OVERNIGHT MONEY: Budget fitness

TUESDAY’S BIG STORY:

Fun with budgets: The Congressional Budget Office (CBO) on Tuesday will release its annual budget and economic update that will take a peek into the nation’s financial condition. 

Needless to say, the nation probably needs to hit the gym a bit more regularly to, well, trim down. 

{mosads}In past years, CBO has generated the update in January, but because Congress didn’t wrap up last year’s work until New Year’s Day, the nonpartisan group had to scramble to complete its report. 

Lawmakers needed until Jan. 1 to deal with the so-called “fiscal cliff” of tax increases and spending cuts. 

The CBO report will form the “budget baseline” by which House Budget Committee Chairman Paul Ryan (R-Wis.) and Senate Budget Committee Chairwoman Patty Murray (D-Wash.) will rewrite their radically different fiscal 2014 budget plans.

As in past years, CBO will produce a current law scenario and an alternative “current policy” baseline. 

The first will assume that all current law, including nearly $1 trillion in automatic spending cuts over nine years, takes place. 

The other assumes Congress acts as it has in the past. 

Last year, CBO assumed that Congress would turn off the automatic cuts, and it may make that assumption again. 

The fiscal cliff did resolve a major discrepancy in the two baselines — individual tax rates no longer automatically go up in the budget 10-year timeframe, and the Alternative Minimum Tax doesn’t hit the middle class. 

The absence of these deficit-reducing actions should make it easier for Murray to produce a budget that does not add to the deficit. Ryan has set himself a higher challenge of balancing the budget in 10 years. 

Ryan’s panel will dig deep into the analysis as the debate continues over levels of federal spending — much of it entrenched in mandatory spending programs — with plans for a Wednesday hearing featuring CBO Director Doug Elmendorf.

WHAT ELSE TO WATCH FOR 

Haste makes waste: The House Government Reform and Oversight Committee will hold a hearing on Tuesday to look for ways to reduce wasteful government spending. Taxpayers for Common Sense will detail some of the more than $1.2 trillion in deficit reduction it sees, through overhauling a wide range of government programs from farm subsidies to disaster aid, according to prepared testimony. The IBM Center for the Business of Government will present better management practices that could save $1 trillion over 10 years. The National Academy of Public Administration and Citizens Against Government Waste also will testify. 

Sailing, takes me away: Well, Senate Democrats aren’t expected to sail around Chesapeake Bay on Tuesday, but they will head off to Annapolis, Md., for their policy retreat, giving the caucus a chance to huddle ahead of what could be bruising battles on some monster issues like the sequester, immigration, producing a Senate budget, gun control and making sure the government can keep running while they work on solutions to everything else. Whew. 

President Obama and other Democrats have talked up a number of tax breaks, including those used by oil-and-gas companies as well as the carried interest break for private equity that they want on the table in the looming fiscal negotiations. 

Republicans … not so warm to those ideas. 

Senate Majority Leader Harry Reid (D-Nev.) also said over the weekend that voters needed to realize that Washington had already put into place more than $2.5 trillion in spending cuts in recent years.

Thanks for proving my point: House Majority Leader Eric Cantor (R-Va.) is slated to discuss the conservative case for how government can help people, in what his office is calling a major policy address.

And as Bloomberg notes, Cantor’s prepared remarks, which were circulated by his office, might have underscored the long-held GOP point that the current tax code is too complex. In the excerpts, Cantor mixes up the W-2 and W-4 tax forms.  

Roll back: Reps. Keith Ellison (D-Minn.) and Raúl Grijalva (D-Ariz.), key figures in the Congressional Progressive Caucus, are scheduled to hold a Tuesday news conference on new legislation to roll back the sequester, which will go into effect in March if lawmakers can’t find an alternate solution. 

BREAKING NEWS

Failure to launch: Congressional Republicans are seizing on the White House’s failure to meet the Feb. 4 legal deadline to produce an annual budget as a gift that will help them recover from months of political beatings.

The White House on Monday declined to say when President Obama’s delayed 2014 budget will come out.

“President Obama missed a great opportunity today to help our economy. This was supposed to be the day he submitted his budget to the Congress. But it’s not coming. It’s going to be late. Some reports say it could be a month late,” Speaker John Boehner (R-Ohio) said on the House floor.

ECONOMIC INDICATORS

ISM Services: The Institute for Supply Management will release its January report for the non-manufacturing sector, which accounts for about 90 percent of the economy, and covers industries ranging from utilities, retail to healthcare and finance. 

WHAT YOU MIGHT HAVE MISSED

— Levin: Democrats will target carried interest

— Corker introduces bill telling Fed to deal with price stability, not unemployment

— Analysis: Sequester could hit federal grants to states

— Justice planning charges against S&P for financial crisis ratings

— Community banks call for Dodd-Frank relief

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