OVERNIGHT MONEY: Sequester to hit Friday

Republicans said they won’t accept any additional tax increases as part of a deal to stave off the current cuts while Democrats argue that, eventually, the GOP will see the light and give ground on raising taxes. 

{mosads}But, right now, it’s unclear what Congress will do to avert the cuts — if they can actually do anything before the fiscal year runs out.

As crazy as it sounds, Congress could spend the better part of March focused on budgetary matters — with expected budget markups in the House and Senate (yes, really) and some sort of agreement being hatched out on a continuing resolution (CR) that would keep the government running for the final six months of the fiscal year. The current stopgap measure expires March 27. 

The House seems to be making progress on that six-month CR with action possible next week. 

Lawmakers had thought the CR could be a great place to park provisions halting the sequester, but that option no longer seems promising. 

That probably means that turning off the sequester won’t happen until at least April, and possibly later. 

Senate Democrats are taking a look at the Senate budget resolution as a possible way to nix the spending cuts. They say that deficit-reduction measures proposed by their budget blueprint could justify eliminating it. 

But they acknowledge that the only way to guarantee the future savings is if the Senate and House can come together and agree on a budget blueprint. 

Those talks could drag into the summer.  

All in all, the delay may not be all bad because it could take awhile for the effects of the cuts to be felt.  

Most unpaid furloughs of government workers won’t start until April, and it will take until the end of that month for job cuts to hit the Defense Department.  

On Thursday afternoon, the White House sent a new memo guiding agencies on how to implement the sequester.

The memo estimates a 9 percent cut to affected domestic agency budgets and a 13 percent cut to defense.

Still, the Congressional Budget Office estimates the cuts could cost 750,000 jobs this year.

If Congress can’t stop the cuts this fiscal year, a total of $110 billion in spending reductions to domestic discretionary and defense programs will have been implemented between October and September.

On Thursday, the Senate turned back both the Democratic and Republican alternatives, leaving Obama to say that the Senate GOP voted “to let the entire burden of deficit reduction fall squarely on the middle class.

A bill crafted by Senate Democrats won 51 votes, while a Republican alternative won only 38 votes. 

“Today, Republicans in the Senate faced a choice about how to grow our economy and reduce our deficit. And instead of closing a single tax loophole that benefits the well-off and well-connected, they chose to cut vital services for children, seniors, our men and women in uniform and their families,” Obama said in a statement.

So, if Congress can make headway on a continuing resolution and a budget, maybe there’s a chance that March will go out like a lamb. But probably not. 

CABINET WATCH

Lew in place: Treasury Secretary Jack Lew took the oath of office at the White House on Thursday, a day after the Senate confirmed him to take over the Cabinet slot vacated by Timothy Geithner last month. Lew got his tenure started off with an afternoon meeting with the Financial Stability Oversight Council. 

President Obama still needs to nominate a new Commerce secretary and a new U.S. Trade Representative to take the place of Ron Kirk, whose last day in the job was Friday. 

ECONOMIC INDICATORS 

Michigan Sentiment: Thomson Reuters/University of Michigan will release its final measure of consumer sentiment for February. 

ISM Index: The Institute for Supply Management will release its February index that measures the pace of growth of the manufacturing sector.

Personal Income: The Commerce Department releases January figures that measure income from all sources. The largest component of total income is wages and salaries, which is estimated using payrolls and earnings data from the employment report.

WHAT YOU MIGHT HAVE MISSED

— Economy shows anemic growth last quarter

— Homeowners set to get compensation for bad foreclosure practices

— Union to discuss sequester furloughs with IRS

— IMF looks to lower US growth expectations on sequestration

— AFL-CIO backing Senate Democrats’ sequester bill

— Jobless benefits claims drop by 22,000

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