2014 WSB Care-a-Thon Your support moves us closer to a future free of childhood cancers and blood disorders.

Politics: Daily Briefing: Investors getting pretty nervous about the fiscal cliff

Published by: Clark Barrow on Friday September 21st, 2012

Clark Barrow

By CLARK BARROW - Also, House Republicans extend invitation to Netanyahu.

DAILY BRIEFING - SUMMARY

· FISCAL CLIFF - A recent survey conducted by Bank of America-Merrill Lynch Fund Manager found that more investors are concerned about the upcoming U.S. fiscal cliff than they are the European debt crisis.

· CONGRESS - The lawmakers left Washington, D.C. on Thursday as the U.S. Congress went in recess until after the November election. Lawmakers departed without agreements on big issues, including: taxes, defense, spending, farms, even post office policy.

· CONGRESS - U.S. House Republicans have invited Israeli Prime Minister Benjamin Netanyahu to meet with them whenever he's in Washington, D.C.

· ATTACK - As investigations widen in the case of the recent assault in Benghazi, Libya, new intelligence suggests the attack was tied to al-Qaeda, and particularly an associate of Osama bin Laden.

o Meanwhile, after the White House for the first time Thursday explicitly called the attack on the U.S. Consulate in Libya an act of terror, President Obama on Thursday ducked an opportunity to clear up the confusion about the ever-changing narrative -- appearing to hold firm to the story that an anti-Islam film was to blame.

· DRONE WARFARE - A U.S. appeals court responded skeptically on Thursday to Obama administration assertions the government can withhold documents about a program that uses aerial drones for targeted killings overseas.

· OBAMACARE - Earlier this week, the U.S. Congressional Budget Office (CBO) released a new report that determined that 6 million Americans will be forced to pay Obamacare’s individual mandate by 2016. According to an analysis by the Heritage Foundation, a disproportionately high number of these individuals will be lower-income Americans.

WHAT WE KNOW

ECONOMIC NEWS

· HOUSEHOLD WORTH - U.S. households' net worth dropped by $300 billion in the second quarter as gains made from rising real-estate values were offset by the falling stock market.

o A U.S. Federal Reserve report released Thursday showed that households' total net worth fell to $62.7 trillion between April and June of this year.

o "The value of corporate equities and mutual funds owned by households declined close to $600 billion, more than offsetting a $355 billion increase in the value of real estate owned by households," the Fed said.

· FISCAL CLIFF - A recent survey conducted by Bank of America-Merrill Lynch Fund Manager reflects growing pessimism over the looming 2013 fiscal cliff. A total of 253 panelists with $681 billion in managed assets participated in the September survey.

o For the month of September, 35 percent of investors surveyed listed the fiscal cliff as their biggest concern in contrast to the EU debt Crisis at 33 percent. The EU debt crisis had previously been listed as the biggest concern for investors at 48 percent for August. But as concern over the debt crisis in the EU subsides, investor focus has shifted to Congress' budget negotiations over tax cuts.

o Although disheartening, the survey’s results shouldn’t be surprising, as many within the government and private sector, including the CBO, Federal Reserve, and Moody’s, have made it known that if scheduled tax hikes go into effect, a double-dip recession will be inevitable.

· The Dow Jones Industrial Average end at 13,597.16, up 19.2 points, or 0.1%.

· The S&P 500 Index ended down a fraction of a point at 1,460.27.

· The Nasdaq Composite Index declined 6.66 points, or 0.2%, to 3,175.96.

COMMODITIES

· The U.S. national average for a gallon of regular gasoline is $3.83.

o When President Obama was inaugurated, in January 2009, the U.S. national average for a gallon of regular gasoline was $1.85. Average gasoline prices are currently 107 percent higher than they were when Mr. Obama became president.

· Crude oil for October delivery retreated 11 cents, or 0.1%, to $91.87 a barrel on the New York Mercantile Exchange.

· Gold for December delivery declined $1.50, or 0.1%, to settle at $1,770.20 an ounce on the Comex division of the New York Mercantile Exchange.

NEWS TO WATCH

· ELECTION - As of today, there are 46 days until the November 2012 presidential election.

