Politics: Daily Briefing: Only 96,000 new jobs added in August

Published by: Clark Barrow on Friday September 7th, 2012

Clark Barrow

By CLARK BARROW - The U.S. economy added only 96,000 new jobs in August, and 368,000 people left the workforce.

DAILY BRIEFING - SUMMARY

· JOBS - Job growth slowed sharply in August, the U.S. Labor Department said Friday. Total nonfarm payrolls increased by 96,000 and the unemployment rate declined to 8.1% in August from 8.3% in the previous month but the drop was due to a smaller labor force. A total of 368,000 Americans left the labor force in August.

· DEMOCRATIC NATIONAL CONVENTION – President Obama accepted his party's nomination for a second term, saying voters face a clear choice between two fundamentally different visions for the future. Included in this briefing are a set of specific goals the Obama campaign released Thursday and an analysis of the president’s speech.

· CONGRESS - A top U.S. Senate Democrat offered new clues Thursday about their "fiscal cliff" strategy heading into the lame-duck session of Congress after the November election, suggesting they plan on a showdown with Republicans over tax and spending policy.

o Meanwhile, the Congressional Budget Office (CBO) projected that if changes in federal taxing-and-spending policies already enacted and set to take effect at the beginning of next year do in fact take place, the unemployment rate will climb to 9.1 percent.

· WHITE HOUSE - The Obama administration circumvented federal law in announcing it would waive the work requirements in welfare, a U.S. Government Accountability Report (GAO) review found, saying that the U.S. Department of Health and Human Services (HHS) should have submitted the new policy to Congress for review.

· WASTE - The U.S. health-care system squanders $750 billion a year through unneeded care, byzantine paperwork, fraud and other waste, the influential Institute of Medicine said in a report Thursday.

· ISRAEL - Israel's defense minister says his country continues to have differences with the U.S. over Iran's disputed nuclear program.

WHAT WE KNOW

ECONOMIC NEWS

· JOBS - Job growth slowed sharply in August, the U.S. Labor Department said Friday. Total nonfarm payrolls increased by 96,000 and the unemployment rate declined to 8.1% in August from 8.3% in the previous month but the drop was due to a smaller labor force. A total of 368,000 Americans left the labor force in August.

o The U6 jobless rate, meaning the number of unemployed and underemployed measure, dropped from 15% in July to 14.7% in August.

o Meanwhile, job growth for June 2012 was revised down from 64,000 to 45,000, and July 2012 was revised down from 163,000 to 141,000.

o According to analysis from the American Enterprise Institute, if the labor force rate had just stayed same as last month, unemployment rate would be 8.4% for August 2012. The unemployment rate would be 11.2% if labor force participation rate was the same as when Obama took office.

· The Dow Jones Industrial Average closed up 244.52 points, or 1.9%, at 13,292.

· The S&P 500 Index advanced 28.86 points, or 2%, to close at 1,432.12.

· The Nasdaq Composite Index rose 66.64 points, or 2.2%, to close at 3,135.81,

COMMODITIES

· The U.S. national average for a gallon of regular gasoline is $3.82.

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 106 percent higher than they were when Mr. Obama became president.

· Crude oil for October delivery advanced 17 cents, or 0.2%, to $95.53 a barrel on the New York Mercantile Exchange.

· Gold for December delivery rose $11.60, or 0.7%, to trade at $1,705.60 an ounce on the Comex division of the New York Mercantile Exchange.

NEWS TO WATCH

· ELECTION - As of today, there are 60 days until the November 2012 presidential election.

· PROTESTERS - After a week of protests against the Democratic National Convention in Charlotte, North Carolina, a total of 10 protesters were arrested in uptown Charlotte on Thursday.

o Six environmental protesters were arrested Thursday afternoon after locking arms and sitting down at an intersection next to the uptown Duke Energy Center, which became a favorite target for political and environmental reasons. Police arrested four more after other incidents.

o Meanwhile, protesters twice interrupted U.S. House Minority Leader Nancy Pelosi during Politico’s Democratic National Convention breakfast Thursday morning.

· DEMOCRATIC NATIONAL CONVENTION – President Obama accepted his party's nomination for a second term, saying voters face a clear choice between two fundamentally different visions for the future.

o Obama’s campaign released a set of specific goals the president will work toward if he wins a second term. Some of those include:

§ JOBS - Create 1 million new manufacturing jobs by the end of 2016, support 600,000 natural gas jobs by the end of the decade.

