Budget “Cease-Fire” Expected

W. Post describes likely budget agreement this week as a “cease-fire”: “Republicans and Democrats are abandoning their debt-reduction goals, laying down arms and, for the moment, trying to avoid another economy-damaging standoff … Congressional leaders hope to finish work quickly and leave town for the holidays as soon as Friday … the emerging agreement aims to partially repeal the sequester and raise agency spending to roughly $1.015 trillion in fiscal 2014 and 2015. That would bring agency budgets up to the target already in place for fiscal 2016. To cover the cost, Ryan and Murray are haggling over roughly $65 billion in alternative policies, including cuts to federal worker pensions and higher security fees for the nation’s airline passengers.”

Concerns in both parties, but probably not enough to thwart deal. Politico: “For Republicans, their unease is caused by news that domestic spending may surpass existing caps, fueled by an increase in fees on government services. House Democrats are growing angry over the increased likelihood that federal workers’ benefits are going to be cut and the possible exclusion of unemployment insurance … Senate Democrats will need to win over only five Republicans, which aides in both parties predict is a strong possibility. And most House Democrats would likely join Republicans in passing a deal, fearful of being tagged with an obstructionist label…”

Military pensions may take a hit. Politico: “The two sides appear close but Democrats are anxious about the level of savings being sought by Republicans from civilian federal workers. Finding some money on the military side of the equation could lessen this burden and make the package more equitable too from a political standpoint.”

Hope For Jobless Aid Extension

Hope remains for unemployment insurance extension, but in a separate deal. The Hill: “…Democrats aren’t insisting that the reauthorization be included in a budget agreement, which could leave the measure without an obvious legislative vehicle … Republicans hinted Friday that the good jobs report could be a reason to end the program … But Boehner also said he would be willing to look at any plan produced by the White House to renew the federal program. A House Democratic aide suggested that Boehner’s comments may actually point to a solution: The program can be extended, they say, if it is paid for. Democrats in the past have argued there is no reason to offset the cost of the benefits because it stimulates spending in the economy. The White House has offered to work with congressional leaders on finding the needed offsets.”

Krugman slams GOP for embracing “punishment” for jobless: “… the G.O.P. answer to the problem of long-term unemployment is to increase the pain of the long-term unemployed: Cut off their benefits, and they’ll go out and find jobs. How, exactly, will they find jobs when there are three times as many job-seekers as job vacancies? Details, details.”

Fed probably won’t withdraw stimulus this month. NYT: “The Fed’s chairman, Ben S. Bernanke, predicted in June that the Fed would taper its purchases by the end of this year, and officials say they still could announce such a cut next week, when the Fed’s policy-making committee is scheduled to hold its final meeting of the year. But influential Fed officials see little harm in postponing the decision, particularly compared with the risks of pulling back too soon. Significant details of the eventual retreat also remain the subjects of unresolved debates, according to the public statements and interviews. And some officials argue that the slow pace of inflation is itself a reason for the Fed to maintain its stimulus campaign.”

NYT digs in to plight of child homelessness: “With the economy growing in 2004, the Bloomberg administration adopted sweeping new policies intended to push the homeless to become more self-reliant. They would no longer get priority access to public housing and other programs, but would receive short-term help with rent … [But as] rents steadily rose and low-income wages stagnated, chronically poor families like Dasani’s found themselves stuck in a shelter system with fewer exits. Families are now languishing there longer than ever — a development that Mr. Bloomberg explained by saying shelters offered ‘a much more pleasurable experience than they ever had before.’ Just three days before the mayor made that comment at a news conference in August 2012, an inspector at Auburn stopped by Dasani’s crowded room, noting that a mouse was ‘running around and going into the walls,’ which had ‘many holes.’ ‘Please assist,’ the inspector added. ‘There is infant in room.’”

Pressure On Volcker Rule From Both Sides

As regulators plan Volcker Rule vote tomorrow, banks threaten litigation. NYT: “In recent letters and meetings with financial regulators, lobbyists for Wall Street banks and business trade groups issued thinly veiled threats about challenging the Volcker Rule in court, people briefed on the matter said. The groups, including theU.S. Chamber of Commerce, are hinting that they could use litigation to either undercut or clarify the rule, which is intended to bar banks from trading for their own gain and limit their ability to invest in hedge funds.”

While consumer activists threaten reinstatement of Glass-Steagall. Bloomberg: “Politicians and advocates — some Democrats, some Republicans — who blame the 2008 financial crisis on deregulation express concern that the Volcker rule won’t adequately block banks from making risky bets with their own money. If they deem the rule too weak, they say it will add fuel to a push to reinstate a Depression-era law known as Glass-Steagall that until 1999 split banks and securities firms. Such vows suggest U.S. lenders planning to challenge the ban in court risk a political backlash …”