· CONGRESS - The lawmakers left Washington, D.C. on Thursday as the U.S. Congress went in recess until after the November election. Lawmakers departed without agreements on big issues, including: taxes, defense, spending, farms, even post office policy.

o No resolution emerged Thursday to avert $55 billion in cuts to a defense budget of roughly $600 billion, beginning Jan. 2. A House Armed Services hearing with the Pentagon comptroller and the services' vice chiefs devolved into finger-pointing between Republicans and Democrats.

o Republicans blamed President Obama and the Democratic-controlled Senate. Democrats argued that the GOP must be willing to consider tax increases.

o Meanwhile, U.S. Senate Democratic leaders are predicting Tea Party losses in November will push Republicans to compromise on raising taxes after the election. U.S. Senate Democratic Policy Committee Chairman Charles Schumer (N.Y.) told reporters that mainstream conservative senators have told him privately they will have more freedom to cut deals after the election.

· CONGRESS - U.S. House Republicans have invited Israeli Prime Minister Benjamin Netanyahu to meet with them whenever he's in Washington, D.C.

o The invitation sent Wednesday evening by the 165-member Republican Study Committee (RSC) comes after reports that President Obama will not meet with Netanyahu when both leaders are in New York for the opening of the United Nations' 67th session next week.

o Israeli officials previously told Reuters that Netanyahu had asked for a one-on-one meeting with Obama to talk about Iran's nuclear weapons program, only to be rebuffed by the White House, which said the schedules of the two leaders wouldn't overlap.

· WHITE HOUSE - President Obama on Thursday faced some of the toughest questioning of his reelection campaign to date, pressed repeatedly on his failure to achieve comprehensive immigration reform and other unmet promises from his 2008 run.

o Asked why the United States was not better prepared, with better security at its embassies on the Sept. 11 anniversary, Obama responded by repeating the admonitions about not tolerating violence, but continued to discuss the incident in the context of the controversial video depicting scenes from the life of Mohammed.

o However, much of the time in front of the Spanish-language audience here was spent on Obama’s failure to get comprehensive immigration reform — something that Obama attributed to focusing instead on the economy and blaming Republicans in Congress.

o Obama also blamed Congress when reminded that he has presided over more deportations than any president in history. And asked if his action to stop deporting some people in the country illegally — announced in June, as the campaign was heating up — was done purely for political purposes, Obama pivoted to focus the conversation on the Republicans’ immigration proposals.

PRESIDENT’S SCHEDULE

· In the morning, President Obama will receive the Presidential Daily Briefing at the White House.

· Later in the morning, the president will depart Washington, D.C. and travel to Woodbridge, Virginia.

· Later, the president will deliver remarks, live via satellite, to the AARP annual National Event & Expo in New Orleans from G. Richard Pfitzner Stadium in Woodbridge, Virginia.

· In the afternoon, the president will hold a campaign event at the G. Richard Pfitzner Stadium in Woodbridge, Virginia.

· Later in the afternoon, the president will return to Washington, D.C.

HAPPENING IN THE U.S. CONGRESS

U.S. SENATE

· The U.S. Senate is not in session today.

U.S. HOUSE OF REPRESENTATIVES

· The U.S. House is not in session today.

TOPICS OF INTEREST

NATIONAL SECURITY

· ATTACK - Prior to the Sept. 11 attack on the U.S. consulate in Benghazi, the U.S. State Department and the Marines Corps had been discussing deploying Marines to guard the U.S. Embassy in the Libyan capital Tripoli "sometime in the next five years," according to the U.S. Marine Corps.

o The issue of security at U.S. diplomatic outposts in Libya has been front and center as Congress and others begin to investigate whether or not those facilities were sufficiently protected before the attacks that killed Amb. Chris Stevens and three other Americans.

o The U.S. State Department won't discuss the specifics of its security posture in Libya before the attack, but the Marine Corps has briefed congressional staffers on the issue.

o As investigations widen in the case of the recent assault in Benghazi, Libya, new intelligence suggests the attack was tied to al-Qaeda, and particularly an associate of Osama bin Laden.

o It has been suggested ever since the September 11, 2012 attack in Benghazi that terrorists may have been behind the raid that killed four Americans, including Mr. Stevens and a Navy SEAL, but this week the claim was heard by Congress as US lawmakers attempt to get to the bottom of the incident.

o U.S. Secretary of State Hillary Clinton said on Thursday she was forming a panel to investigate the attack on the U.S. Consulate in Benghazi, Libya.

o After the White House for the first time Thursday explicitly called the attack on the U.S. Consulate in Libya an act of terror, President Obama ducked an opportunity to clear up the confusion about the ever-changing narrative -- appearing to hold firm to the story that an anti-Islam film was to blame.

o The president spoke Thursday at a town hall hosted by the Spanish-language Univision. He declined to get into specifics, even as lawmakers said after an intelligence briefing that there clearly was "some pre-planning" in last week's deadly attack.

