Don't be fooled by DC's quiet this week: Plenty is happening

Jerome Favre | Bloomberg | Getty Images

Larry Summers, professor at the John F. Kennedy School of Government.

Washington will be whisper quiet this week with Congress gone and President Barack Obama vacationing on Martha's Vineyard. That does not mean important things are not happening behind the scenes and around the country. Indeed, decisions made over the next few weeks will determine just how noisy the nation's capital will be when everyone is back in town in September.

There are two critical open questions: Who will Obama pick for Fed Chair and do Republicans come back from their summer break determined to fight to the death on spending cuts in a way that could risk a government shutdown or debt ceiling debacle.

On the Fed Chair front, people close to the matter suggest Obama may use the quiet time on the Vineyard to make a final call. The leading candidate remains former Treasury Secretary Larry Summers followed by Fed Vice Chair Janet Yellen. Summers' work for Citigroup and other financial firms came under scrutiny in the New York Times on Sunday but nothing in the article is likely to impact Obama's decision.

(Read more DC Money Insider: Obama rips GOP on health care as he heads to vacation)

Summers would be a somewhat more difficult candidate for Obama to get confirmed, perhaps creating some bond market uncertainty this fall. But the Senate would likely eventually approve either candidate,as the FT noted this weekend. And once in the job, Summers and Yellen would not likely be much different on actual monetary policy, with Yellen perhaps just the slightest bit more dovish.

On the Congressional front, Senate Majority Leader Mitch McConnell, who faces a primary challenge from the right, is demanding that hisparty toe the line on keeping sequester-level spending cuts in place, as POLITICO reported this weekend.That raises the chances that no deal is found to get past the Sept. 30 deadline for avoiding a government shutdown. If House Republicans get an earful back home not to cave on any spending deal with Democrats, look out for some scary days in days in DC in September.

Programming note: Your DC Money Insider is going on vacation through the end of August. See you back here Sept. 3^nd, the dayafter Labor Day. Happy Summer!

— By Ben White, POLITICO's chief economic correspondent and a CNBC contributor. White also authors the daily tip sheet POLITICO Morning Money [politico.com/morningmoney] Follow him onTwitter @morningmoneyben.