§ DEFICIT - Cut the deficit by more than $4 trillion over the next 10 years

§ OIL - Cut net oil imports in half by 2020

§ EDUCATION - Cut the growth of college tuition in half over the next 10 years, recruit 100,000 math and science teachers over the next 10 years and train two million workers for real jobs at community colleges

o In his Thursday night speech, President Obama asked Americans to be patient with the economic recovery and sought to explain how ordinary Americans provide him with hope and inspiration. But the president’s speech also included several factual errors, including:

§ CLAIM - Throughout President Obama's speech, he claimed that the middle class would do better under his administration that a Romney administration.

· THE FACTS - Since President Obama took office, the U.S. has lost a total of 316,000 jobs and the unemployment rate has remained above 8% for 42 straight months.

· Across the country, in almost every demographic, Americans earn less today than they did in June 2009, when the recovery technically started. According to the Pew Research center, under President Obama, the middle class is in decline with lower income And Wealth.

· Since President Obama took office, the average cost of in-state tuition at a four-year college has increased from $6,585 to $8,244 – a 25 percent increase.

§ CLAIM - President Obama promised to reduce the deficit by more than $4 trillion over 10 years.

· THE FACTS - President Obama's deficit reduction claim is simply misleading at best. The $4 trillion figure, for instance, includes counting some $1 trillion in cuts reached a year ago in budget negotiations with Congress. So no matter who is the president, the savings are already in the bank. Moreover, the administration is also counting $848 billion in phantom savings from winding down the wars in Iraq and Afghanistan, even though the administration had long made clear those wars would end. The administration also counts $800 billion in savings in debt payments (from lower deficits) as a “spending cut,” which is a dubious claim.

§ CLAIM – President Obama said the U.S. can help big factories and small businesses double their exports and can create a million new manufacturing jobs in the next four years.

· THE FACTS: Obama has claimed an increase of some 500,000 manufacturing jobs over the past 29 months. But this is cherry picking by the president. From the beginning of Obama's term 3 1/2 years ago, manufacturing jobs have declined by more than 500,000, according to the U.S. Labor Department's Bureau of Labor Statistics. Manufacturing jobs have been on a steady decline for nearly two decades.

· Even though there has been a modest uptick in manufacturing jobs this year, unless there is a major turnaround, it seems unlikely that Obama's goal of 1 million new manufacturing jobs can be reached by his target date of 2016.

§ CLAIM – To help decrease rising deficits, President Obama asked anybody making over $250,000 a year to go back to the tax rates they were paying under Bill Clinton.

· THE FACTS - Here, Obama is defending his proposal to boost taxes on the wealthy by noting that the tax rate would be the same as under Clinton. The Bush tax cut set the top income-tax rate at 35 percent, and Obama would restore it to the 39.6 percent rate set during Clinton’s presidency. But while Social Security taxes are capped, there is no cap on Medicare payroll taxes — also a legacy of Bill Clinton’s 1993 deficit-reduction deal. And Obama does not mention that the health care law included a 0.9 percent Medicare surtax on incomes over $200,000 for individuals and $250,000 for couples filing joint returns. When the full payroll tax is included, the marginal tax rate would be nearly 45 percent.

§ CLAIM - Among the reasons to re-elect President Obama repeated by speakers at the first night of the Democratic Convention in Charlotte was that Obama ended the war in Iraq.

· THE FACTS - The last U.S. troops left Iraq in December 2011, while Barack Obama was president, but the “status of forces agreement” that governed the departure of U.S. troops was actually negotiated between Iraqi and U.S. officials in late 2008, under the auspices of President George W. Bush.

§ CLAIM - Under President Obama, domestic oil production is at an eight-year high.

· THE FACTS - Federal lands, which the president controls, produced 31.8 percent of domestic oil last year, slightly below the nine-year average of 33.4 percent, according to a U.S. EIA report. The increase in production last year came on state and privately-owned lands, which yielded almost 150 million barrels more than 2010. In contrast, 2011 production on federal lands dropped by 83 million from a nine-year high mark achieved in 2010.

§ CLAIM – Vice President Biden said Republican supported health care reforms would immediately cut benefits to more than 30 million seniors already on Medicare.

