OVERNIGHT MONEY: Budget deal comes together

WEDNESDAY’S BIG STORY:

It’s budget time: House and Senate negotiators reached a deal Tuesday night and spilled the details about the two-year agreement ahead of the budget conference’s Dec. 13 deadline.

Now the House will shift its efforts into passing the legislation before leaving for the holidays at the end of the week. 

{mosads}The deal, which was two months in the making and mainly came down to behind-closed-door meetings between Senate Budget Committee Chairwoman Patty Murray (D-Wash.) and House Budget Committee Chairman Paul Ryan (R-Wis.), provides some budget certainty for the first time in years. 

The big question is whether that package will be accepted in the House.

Ryan called on “all my colleagues in the House to support it.’

Murray said the deal is a “good step in the right direction that can hopefully rebuild some trust and serve as a foundation for continued bipartisan work.”

The Senate will remain in session next week, and is expected to take a vote on the plan.

Murray and Ryan emphasized that the deal would help lawmakers avoid any government shutdowns over the next two years.

The deal comes up short of the grand budget bargain that Speaker John Boehner (R-Ohio) and President Obama had once hoped for, but each leader praised the breakthrough.

Obama called bipartisan budget agreement “a good first step.”

“Congress has a lot more to do on that front,” he said.

Obama called on Congress to reauthorize unemployment benefits for those who have been out of work for at least six months. Without congressional action, 1.3 million people would lose their weekly benefits.

It’s tough to know what will happen to the $25 billion extension of benefits because they aren’t included in the budget deal, and there are few other options for them to get through both chambers before the holidays.

Senate Majority Leader Harry Reid (D-Nev.) did make an attempt on Tuesday night to bring up an extension, but Republicans objected.

Rep. Chris Van Hollen (Md.), the top Democrat on the House Budget Committee, said that Democrats are insisting on the extension before Congress leaves for the year.

“Our view is that [unemployment insurance] has to be done before we adjourn,” he said. 

“We’ve got to move forward on UI [and] we need to move forward on the budget. We’ve got to get them both done before we leave.”

The agreement sets overall discretionary spending for fiscal 2014 at $1.012 trillion — about halfway between the Senate budget level of $1.058 trillion and the House budget level of $967 billion.

The agreement provide $63 billion in sequester relief over two years, split evenly between defense and non-defense programs.

In fiscal 2014, defense discretionary spending would be set at $520.5 billion, and non-defense discretionary spending would be set at $491.8 billion.

The sequester relief is fully offset by savings elsewhere in the budget, totaling approximately $85 billion. The agreement would reduce the deficit by between $20 billion and $23 billion.

If the bill is signed into law, the House and Senate appropriations committees will then be able to work on spending bills at an agreed-upon level in advance of the Jan. 15 deadline, when government funding is set to run out. 

WHAT ELSE WE’RE WATCHING

Welcome back: The Senate Finance Committee is set to restart a hearing for President Obama’s choice to lead the Internal Revenue Service on Wednesday that was halted on Tuesday by Senate Republicans, raising new questions about whether the troubled agency will have a confirmed chief by year’s end.

Before the hearing broke up, Senate Finance Committee Chairman Max Baucus (D-Mont.) and the panel’s top Republican, Sen. Orrin Hatch (R-Utah), vowed to support John Koskinen, the former Freddie Mac executive tapped to take over an agency still reeling from its admission that it inappropriately singled out conservative groups for additional review.

But with the agency’s current interim chief, Danny Werfel, scheduled to leave by the end of the month, it’s far from clear when Koskinen’s nomination could reach the Senate floor. 

The GOP decision Tuesday to block the hearing from proceeding came as the Senate was continuing its work to confirm a string of federal judges and Obama’s nominees via majority vote, after a rule change via the “nuclear option” that Republicans vigorously opposed. 

BREAKING NEWS

Volcker rule gets nod: The days of risky trading activity by the nation’s biggest banks are looking like a practice of the past under a final version of the “Volcker Rule” that was approved Tuesday.

Several financial regulators signed off on the final rule, drawing to a close years of work that required sifting through roughly 18,000 comments.

The Volcker Rule, mandated by the Dodd-Frank law, is aimed at cracking down on risky proprietary trading by banks seeking their own profits instead of serving clients.

Industry groups complained that the regulation misses the mark.

The U.S. Chamber of Commerce said it is “disappointed” with the regulations, and plans to  take “all options into account” in determining its next move.

Other related stories: 

— Obama: Volcker Rule makes US more secure

— GOP regulator cites ObamaCare woes in opposing Volcker Rule

Farm bill in a rut: House and Senate negotiators announced Tuesday they won’t get a farm bill done by the end of the year.

Agriculture committee leaders said they would restart House-Senate conference meetings early next month. 

They blamed wintry weather in Washington for delaying some of the budget information they needed to move forward with an agreement.  

Other related stories: 

— Farm bill negotiations resume as the House mulls a short-term extension

ECONOMIC INDICATORS

MBA Mortgage Index: The Mortgage Bankers Association releases its weekly report on mortgage application volume.

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

WHAT YOU MIGHT HAVE MISSED

— Senate confirms Watt to head housing finance agency

— Watt on path to confirmation

— Fast-track authority, currency manipulation remain top trade issues amid TPP delay

— Negotiators fail to complete TPP trade deal

— Senator: Airline tax part of budget deal ‘collection of cats and dogs’

— Swiss bank signs up to fight tax evasion

— Government succeeds at keeping poor above poverty line

— Poll: Obama’s approval on economy unchanged

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