Daily News Briefing: Friday, July 13, 2012

Published by: Clark Barrow

Clark Barrow

DAILY BRIEFING - SUMMARY

  • DEBT - The national debt has now increased by more than $64,000 per federal taxpayer since Barack Obama was inaugurated president.
  • CONGRESS - U.S. House lawmakers had signaled this week that they planned to launch their own investigation into recent national security leaks -- and use subpoena power to call witnesses.
  • WELFARE REWRITE - On Thursday, the U.S. Department of Health and Human Services (HHS) released an official policy directive rewriting the welfare reform law of 1996. According to the Heritage Foundation, the new policy guts the federal work requirements that were the foundation of the reform law. The Obama directive bludgeons the letter and intent of the actual reform legislation.
  • SOCIAL SECURITY - A new report says the U.S. Social Security Administration failed to properly record the deaths of 1.2 million Americans on a list that is distributed to federal agencies and private companies, making it likely that their families or others wrongly received benefits after they died.
  • AFGHANISTAN - Moving the mountain of U.S. military gear out o fAfghanistan after more than a decade of war will cost billions of dollars and prove far more difficult than last year’s withdrawal from Iraq, the Pentagon’s No. 2 official says.
  • CHINA - China’s economy cooled to its weakest rate of growth in more than three years in the second quarter, expanding 7.6% from a year earlier, in a result that matched expectations but underscored problems faced by its export-dependent growth model.
  • SYRIA - Syria has begun moving parts of its vast arsenal of chemical weapons out of storage facilities, in a development that has alarmed many U.S. officials.

WHAT WE KNOW

ECONOMIC NEWS

  • DEBT - The national debt has now increased by more than $64,000 per federal taxpayer since Barack Obama was inaugurated president.
    • At the close of business on Jan. 20, 2009, according to the U.S. Treasury, the total debt of the federal government was $10,626,877,048,913.08. By the close of business on July 10, 2012, that debt had climbed to $15,885,854,755,351.47—an increase of $5,258,977,706,438.39.
    • In “Statistics of Income—2009 Individual Income Tax Returns,” which was published this year and is the Internal Revenue Service’s most recent statistical report on individual income tax data, the IRS reported that there were 81,890,189 tax returns filed in 2009 that reported taxable income.
  • The Dow Jones Industrial Average declined 31.26 points, or 0.3%, to close at 12,573.27.
  • The S&P 500 fell 6.69 points, or 0.5%, to 1,334.76.
  • The Nasdaq Composite slid 21.79 points, or 0.85, to 2,866.19.

COMMODITIES

  • The U.S. national average for a gallon of regular gasoline is $3.38.
    • 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 83 percent higher than they were when Mr. Obama became president.
  • Crude for August delivery advanced 27 cents, or 0.3%, to end at $86.08 a barrel on the New York Mercantile Exchange.
  • Gold for August delivery declined $10.40, or 0.7%, to settle at $1,565.30 anounce on the Comex division of the New York Mercantile Exchange.