· THE FACTS - Biden was referring to the Medicare reform plan offered by U.S. Representative Paul Ryan, which would repeal Obamacare in its entity. While some may lose coverage if Obamacare is repealed, the Medicare plan put forward by Ryan in Congress would have no immediate effect because it would give future retirees the option of enrolling in a different plan.

§ CLAIM - Vice President Biden said Gov. Romney was willing to let Detroit go bankrupt.

· THE FACTS - Gov. Romney said “Detroit needs a turnaround, not a check.” It is also important to note that although “bankrupt” often conjures up images of liquidation, Romney called for a “managed bankruptcy.” This is a process in which the company uses the bankruptcy code to discharge its debts, but emerges from the process a leaner, less leveraged company. Ultimately, along with getting nearly $80 billion in loans and other assistance from the Bush and Obama administrations, GM and Chrysler did go through a managed bankruptcy.

· CONGRESS - A top U.S. Senate Democrat offered new clues Thursday about their "fiscal cliff" strategy heading into the lame-duck session of Congress after the November election, suggesting they plan on a showdown with Republicans over tax and spending policy.

o Sen. Dick Durbin (D., Ill.) rejected a suggestion that lawmakers in the next few weeks block spending cuts that are scheduled to begin in January because he said he wants to keep the threat of these cuts looming over Republicans to force them to negotiate.

o The Congressional Budget Office (CBO) is projecting that if changes in federal taxing-and-spending policies already enacted and set to take effect at the beginning of next year do in fact take place, the unemployment rate will climb to 9.1 percent.

o In a report released on Aug. 22, An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022, CBO’s baseline projections show that by the fourth quarter of 2013 the national unemployment rate will be 9.1 percent.

o The estimate is based on the assumptions that the automatic caps on federal spending mandated under the Budget Control Act will take effect and that the extensions of the Bush-era tax rates enacted in 2010 will also be allowed to expires as they are set to do after Dec. 31.

· WHITE HOUSE - A deadline loomed on Thursday for the Obama administration to provide details on mandatory spending cuts if Congress fails to reach a deficit reduction deal by year end, but the White House has not said when it will release the report.

o President Obama, who on Thursday night accepted the Democratic Party nomination for a second term, is required to list how the first segment of $1.2 trillion in automatic spending cuts over 10 years would affect the government. Under a law he signed on August 7, he was supposed to do that within 30 days.

o If the cuts are not changed or canceled by Congress, the spending reductions would take away about $55 billion from defense and $55 billion from other domestic programs in 2013.

· WHITE HOUSE - The Obama administration circumvented federal law in announcing it would waive the work requirements in welfare, a U.S. Government Accountability Report (GAO) review found, saying that the U.S. Department of Health and Human Services (HHS) should have submitted the new policy to Congress for review.

o At issue is whether the policy falls under the purview of the Congressional Review Act (CRA) that requires all administrative changes of policy or regulation be submitted to Congress for review and possible disapproval.

o The GAO, in a letter to House Ways and Means Chairman Dave Camp (R-Mich.) and Senate Finance Committee ranking member Orrin Hatch (R-Utah), said that the July 12 change in policy falls under the CRA and should have been submitted to Congress for approval.

PRESIDENT’S SCHEDULE

· In the morning, President Obama will depart Charlotte, N.C. and travel to Portsmouth, New Hampshire.

· In the afternoon, the president will hold a campaign event at the Strawbery Banke Museum in Portsmouth, New Hampshire.

· Later in the afternoon, the president will depart Portsmouth, New Hampshire and will travel to Iowa City, Iowa.

· In the evening, the president will hold a campaign event at the University of Iowa in Iowa City, Iowa.

· Later in the evening, the president will depart Iowa City, Iowa and travel to St. Petersburg, Florida.

· The president will remain overnight in St. Petersburg, Florida.

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

FEDERAL GOVERNMENT

· WITHDRAW - Although the U.S. Congressional Budget Office estimates that the federal government will spend $3.563 trillion in fiscal year 2012 and the White House Office of Management estimates it will be $3.795 trillion, actual withdrawals from the U.S. Treasury have already exceeded $10 trillion.

o In fact, as of the close of business Wednesday, withdrawals from the Treasury equaled $10,201,615,000,000 for fiscal 2012, which began on Oct. 1, 2011 and will end on Sept. 30.

o The federal government churns through trillions of dollars each year above the level of current annual federal spending in order to maintain its $16 trillion debt—much of which is held in U.S. Treasury notes that mature in anywhere from 2 to 10 years and Treasury bills that mature in anywhere from a few days to less than a year.