· THREAT - The American embassy in Islamabad, in a bid to tamp down public rage over the anti-Islam film produced in the U.S., is spending $70,000 to air an ad on Pakistani television that features President Obama and U.S. Secretary of State Hillary Clinton denouncing the video.

o The U.S. State Department said Thursday the embassy had compiled brief clips of Obama and Clinton rejecting the contents of the movie and extolling American tolerance for all religions into a 30-second public service announcement that is running on seven Pakistani networks. Obama and Clinton's comments, which are from previous public events in Washington, are in English but subtitled in Urdu, the main Pakistani language.

o The U.S. State Department said the aim was to get the messages to the widest possible audience in Pakistan, where tens of thousands of protestors angry about the film tried to reach the U.S. embassy before being turned back by Pakistani police. The U.S. State Department said embassy staffers had decided the ads were the best way to spread the word. The seven networks have a potential audience of 90 million people, she added.

· DRONE WARFARE - A U.S. appeals court responded skeptically on Thursday to Obama administration assertions the government can withhold documents about a program that uses aerial drones for targeted killings overseas.

o A suit brought by the American Civil Liberties Union is part of a broad legal strategy, also playing out in federal court in New York, to learn more about the drone program that the government says targets al Qaeda militants.

o The program is shrouded in secrecy, even as officials up to President Obama acknowledge it exists. What remains in dispute is whether the government has confirmed the involvement of the CIA in the program, and if so, whether the CIA must turn over documents to the ACLU.

o A ruling against the government could lead to the release of such information as the government's legal explanation of how the targeted killings comply with international law and the rights of U.S. citizens abroad.

FEDERAL GOVERNMENT

· OBAMACARE - Earlier this week, the U.S. Congressional Budget Office (CBO) released a new report that determined that even more Americans than previously estimated will be hit with Obamacare’s ever-controversial individual mandate tax, totaling 6 million by 2016.

o Of the 30 million Americans whom Obamacare leaves uninsured and without affordable insurance options, 6 million will have to pay the penalty, an increased estimate from 2010. According to CBO, “About two million more uninsured people are now projected to pay the penalty each year, and collections are now expected to be about $3 billion more per year.” The total cost to uninsured Americans will be around $7 billion in 2016 and is projected to be about $8 billion every year from 2017 to 2022.

o According to the Heritage Foundation, the tax penalty is calculated in different ways depending on income levels. If they do not obtain Obamacare-mandated health insurance, households with lower incomes will pay a flat dollar amount each year, and those with higher incomes will pay a penalty equal to a percentage of their incomes.

o The Heritage Foundation reports that despite claims made by Obamacare’s advocates that the law will help middle- and low-income Americans, CBO’s table reveals that the distribution of the tax falls heavily on those making less than 400 percent of the federal poverty level (FPL)—meaning the majority of this new tax falls on the very people the law was supposed to help. For instance, a family of four making about $24,600 per year, the projected FPL in 2016, could be subject to this egregious tax penalty.

· ENVIRONMENTAL PROTECTION AGENCY - The U.S. Environmental Protection Agency (EPA) has mandated that all consumers in the United States must purchase at least 4 gallons of gasoline when they go to the gas station, if they are getting fuel from a pump that also offers a new E15 ethanol-gasoline blend.

o The Obama administration wants consumers to use more of the E15 fuel – a blend that contains 15 percent ethanol – but the problem is that many gas stations use blender pumps, which offer several types of fuel and, after pumping, there always is a residual amount of fuel in the hose. E15 fuel can potentially damage engines made prior to 2000 and it cannot be used in motorcycles, ATVs, and many other engines, such as lawn mowers and boat engines.

o So, to circumvent the potential problems, the EPA is requiring a 4-gallon minimum from blender pumps to ensure that any E15 fuel residue is diluted. (Stations that provide a completely separate, single hose for E15 only are exempt from the rule.)

FOREIGN POLICY

MIDDLE EAST

· SYRIA - Rebels have taken a major stride in uniting their ranks in the battle for Syria's largest city, giving them hope they could tip the balance after three months of bloody, stalemated combat in Aleppo, one of the biggest prizes of the civil war.

o The question is how much more destruction the city can bear. Government troops are retaliating against more effective rebel attacks with increasingly devastating bombardment, and civilians are bearing the brunt, with their neighborhoods left in ruins.

o The new military council was announced Sept. 9. It brings together two of the biggest rebel players in Aleppo and the countryside, and should allow for better coordinated attacks against the 30 percent of the city still in regime hands.

