Daily News Briefing: Monday, July 16, 2012

Published by: Clark Barrow

Clark Barrow

 

DAILY BRIEFING - SUMMARY

  • PER CAPITA DEBT - According to 2010 data from the International Monetary Fund data, per capita debt in the United States is higher than in all -- or at least some, depending on how it's calculated -- the European nations that have accepted bailouts to date.
  • CONGRESS - In a break with President Obama on tax rates, some Democrats in the U.S. Senate are proposing a one-year extension of Bush-era tax rates, which are set to expire at the end of the year, with a $200,000 cutoff for individuals and $250,000 for couples.
  • WHITE HOUSE - In his weekly radio and Internet address, President Obama is prodding Congress to “skip the unnecessary drama” and pass his proposal to extend Bush-era tax cuts to families earning less than $250,000 a year but not for those who earn more.
  • PORT SECURITY - The Obama administration has failed to meet a legal deadline for scanning all shipping containers for radioactive material before they reach the United States, a requirement aimed at strengthening maritime security and preventing terrorists from smuggling a nuclear device into any of the nation’s 300 sea and river ports.
  • SYRIA - The International Committee of the Red Cross said Sunday it now considers the conflict in Syria to be a full-blown civil war. This comes as senior government officials in the US, Europe and the Middle East are increasingly concerned about President Bashar al- Assad’s possession of chemical and biological weapons.
  • IRAN - Iran renewed threats on Sunday to close the Strait of Hormuz unless sanctions against it were revoked, though it remains unclear how Tehran could shut down the vital oil shipping channel given the significant American military presence there.
    • Meanwhile, the United Arab Emirates on Sunday inaugurated a much-anticipated overland oil pipeline that bypasses the Strait of Hormuz, giving the OPEC member insurance against Iranian threats to block the strategic waterway.

WHAT WE KNOW

ECONOMIC NEWS

  • PER CAPITA DEBT - According to 2010 data from the International Monetary Fund data, per capita debt in the United States is higher than in all -- or at least some, depending on how it's calculated -- the European nations that have accepted bailouts to date. The following figures indicate each country's debt per capita:
    •  
      • United States: $46,208
      • Ireland: $41,906
      • Greece: $38,159
      • Portugal: $19,686
      • Spain: $18,162
    • Experts say fortunately for the U.S., the economy is much bigger than the corresponding economies in Europe. And people are still buying U.S. debt, helping keep U.S. interest rates far lower than they are in, say, Greece.
    • But the figures help underscore the risky direction American finances are headed. The latest monthly report shows the federal budget deficit grew almost $60 billion in June, putting it on course to top $1 trillion for the fourth year in a row.
  • Monday morning futures on the Dow Jones Industrial Average fell 31 points to 12,681.
  • Monday morning futures on the S&P 500 lost 3.6 points to 1,348.10.
  • Monday morning futures on the Nasdaq-100 declined 5.5 points to 2,571.50.

COMMODITIES

  • The U.S. national average for a gallon of regular gasoline is $3.39
    • 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 oil for August delivery dropped 25 cents to end at $86.85 a barrel on CME Globex.
  • Gold for August delivery slid $6.60, or 0.4%, to 1,585.50 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 299th day.
  • CONGRESS - In a break with President Obama on tax rates, some Democrats in the U.S. Senate are proposing a one-year extension of Bush-era tax rates, which are set to expire at the end of the year, with a $200,000 cutoff for individuals and $250,000 for couples.
    • The core of the proposal would extend the George W. Bush-era cuts through 2013 for 98 percent of households while letting them expire on income above $200,000 for individuals and above $250,000 for married couples.
    • U.S. Senate Democrats are seeking to set the top tax rate on dividends at 23.8 percent, almost 20 percentage points lower than the proposal offered by President Obama. The proposed bill would set the basic top rate at 20 percent for both capital gains and dividends. The 2010 health care law included an additional 3.8 percent tax, yielding the 23.8 percent rate.
    • In his 2013 budget, Obama called for taxing dividends as ordinary income, subjecting them to a top rate of 39.6 percent and the 3.8 percent surcharge for a 43.4 percent total. President Obama, who has called for extending the Bush era-rates for families making $250,000 or less intensifies the tax fight ahead of the November elections.
  • WHITE HOUSE - The White House last week launched its fourth annual competition for money-saving, waste-cutting ideas from federal employees.
    • The goal of the SAVE Award is to produce ideas that will yield savings while also improving the way that government operates. Contestants are encouraged to submit ideas for improving the quality of government output at lower costs, simplifying processes to reduce administrative burden or improving the speed of government operations to improve efficiency.
    • The award program began in 2009 as a morale booster for the federal workforce and is an effort to publicize the administration’s focus on cutting waste. It’s unclear how many of the ideas have been implemented.
  • WHITE HOUSE - In his weekly radio and Internet address, President Obama is prodding Congress to “skip the unnecessary drama” and pass his proposal to extend Bush-era tax cuts to families earning less than $250,000 a year but not for those who earn more.
    • Obama has made his push for a tax-cut extension for all but the highest-income families a central theme in his presidential campaign last week. He has been asking Congress to send him the plan for his signature as soon as possible.
    • If Congress doesn’t act, tax rates on ordinary income, capital gains, dividends and estates would all increase in 2013.

