Daily News Briefing: Friday, August 24, 2012

Published by: Clark Barrow

Clark Barrow

DAILY BRIEFING - SUMMARY

  • SHRINKING MIDDLE CLASS - America's middle-class earners lost significant ground during the last decade as their incomes dropped for the first extended period since World War II, according to a report released Wednesday by the Pew Research Center.
  • RETIREMENT LOSS – According to a new report, across the country, in almost every demographic, Americans earn less today than they did in June 2009, when the recovery technically started. As of June, the median household income for all Americans was $50,964, or 4.8 percent lower than its level three years earlier, when the inflation-adjusted median income was $53,508.
  • GOLD STANDARD - The gold standard has returned to mainstream U.S. politics for the first time in 30 years, with a “gold commission” set to become part of official Republican party policy.
  • WHITE HOUSE - President Obama wants Congress to agree to extend middle-class tax cuts now to take the edge off the looming "fiscal cliff" and leave tougher fiscal decisions for after November's election, the White House said on Thursday.
  • DEBT – A report by the Republican side of the U.S. Senate Budget Committee found by the end of 2012, the federal debt is expected to be $16.2 trillion, which is $6.2 trillion more than when President Obama first came into office four years ago. Over the next 4 years, if Barack Obama remains president and his budget is enacted, $4.4 trillion will be added to the federal debt.
  • IRAN - Iran has installed more uranium enrichment machines in an underground bunker, diplomatic sources said on Thursday, potentially paving the way for a significant expansion of work the West fears is ultimately aimed at making nuclear bombs.

WHAT WE KNOW

ECONOMIC NEWS

  • SHRINKING MIDDLE CLASS - America's middle-class earners lost significant ground during the last decade as their incomes dropped for the first extended period since World War II, according to a report released Wednesday by the Pew Research Center.
    • The report found that, while the economy is recovering, it likely will be years before the middle class can entirely reverse the deep losses suffered over the 10-year span.
    • Nationwide, middle-class household incomes declined by 5 percent from 2000 to 2010, to a median of about $69,000, the report found. Middle-class wealth – assets minus debt – plunged by 28 percent, largely due to the housing bust.
    • A full 85% of middle-class Americans said it was harder now than a decade ago to maintain their middle-class lifestyles. Of those who felt that way, 62% said "a lot" of the blame lay with Congress. About 54% blamed banks and financial institutions, 47% said the same about large corporations. More people placed blame with the previous Bush administration (44%) than did with the administration of President Obama (34%).
  • RETIREMENT LOSS – According to a new report, across the country, in almost every demographic, Americans earn less today than they did in June 2009, when the recovery technically started. As of June, the median household income for all Americans was $50,964, or 4.8 percent lower than its level three years earlier, when the inflation-adjusted median income was $53,508.
    • Americans nearing retirement age have suffered disproportionately after the financial crisis: along with the declining value of their homes, which were intended to cushion their final years, their incomes have fallen sharply.
    • The typical household income for people age 55 to 64 years old is almost 10 percent less in today’s dollars than it was when the recovery officially began three years ago, according to a new report from Sentier Research, a data analysis company that specializes in demographic and income data.
  • JOBS DEFICIT - The huge U.S. trade deficit with China, fueled by Beijing's actions to depress the value of its currency, displaced or eliminated more than 2.7 million American jobs between 2001 and 2011, the labor-friendly Economic Policy Institute said on Thursday in its latest look at the issue.
    • The institute estimated that nearly 77 percent, or more than 2.1 million, of the lost jobs were in manufacturing.
    • The think tank receives about 30 percent of its funding from union groups, which have pressed both the administration and Congress for tougher steps to rein in the growing trade deficit with China, which hit a record $295 billion in 2011.
  • The Dow Jones Industrial Average fell 115.3 points, or 0.9%, to 13,057.46.
  • The S&P 500 index declined 11.41 points, or 0.8%, to 1,402.08.
  • The Nasdaq Composite shed 20.27 points, or 0.7%, to 3,053.4.

COMMODITIES

  • The U.S. national average for a gallon of regular gasoline is $3.73.

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

  • Oil for October delivery retreated 99 cents, or 1%, to $96.27 a barrel on the New York Mercantile Exchange.
  • Gold for December delivery advanced $32.30, or 2%, to settle at $1,672.80 an ounce on the Comex division of the New York Mercantile Exchange.

NEWS TO WATCH

  • ELECTION - As of today, there are 73 days until the November 2012 presidential election.
  • GOLD STANDARD - The gold standard has returned to mainstream U.S. politics for the first time in 30 years, with a “gold commission” set to become part of official Republican party policy.
    • Drafts of the Republican party platform, which it will adopt at a convention in Tampa Bay, Florida, next week, call for an audit of Federal Reserve monetary policy and a commission to look at restoring the link between the dollar and gold.
    • The move shows how five years of easy monetary policy – and the efforts of congressman Ron Paul – have made the once-fringe idea of returning to gold-as-money a legitimate part of Republican debate.
  • WHITE HOUSE - President Obama wants Congress to agree to extend middle-class tax cuts now to take the edge off the looming "fiscal cliff" and leave tougher fiscal decisions for after November's election, the White House said on Thursday.
    • Obama's fellow Democrats and their rival Republicans in Congress are at loggerheads over whether to avert tax hikes on the very wealthy due to kick in at the end of this year, alongside spending cuts that could pinch the military. The White House wants the Bush-era tax cuts for the middle class to be extended, but not those for the wealthy.
    • On Wednesday, the U.S. Congressional Budget Office said that Americans should expect a "significant recession" and 2 million job losses unless U.S. lawmakers are able to resolve their differences and avoid the full fiscal cliff.  Even if Congress avoids the fiscal cliff, the CBO said the unemployment rate at the end of 2013 would be 8 percent and that the economy would only grow by 1.7 percent for the entire year.
    • Unlike ahead of last year's debt-ceiling deadline, when Vice President Joe Biden mediated a bipartisan panel on deficits, the White House has not led any formal efforts to negotiate an alternative to the year-end tax and spending crunch.