· IRAN - North Korea and Iran appear to be increasing their dealings in nuclear technology and missiles with each other under a breakthrough agreement reached between the two nations in Tehran three weeks ago.

o Concerns about the nature of North Korea’s exchanges with Iran have risen since Iran's science and technology minister, Farhad Daneshjoo, and North Korea’s foreign minister, Pak Ui-chun, signed the deal to cooperate on science and technology after a summit of “nonaligned nations” held in Tehran in late August.

o North Korea and Iran have been cooperating for years but never previously had a framework agreement that confirmed their longstanding relationship and also made clear their desire to build on it. The timing of the deal is significant, since Israel has been pressing for concerted action against Iran’s nuclear program while North Korea under new leader Kim Jong-un has been coming out with harsh denunciations of South Korean policies.

AFRICA

· EGYPT - Muslims angered by cartoons mocking the Prophet Mohammad should follow his example of enduring insults without retaliating, Egypt's highest Islamic legal official said on Thursday.

o Western embassies tightened security in Sanaa, fearing the cartoons published in a French magazine on Wednesday could lead to more unrest in the Yemeni capital where crowds attacked the U.S. mission last week over an anti-Islam film made in America.

o In the latest of a wave of protests against that video in the Islamic world, several thousand Shi'ite Muslims demonstrated in the northern Nigerian town of Zaria, burning an effigy of U.S. President Barack Obama and crying "Death to America".

ASIA

· AFGHANISTAN - The last of the 33,000 'surge' troops ordered into Afghanistan by President Obama in 2009 have withdrawn from the country, returning the American presence to pre-surge levels, a senior U.S. defense official said on Friday.

o The surge in American troops was designed to push back the Taliban and create space for NATO forces to build the Afghan army to a point where it could take over Afghanistan's security, allowing for an eventual Western drawdown.

o The completion of the surge withdrawal had been expected by the end of September. Obama has trumpeted ending the war in Iraq and winding down the war in Afghanistan as he seeks re-election on November 6.

· PAKISTAN - Pakistani police opened fire on rioters who were torching a cinema during a protest against an anti-Islam film Friday, and security forces clashed with demonstrators in several other cities in Pakistan on a holiday declared by the government so people could rally against the video. Thousands of people protested in several other countries, some of them burning American flags and effigies of President Obama.

o Mohammad Amir, a driver for a Pakistani television station, was killed when bullets hit his vehicle in the northwest city of Peshawar, said Kashif Mahmood, a reporter for ARY TV who was also sitting in the car at the time. The TV channel showed footage of Amir at the hospital as doctors tried to save him. It also showed the windshield of the vehicle, shattered by several gunshots.

o The film denigrating the Prophet Muhammad - "Innocence of Muslims" - has sparked unrest in many parts of the Muslim world over the past 10 days, and the deaths of at least 31 people, including the U.S. ambassador to Libya, have been linked to the violence. Much of the anger has been directed at the U.S. government even though the film was privately produced in the U.S. and American officials have criticized it for insulting Muslims.

EUROPE

· UNITED KINGDOM - The budget deficit widened to the biggest on record for any August, data showed on Friday, a day after the central bank governor said overshooting budget targets may now be acceptable.

o The government said a weak economy pushed down corporation tax receipts and drove up benefit payments.

o As a result, public sector net borrowing excluding financial sector interventions - the government's preferred measure - rose last month to 14.410 billion pounds ($23.4 billion) from 14.365 billion pounds ($23.3 billion) in August 2011.

SOUTH AMERICA

· VENEZUELA - After 14 years in power, Venezuelan President Hugo Chávez faces his toughest election yet, as he deals with a strong opposition candidate and national doubts about his health. Chávez’s biggest obstacle in his re-election campaign, however, may be his own record in office.

o A soaring crime rate and doubts over whether the populist leader could have done more with the country’s vast oil wealth continue to hound him in the final weeks of his campaign.

o Supporters of Chávez, however, argue that there has been progress since he took office in 1998. The infusion of around one trillion 'petrodollars' has allowed him to secure his support among the country’s poor through cash handouts, social programs and a number of state-run grocery stores.