OVERNIGHT MONEY: Obama seeking common ground

In recent days, there have been countless studies that detail how the automatic spending cuts would damage the overall economy. 

While Obama is likely to outline some legislative goals for the year, he could do that in the context of a greater vision — the importance of Washington working together on the issues where the parties’ paths cross, especially with the goal of speeding up the nation’s economic recovery amid persistently high unemployment. 

{mosads}There will probably be some talk about Obama’s vision on the nation’s budget struggles and the battles ahead — including the looming sequestration and government funding for the rest of the fiscal year. 

While the president could contrast his approach with the GOP’s plans, he might point out where the parties agree and hammer home those points.

As The Hill’s Alex Bolton reported, there have been several signs lately that the ice of gridlock is thawing — Senate Majority Leader Harry Reid (D-Nev.) forged a deal with Republican Leader Mitch McConnell (Ky.) to reform the filibuster rule; Sen. Charles Schumer (D-N.Y.) praised House Majority Leader Eric Cantor (R-Va.); bipartisan groups of House and Senate lawmakers are teaming up on immigration; a bipartisan House bill has been launched to stiffen penalties against straw purchasers of firearms; and House freshmen are planning a bipartisan bowling session this month.

We’ll see if the speech leads to more of these types of deals amid a flurry of budget challenges.

WHAT ELSE TO WATCH FOR 

Budget debut: Sen. Patty Murray (D-Wash.) will hold her first hearing as the new chairwoman of the Senate Budget Committee on Tuesday. The committee will hear from Doug Elmendorf, director of the Congressional Budget Office (CBO), who will present the nonpartisan agency’s annual budget baseline outlook, which was released on Feb. 5. 

CBO is forecasting that the deficit would fall this year to $845 billion, the first sub-trillion deficit under President Obama. Elmendorf will show why he expects the the deficit to decline in the middle part of the decade only to return to the $1 trillion by around 2023, as an aging population and soaring healthcare costs weigh on the budget. 

Murray is slated to insist on an approach of spending cuts and more tax increases to get fiscal matters under control. 

The hearing will showcase the relationship with panel ranking member Jeff Sessions (R-Ala.), who brings a prosecutorial zeal to the budget process. 

Sequester replacement confab: Barring any last-minute hurdles, Senate Democrats plan to discuss legislation to replace the $85 billion sequester at their weekly policy lunch on Tuesday. 

Senate Majority Leader Harry Reid (D-Nev.) hopes to brief members on a package that would include a mix of tax increases and spending cuts, and get the go-ahead from lawmakers to introduce a measure by Thursday. That would set in motion procedures for a final vote the week of Feb. 25, only a few days head of the March 1 sequestration deadline. 

The Senate Armed Services Committee will explore on Tuesday what impact the across-the-board cuts to discretionary and defense spending would mean with a wide range of Defense Department officials. 

On Monday night, Democratic aides said their proposal is still under construction.

They have said a replacement package could reflect parts of what Rep. Chris Van Hollen (Md.), the top Democrat at the House Budget Committee, offered up last week.

Van Hollen and Rep. Tom Price (R-Ga.), a member of the Budget panel, will discuss the federal budget on Tuesday at the National Press Club. 

The New York Times reported Monday that Senate Democrats were nearing completion of $120 billion package that would include elements of Van Hollen’s proposal.

The House Democratic plan would eliminate subsidies to agribusinesses, scrap tax preferences used by oil-and-gas companies and implement a new minimum tax rate on people making seven figures a year — the proposal commonly known as the “Buffett Rule.” 

On Monday, Senate Democrats began to take steps toward a solution to avoid sequestration by closing tax loopholes.

Sens. Carl Levin (D-Mich.) and Sheldon Whitehouse (D-R.I.) said they had two bills: one that would avoid the automatic spending cuts set to take place next month for one year, and a second bill that would close enough tax loopholes to provide revenue to turn off the sequester for the next 10 years.

Levin said tax loopholes for corporations drain the U.S. Treasury and shift the burden to middle-class families. He specifically targeted tax loopholes that allow corporations to hold assets overseas, deduct corporate stock options and deductions for large oil companies.

While lawmakers move forward, most market professionals do not believe the White House and Congress will strike a deal to avoid automatic spending cuts, and the stock market will pay the price as a result.

CABINET WATCH

Not your run of the Mill(s) departure: Karen Mills, the head of the Small Business Administration (SBA), on Monday became the latest departure from President Obama’s Cabinet.

“After four years as Administrator of the SBA, I have let President Obama know that I will not be staying for a second term. I will stay on until my successor is confirmed to ensure a smooth and seamless transition,” Mills wrote in a note to SBA staff.

Mills has served for nearly four years in the administration, and became a member of the Cabinet a little more than a year ago, after the president elevated the SBA administrator to his inner circle.

Obama credited Mills for her efforts to support start-ups and entrepreneurs and in seeing through the passage of the Small Business Jobs Act.

“I asked Karen to lead the SBA because I knew she had the skills and experience to help America’s small businesses recover from the worst economic crisis in generations — and that’s exactly what she’s done,” Obama said.

Looking at Lew: Senate Finance Committee Chairman Max Baucus (D-Mont.) said his panel would quickly confirm Jack Lew to be the next Treasury secretary.

However, the top Republican on the panel said Lew should be properly grilled, in particular when it comes to the time he spent at the bank Citigroup.

The panel is lined up to consider Lew’s nomination on Wednesday.

“We have a tremendous amount of work to do over the next couple months to get our fiscal house in order,” he said in a statement. 

“It is my hope that — after this thorough vetting process — Jack Lew will be quickly confirmed so he can help tackle our country’s pressing economic issues.”

The panel’s ranking member, Sen. Orrin Hatch (R-Utah), said he needs a better understanding of Lew’s role at Citigroup as well as his knowledge of financial markets before deciding if he will support his nomination. 

“The American people will want to know what his role was there and how that might have prepared him for this critical job after the most severe financial crisis and prolonged economic downturn in generations,” Hatch said in a statement.  

“After all, as Treasury secretary, he would be leading efforts dealing with international financial markets, global banking rules, exchange rates and a host of domestic policies ranging from housing and mortgage markets to oversight of entitlement trust funds.”

Haggling for Hagel: Senate Democratic leaders are aiming to clear former Sen. Chuck Hagel’s (R-Neb.) nomination by Thursday even as Republicans are threatening to block his confirmation. 

Senate Majority Leader Harry Reid (D-Nev.) said Monday he would move Hagel’s nomination as Defense secretary quickly to the floor following a Tuesday vote by the Senate Armed Services Committee.

Reid said he expected a floor vote on Wednesday or Thursday, and was “confident” that there would not be a filibuster, despite the Republicans’ rhetoric.

ECONOMIC INDICATORS

Treasury Budget: The Treasury Department releases its January budget data, which is used mostly by the market for year-over-year changes in receipts and outlays. 

WHAT YOU MIGHT HAVE MISSED

— Russia suspends US meat imports over use of feed additive

— Official: Job woes drive Fed action

— Carney: Obama won’t back higher Medicare age

— Watchdog: Former SEC employees helping shield corporations from regulations

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