–Obama and Biden To Meet Separately With Sens. Reid, McConnell Monday
–White House, Hill Search For Formula To Cut Deficit, Hike Debt Ceiling
–Senate Banking Committee To Hold Hearing on Derivatives, FDIC
–Senate Finance Panel Sets Up Tax Reform, Deficit Reduction Hearings
–House Takes Early July 4th Recess; Senate To Pass FAA Bill

By John Shaw

WASHINGTON (MNI) – President Obama will intervene directly this
week in talks with congressional leaders to secure passage of a debt
ceiling increase later this summer.

Obama and Vice President Biden is meeting Monday with Senate
Majority Leader Harry Reid and will then meet with Senate Minority
Leader Mitch McConnell at 5 p.m.

Obama’s talks with Reid and McConnell are likely to be the start of
many weeks of exchanges between the president and congressional leaders
on the debt ceiling and deficit reduction.

Late last week when the only two Republican members of his budget
negotiations decided to drop out of the talks, Biden handed the
high-stakes negotiations over to Obama.

But Biden will remain part of the negotiations as the White House
launches discussions with Reid, McConnell, House Speaker John Boehner,
and Nancy Pelosi, the House Minority Leader.

Biden has said that the budget talks he led for six weeks made
“significant progress” toward a budget agreement that would generate
“substantial savings.”

The vice president said a final agreement should take a “balanced
approach that finds real savings across the budget–including domestic
spending, defense spending, mandatory spending and loopholes in the tax
code.”

Boehner, in a statement Friday, said again that a debt ceiling
increase bill that is coupled with a plan that includes tax increases
could not pass in the House.

The Speaker repeated that any debt ceiling increase this summer
must be accompanied by a spending cut package that is at least as large
as the debt hike. He also said the deficit cutting package must include
budget enforcement reforms.

McConnell, in a Monday op-ed, said he hopes that Obama is prepared
to outline his plan for cutting budget deficits and controlling rising
debt.

According to various reports, the Biden talks identified up to $1.4
trillion in 10 year budget savings, with Democrats arguing that about
$600 billion in revenues would be needed to get the deficit reduction
number to about $2 trillion.

The U.S. has already reached its $14.29 trillion debt ceiling.
Treasury Secretary tim Geithner has said that Congress must pass
legislation increasing the debt ceiling by August 2.

Senate Budget Committee Chairman Kent Conrad has said that he
continues to work with a bipartisan group of senators on a $4 trillion
deficit reduction plan. He called his plan “another way” to get out of
the current fiscal impasse.

But Reid, the Senate Majority Leader, has not appeared eager for
Conrad to enter the budget fray.

In other action this week, the Senate Banking Committee will hold
several hearings. On Tuesday, the Banking panel will hold a hearing at
10 a.m. on access to credit markets for small financial institutions. On
Wednesday, the Banking Committee’s Securities subcommittee will hold a
hearing on the emergence of Swap execution facilities.

Thursday, the full Banking Committee will hold a hearing on the
state of the FDIC in which Sheila Bair will give her final congressional
testimony as FDIC chair.

The Senate Finance Committee will hold a hearing Tuesday at 10 a.m.
on simplifying the tax code to increase compliance and closing the tax
gap.

The Finance Committee will hold a hearing Thursday at 10 a.m. on
deficit reduction. Two former White House budget directors will testify:
Peter Orszag and Jim Nussle.

The Senate will consider several judicial nominations this week,
work on legislation to streamline the Senate confirmation process and
take up a short-term extension of the authority of the Federal Aviation
Administration.

The House will be on its July 4th recess this week.

** Market News International Washington Bureau: (202) 371-2121 **

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