HEALTH CARE

· WASTE - The U.S. health-care system squanders $750 billion a year through unneeded care, byzantine paperwork, fraud and other waste, the influential Institute of Medicine said in a report Thursday.

o President Obama and Republican Mitt Romney are accusing each other of trying to slash Medicare and put seniors at risk, but the report's finding is that deep cuts are possible without rationing and a leaner system may produce better quality.

o The one-year estimate of $750 billion in health-care waste is equal to more than ten years of Medicare cuts in Mr. Obama's health-care law. It is more than the Pentagon budget and more than enough to care for the uninsured. The report didn't lay out a policy prescription for Medicare and Medicaid but suggested there is room for lawmakers to find a path.

FOREIGN POLICY

MIDDLE EAST

· ISRAEL - Israel's defense minister says his country continues to have differences with the U.S. over Iran's disputed nuclear program.

o Ehud Barak says "the clock is ticking at a different pace" for the U.S. and Israel, suggesting disagreements remain on the timeline for any attack on Iran's nuclear facilities.

o Barak spoke Thursday hours after meeting the U.S. Vice Chairman of the Joint Chiefs of Staff, Adm. James A. Winnefeld. Earlier this week, Israeli officials said the sides were working closely in hopes of getting their positions in sync.

o Israel believes time is running out to stop Iran from acquiring nuclear weapons. The U.S. opposes any Israeli military action right now.

· IRAN - Israeli Prime Minister Benjamin Netanyahu blew up at the U.S. ambassador last month because he was "at wit's end" over what he sees as the Obama administration's lack of clarity on Iran's nuclear program, a congressman who was at the meeting said.

o U.S. House Intelligence Committee Chairman Mike Rogers, a Republican, made his first public comments about the late August meeting in Israel in an interview with Michigan's WJR radio on Tuesday.

o Obama has vowed to prevent Iran from obtaining a nuclear weapon, but says there is still time for sanctions and diplomacy to work. The White House says it has brokered international oil and banking sanctions that are far tougher on Iran than previous administrations achieved.

· SYRIA - Western intelligence officials say that Iran's president, Mahmoud Ahmadinejad, has personally sanctioned the dispatch of the experienced officers to ensure that the Assad regime, Iran's most important regional ally, survives the threat to its survival.

o In addition, Iran has shipped hundreds of tons of military equipment, including guns, rockets, and shells, to Syria through the regular air corridor that has been established between Damascus and Tehran.

o Intelligence officials believe the increased Iranian support has been responsible for the growing effectiveness of the Assad regime's tactics in forcing anti-government rebel groups on the defensive.

o In the past few weeks, pro-Assad forces have seized the offensive by launching a series of well-coordinated attacks against rebel strongholds in Damascus and Aleppo.

AFRICA

· LIBYA - Libyan fighters opposed to Moammar Gadhafi's regime were subjected to harsh interrogation techniques while in U.S. custody overseas during the administration of George W. Bush, including one prisoner waterboarded by the Central Intelligence Agency, a human-rights advocacy group alleges in a new report.

o The accusations, if substantiated, would suggest wider use of waterboarding than U.S. officials have previously acknowledged. The CIA has said there have been three substantiated cases of detainees who were subjected to the now-banned technique, which makes subjects believe they are drowning.

o The report from Human Rights Watch, released Thursday, also alleges that the detainees were "rendered," or transferred for purposes of interrogation and detention, to Libya amid fears expressed by detainees that they would be tortured once handed over. Human Rights Watch deemed the allegations credible and called for an inquiry into the CIA detentions.

EUROPE

· EURO ZONE - The European Central Bank unveiled its most ambitious plan yet to ease Europe’s financial crisis with a plan to buy unlimited amounts of government bonds to help lower borrowing costs for countries struggling to manage their debts.

o Large-scale purchases of short-term government bonds would drive up their price and push down their interest rate, or yield, taking some pressure off of financially stressed governments such as Spain and Italy.

o The ECB’s pledge of support came with an important caveat: Countries that want the central bank to help with their borrowing costs must first ask the 17 countries that use the euro to buy their bonds with existing bailout funds and they must submit their economic policies to the scrutiny of the International Monetary Fund.