NEWS TO WATCH

  • PROTESTORS – The Occupy Wall Street protests continue around the world, now in their 296th day.
  • CONGRESS - U.S. House lawmakers had signaled this week that they planned to launch their own investigation into recent national security leaks -- and use subpoena power to call witnesses. The move comes after some Republicans complained that U.S. Attorney General Eric Holder has not assigned a special prosecutor to the case, instead relying on two of his U.S. attorneys for the job.
    • Holder has appointed two U.S. attorneys to the leak probe -- one regarding the Iran report, the other regarding leaks about an operation to foil an Al Qaeda in the Arabian Peninsula bomb plot.
  • CONGRESS - U.S. House and U.S. Senate lawmakers are headed for a collision over funding for food stamps, the big nutrition-assistance program for low-income Americans, in the latest skirmish in the larger battle over the size and scope of federal entitlement programs.
    • The fight has taken on new urgency because it is tied to what is considered a must- pass farm bill. If lawmakers don't reach a deal, it could upend a number of unrelated farm-assistance programs that expire in September.
    • Republican leaders of the U.S. House Agriculture Committee, as part of a broader package of farm and nutrition-policy changes, advanced a measure on Wednesday that would cut $16.5 billion over 10 years from the Supplemental Nutrition Assistance Program, or SNAP. The cuts would come in part by taking away some of the flexibility available to states in the past 10 years to let more families qualify for benefits.
    • Nearly 15% of the U.S. population relied on food stamps in April 2012, the latest month with available data, according to the United States Department of Agriculture. The U.S. Department of Agriculture said 46.1 million people participated in their Supplemental Nutrition Assistance Program (SNAP/food stamps) in April 2012. The department reported that 31.9 million people participated in SNAP in January 2009, the month that Mr. Obama was inaugurated.
  • CONGRESS - U.S. House Speaker John Boehner (R-Ohio) on Thursday said closing tax loopholes “needs to come as part of overall tax reform,” potentially dealing a blow to Senate efforts to use such revenue to offset the elimination of scheduled defense cuts.
    • U.S. Senator's Lindsey Graham (R-S.C.) and John McCain (R-Ariz.) are discussing a deal that would raise $40 billion to $50 billion in new revenue by closing some tax loopholes and increasing fees. The money would help cancel out much of the $55 billion in Pentagon cuts that are scheduled for 2103.
    • But U.S. House Republicans are intent on using many of those revenue sources to offset the cost of lowering the corporate and individual income rates in a broad tax overhaul.
  • CONGRESS - The U.S. Senate failed to end debate on a small-business tax bill on Thursday. The vote to invoke cloture and end debate on the Small Business Jobs and Tax Relief Act (S. 2237) was 53 to 44 on a 60-vote threshold. The bill now goes back onto the Senate calendar.
    • The bill provides a 10 percent tax credit for businesses that increased their payrollsin 2012 compared to 2011. The credit is capped at $500,000. The bill also provides a tax deduction for companies that make major equipment purchases.
    • The vote came a day after U.S. Senate Majority Leader Harry Reid (D-Nev.) tried to move the small business bill forward as well as two competing proposals on extending the Bush-era tax rates. Senate Minority Leader Mitch McConnell (R-Ky.) blocked Reid's unanimous consent, saying he wanted to see the proposal preferred by President Obama and opposed by Republicans in paper form before he agreed to a vote on it.
  • WHITE HOUSE - The Obama administration, frustrated by its stalled nuclear diplomacy with Iran, enacted new sanctions against Tehran Thursday that are aimed at further eroding its military industries and oil exports.
    • The U.S. Treasury and State Departments targeted 11 companies working under Iran's Ministry of Defense for Armed Forces Logistics that the U.S. alleges are involved in developing the country's nuclear and long-range missile programs.
    • The administration also targeted dozens of banks and shipping companies the U.S. believes are attempting to help Iran evade a European Union embargo on the purchasing of Iranian crude oil that went into effect this month.

PRESIDENT’S SCHEDULE

  • In the morning, President Obama will depart Washington, D.C. and travel to Virginia Beach, Virginia for a grassroots campaign event at Green Run High School.
  • In the afternoon, the president will travel to Hampton, Virginia for a campaign event at Phoebus High School.
  • In the evening, the president will travel to Roanoke, Virginia for a grassroots campaign event at Historic Fire Station No. 1.
  • Later in the evening, 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 in session today.

