releasing on Wednesday a much anticipated interest rate decision, and is expected to hike rates for the first time in almost a decade. Chairwoman Janet Yellen has been hinting at a rate increase, warning that a delay could drive the United States into another recession.

Hearings and committee meetings: None — just lots of omnibus and tax deal negotiations.

Recap the week with Overnight Finance:

• Monday: Congress scrambles on spending bill
• Tuesday: Deal elusive as funding deadline nears
• Wednesday: Congress to push back funding deadline
• Thursday: Senate approves short-term funding bill

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