PRESIDENT’S SCHEDULE

  • President Obama has no public events scheduled for Friday, August 24, 2012.

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

  • DEBT – A report by the Republican side of the U.S. Senate Budget Committee found by the end of 2012, the federal debt is expected to be $16.2 trillion, which is $6.2 trillion more than when President Obama first came into office four years ago. Over the next 4 years, if Barack Obama remains president and his budget is enacted, $4.4 trillion will be added to the federal debt.
    • The report estimates that the federal debt will hit $17.5 trillion in 2013, $18.5 trillion in 2014, $19.4 trillion in 2015, and $20.3 trillion in 2016.
    • The U.S. Senate Budget Committee report also notes that federal debt will increase to $25.4 trillion by the end of 2022, an increase of $10.6 trillion (72 percent) under the president’s budget policies.
  • IMMIGRATION - Ten federal immigration agents have filed suit against Homeland Security Secretary Janet Napolitano claiming recent directives are forcing them to break the law and ignore their duties when it comes to deporting illegal immigrants.
    • The suit was filed Thursday in Texas federal court by Immigration and Customs Enforcement officials. It challenges recent directives allowing some illegal immigrants -- particularly non-felons and those who came to the U.S. as children -- to stay and, in some cases, get work permits
    • In the suit, the agents are asking a federal judge to block the directives in question, saying they amount to an end-run around Congress and violate the separation of powers between the Legislative and Executive branches.

HEALTH CARE

  • OBAMACARE - The U.S. Department of Health and Human Services (HHS) announced new federal grants giving 34 states the ability to create insurance exchanges under the healthcare law.
    • By comparison, governors or legislatures in only 16 states have officially created the framework for an exchange, according the Kaiser Family Foundation. The U.S. Department of Health and Human Services (HHS) is preparing for 2014, when much of the divisive law will take effect.
    • The governors of Texas, South Carolina and Florida have said they will not implement the new insurance exchanges under the Medicare expansion in the Affordable Care Act.

ENVIRONMENT

  • ARTIC ICE - The area of ice in the Arctic Ocean has thawed to a record low, surpassing the previous 2007 minimum in a sign of climate change transforming the region, according to some scientific estimates.
    • The U.S. National Snow and Ice Data Center (NSIDC), widely viewed as the main authority on sea ice, has projected that the 2007 minimum extent is set to be breached next week. The summer thaw usually continues well into September.
    • Ice has been shrinking steadily in recent decades in the Arctic, threatening the livelihoods of indigenous peoples and wildlife. It is also helping to open an area rich in oil and gas and bringing the promise of new, shorter shipping routes.

FOREIGN POLICY

MIDDLE EAST

  • SYRIA - Syrian forces on Thursday renewed attacks against rebel strongholds in the nation's two largest cities, highlighting the determination of President Bashar Assad's government to crush resistance in Damascus and the northern city of Aleppo.
    • The reported onslaught appears to be part of a government effort to root out insurgents and sympathizers throughout the greater Damascus area. The government has already swept through many city districts in a bid to crush rebels who rose up there last month.
    • The rebel offensive in the capital raised the specter that it could fall into rebel hands, or at least veer largely out of government control, but Assad's security forces appear to have beaten back rebel forces.
  • IRAN - Iran has installed more uranium enrichment machines in an underground bunker, diplomatic sources said on Thursday, potentially paving the way for a significant expansion of work the West fears is ultimately aimed at making nuclear bombs.
    • If confirmed, the development in Iran's Fordow facility - which is buried deep inside a mountain to protect it against foes - is likely to be seen as a signal of Iran's continued defiance of international demands to curb its nuclear programme.
    • Iran denies Western allegations that is seeking nuclear a weapons capability. But its refusal to suspend enrichment has been met with increasingly tough Western sanctions and heightened speculation that Israel may attack its nuclear sites.

AFRICA

  • EGYPT - The Obama administration is pressing Egypt to be transparent with Israel about its military movements in the Sinai as it cracks down on violence in the lawless desert area.
    • The U.S. State Department said Thursday that Secretary of State Hillary Rodham Clinton spoke by phone with Egyptian Foreign Minister Mohamed Kamel Amr about the matter on Wednesday. It said the call was part of U.S. discussions with both Israeli and Egyptian officials to keep communications lines open. However, Clinton did not make a similar call to Israel.
    • Egypt has been building up its military presence in the Sinai since Islamic militants killed 16 soldiers on Aug. 5. But Israel this week objected to Egypt’s deployment of tanks in the volatile border area, saying it violates a landmark 1979 peace accord. The current spat is the biggest test of the 1979 deal since Egypt’s Islamist president took power in June.

EUROPE

  • EURO ZONE - Angela Merkel and Francois Hollande presented a united front towards Greece on Thursday, telling Athens it should not expect leeway on its bailout agreement unless it sticks to tough reform targets.
    • The German and French leaders met in Berlin to fine-tune their message to Prime Minister Antonis Samaras, who begins a charm offensive in Berlin and Paris this week in the hope of persuading Europe's big powers that Greece deserves patience.
    • Merkel stuck to her policy of deferring to a report due in September on Athens' progress by the "troika" of international lenders before discussing flexibility on the bailout terms, but said it was vital "that we all stay true to our commitments".