PRESIDENT’S SCHEDULE

  • In the morning, President Obama will depart from the White House en route Cincinnati, Ohio.
  • In the afternoon, the president will attend a campaign event and deliver remarks at the Cincinnati Music Hall in Cincinnati, Ohio.
  • Later in the afternoon, the president will return to Washington, D.C.
  • In the evening, the president will attend the United States vs. Brazil women and men's basketball games at the Verizon Center in Washington, D.C.

HAPPENING IN THE U.S. CONGRESS

U.S. SENATE

  • The U.S. Senate is in session today.

U.S. HOUSE OF REPRESENTATIVES

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

TOPICS OF INTEREST

NATIONAL SECURITY

  • PORT SECURITY - The Obama administration has failed to meet a legal deadline for scanning all shipping containers for radioactive material before they reach the United States, a requirement aimed at strengthening maritime security and preventing terrorists from smuggling a nuclear device into any of the nation’s 300 sea and river ports.
    • The U.S. Department of Homeland Security was given until this month to ensure that 100 percent of inbound shipping containers are screened at foreign ports.
    • But the department’s secretary, Janet Napolitano, informed Congress in May that she was extending a two-year blanket exemption to foreign ports because the screening is proving too costly and cumbersome. She said it would cost $16 billion to implement scanning measures at the nearly 700 ports worldwide that ship to the United States.
    • The U.S. Government Accountability Office has warned that a nuclear device could be detonated while at a port — containers often sit for days awaiting radiation checks — causing billions of dollars in damage in addition to the loss of life. Estimates of damage caused by a nuclear detonation at a major port range from tens of billions of dollars to $1 trillion.

FEDERAL GOVERNMENT

  • BIO FUEL - The U.S. Navy angered Republicans by spending $26 a gallon for biofuels for this week's Great Green Fleet demonstration, but the Air Force received little attention when it paid twice as much per gallon to test synthetic jet fuel last month.
    • The U.S. Air Force bought 11,000 gallons of alcohol-to-jet fuel from Gevo Inc, a Colorado biofuels company, at $59 a gallon in a program aimed at proving that new alternative fuels can be used reliably in military aircraft - once, that is, their pricing is competitive with petroleum, which now costs $3.60 a gallon.
    • The cost of the Air Force demonstration - $639,000 - was far less eye-catching than the $12 million the Navy spent for biofuels to power a carrier strike group on alternative energy for a day.

FOREIGN POLICY

MIDDLE EAST

  • SYRIA - The International Committee of the Red Cross said Sunday it now considers the conflict in Syria to be a full-blown civil war. This comes as senior government officials in the US, Europe and the Middle East are increasingly concerned about President Bashar al- Assad’s possession of chemical and biological weapons.
    • As they work through scenarios in this conflict, western governments have three fundamental concerns. The first is that the Assad regime might use chemical weapons against the rebels. Given the pressures the regime is under, such desperation is not inconceivable.
    • The second fear is that the Assad regime loses its grip on the weapons and they fall into the hands of militant Lebanese Shia group Hezbollah. The possibility that this could happen – and that Hezbollah acquires the Scud missiles that can launch them – is of significant concern to Israel.
    • The third concern is that as fighting intensifies there could be an explosion where chemical weapons are based, releasing them into the atmosphere. Syria is thought to have five manufacturing plants and about 20 more storage sites.
  • IRAN - Iran renewed threats on Sunday to close the Strait of Hormuz unless sanctions against it were revoked, though it remains unclear how Tehran could shut down the vital oil shipping channel given the significant American military presence there.
    • The Iranian parliament is considering a bill calling for the strait to be closed. The assembly has little control over national defense and foreign policy decisions and, while the bill would be largely symbolic, it would indicate the legislature's support behind any leadership decision to close the strait.
    • Iran has repeatedly threatened to close the Strait of Hormuz shipping channel, through which 40 percent of the world's seaborne oil exports passes, in retaliation for sanctions placed on its crude exports by Western powers.
    • Meanwhile, the United Arab Emirates on Sunday inaugurated a much-anticipated overland oil pipeline that bypasses the Strait of Hormuz, giving the OPEC member insurance against Iranian threats to block the strategic waterway.

AFRICA

  • EGYPT - U.S. Secretary of State Hillary Clinton urged Egyptian leaders Sunday to mend a political rift that has widened divisions between newly empowered Islamists and a secular- minded old guard that has long looked to America for support.
    • Mrs. Clinton discussed regional security and Egypt's transition to democratic rule with Field Marshall Hussein Tantawi, the country's top general, Sunday morning, a day after meeting with Mohammed Morsi, Egypt's first freely elected president and a former leader in the Muslim Brotherhood.
    • The two meetings straddled a widening ideological divide that has frustrated Egyptians' hopes for a smooth transition to democratic civilian rule.
    • Mr. Morsi's Brotherhood-backed presidency has grappled for power with former military rulers in the past two weeks, pushing Egypt's fledgling democracy into a constitutional crisis and pitting supporters of secular governance against a rising Islamist vanguard.