TOPICS OF INTEREST

FEDERAL GOVERNMENT

  • WELFARE REWRITE - On Thursday, the U.S. Department of Health and Human Services (HHS) released an official policy directive rewriting the welfare reform law of 1996. According to the Heritage Foundation, the new policy guts the federal work requirements that were the foundation of the reform law. The Obama directive bludgeons the letter and intent of the actual reform legislation.
    • Welfare reform replaced the old Aidto Families with Dependent Children with a new program, Temporary Assistance for Needy Families (TANF). The underlying concept of welfare reform was that able-bodied adults should be required to work or prepare for work as a condition of receiving welfare aid.
    • The welfare reform law is often characterized as simply giving state governments more flexibility in operating welfare programs. This is a serious misunderstanding. While new law (the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) did grants states more flexibility in some respects, the core of the act was the creation of rigorous new federal work standards that state governments were required to implement.
    • According to the Heritage Foundation, the welfare reform law was very successful. In the four decades prior to welfare reform, the welfare caseload never experienced a significant decline. But, in the four years after welfare reform, the caseload dropped by nearly half. Employment surged and child poverty among affected groups plummeted. The driving force behind these improvements was the rigorous new federal work requirements contained in the TANF law.
  • SOCIAL SECURITY - A new report says the U.S. Social Security Administration failed to properly record the deaths of 1.2 million Americans on a list that is distributed to federal agencies and private companies, making it likely that their families or others wrongly received benefits after they died.
    • The report released this week by the Social Security agency’s inspector general follows several audits that in recent years have found the government paid benefits from farm subsidies to Medicare years after the people designated to receive them died. The audit did not determine how many of the 1.2 million people still are collecting government benefits or subsidies.
    • Auditors recommended that the agency do a better job matching deaths recorded on its benefit rolls with its master list, and improve its recordkeeping. In response, agency officials concurred with the recommendations, according to the report.

FOREIGN POLICY

MIDDLE EAST

  • SYRIA - Syria has begun moving parts of its vast arsenal of chemical weapons out of storage facilities, U.S. officials said, in a development that has alarmed many U.S. officials.
    • The country's undeclared stockpiles of sarin nerve agent, mustard gas and cyanide have long worried U.S. officials and their allies in the region, who have watched anxiously amid the conflict in Syria for any change in the status or location of the weapons.
    • Some U.S. officials fear Damascus intends to use the weapons against the rebels or civilians, potentially as part of a targeted ethnic cleansing campaign. But other officials said Mr. Assad may be trying to safeguard the material from his opponents or to complicate Western powers' efforts to track the weapons.
    • Meanwhile, a string of high-profile defections from the Syrian regime has stirred hopes in the West that President Bashar Assad's inner circle will start abandoning him in greater numbers, hastening his downfall.
  • IRAN - War games this month showcased missiles with improved accuracy and firing capabilities, Iranian media reports said Friday, an apparent response to stepped up Western moves against Iran's nuclear program.
    • Iran's powerful Revolutionary Guards conducted the exercise in the central desert, firing ballistic missiles including a long-range variety meant to deter an Israeli or U.S. attack. The targets were models of foreign military bases, and the stated goal was to show that Iran's missiles can hit Western bases and Israel.
    • Britain's foreign intelligence chief believes his agents prevented Iran from acquiring nuclear weapons but that the pariah state will become armed within two years, the Daily Telegraph reported Friday.

ASIA

  • AFGHANISTAN - Moving the mountain of U.S. military gear out of Afghanistan after more than a decade of war will cost billions of dollars and prove far more difficult than last year’s withdrawal from Iraq, the Pentagon’s No. 2 official says.
    • U.S. Deputy Defense Secretary Ashton Carter, the Pentagon’s point man for overseeing the draw down in Afghanistan, says land locked Afghanistan requires a 1,000-mile drive on rough, dangerous road to the port in Karachi, Pakistan. Still, that is the best option. Flying equipment out, or using the long, overland route through nations to the north, has added as much as $100 million a month in transportation costs, he said.
    • There are about 88,000 American forces there now. All U.S. combat forces are to leave by 2014.
    • In Iraq, the military essentially loaded up trucks, drove south a few hundred miles to Kuwait and shipped them home. This year, the Pentagon asked for $2.9 billion to pay for repairing and replacing equipment removed last year.
  • CHINA - China’s economy cooled to its weakest rate of growth in more than three years in the second quarter, expanding 7.6% from a year earlier, in a result that matched expectations but underscored problems faced by its export-dependent growth model.
    • Growth eased from an 8.1% expansion in the first quarter, and matched expectations of economists polled by Dow Jones Newswires. The growth rate was the weakest since the first quarter of 2009.
    • For the January-to-June period, the economy grew 7.8%, compared to 9.6% in the same period a year earlier.