Daily News Briefing: Monday, July 2nd, 2012

Published by: Clark Barrow

Clark Barrow

DAILY BRIEFING - SUMMARY

  • SLOWDOWN - Economic expert say they're seeing signs of weakness in U.S. manufacturing because of uncertainty over demand and the global and U.S. outlook.
  • OBAMACARE - The U.S. Supreme Court’s decision upholding President Obama’s health-care reform law may have cleared up some legal questions, but the landmark ruling does little to remove the uncertainty that has been hovering over the industry and the broader economy about the looming regulations. Included in this briefing is a highlight of the taxes that will impact middle income families.
  • FAST & FURIOUS - The U.S. Justice Department said Friday its prosecutors won't pursue criminal charges against their boss, Attorney General Eric Holder, over his refusal to turn over documents sought by U.S. House Republicans.
  •  CONGRESS - U.S. Representative Darrell Issa (R-CA) managed to push the details of a secret wiretap application from the botched “Fast and Furious” gunwalking operation into the public domain this week when he entered summaries into the Congressional Record, apparently using Congress‘ protection under the speech and debate clause to get around legal boundaries.
  •  CONGRESS - The U.S. Congress on Friday approved legislation that will extend federal highway programs through 2014, a low interest rate on student loans for one year, and the National Flood Insurance Program (NFIP) for five years.
  • IRAN - Iran announced missile tests on Sunday and threatened to wipe Israel "off the face of the earth" if the Jewish state attacked it, brandishing some of its starkest threats on the day Europe began enforcing an oil embargo and harsh new sanctions.
  • EGYPT – The Muslim Brotherhood’s Mohammed Morsi became Egypt's first freely elected president on Saturday, in a daylong series of ceremonies that showcased the Islamist leader's rise from persecuted opponent of a now-ousted regime to leader of the Arab world's most-populous nation.


WHAT WE KNOW

ECONOMIC NEWS

  • SLOWDOWN - Economic expert say they're seeing signs of weakness in U.S. manufacturing because of uncertainty over demand and the global and U.S. outlook.
  • Despite the 1.1 percent increase in durable goods orders last month, a Commerce Department report on Wednesday showed underlying weakness in manufacturing, which has shouldered the broader economy's recovery from the 2007-09 recession.
  • Consumers cut back on spending in May and increased their savings, another sign that the U.S. economy has cooled off. Personal spending fell less than 0.1% in May, the first decline since last November, the Commerce Department said. And spending for April and March were revised lower.
  • Monday morning futures on the Dow Jones Industrial Average increased slightly to 12,813.
  • Monday morning futures on the S&P 500 advanced 0.12% to 1,358 points.
  • Monday morning futures on the Nasdaq-100 barely moved to hover around the 2,609 level. 

COMMODITIES

  • The U.S. national average for a gallon of regular gasoline is $3.32.
    • 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 79 percent higher than they were when Mr. Obama became president.
  • Crude oil for August delivery declined $1.50 to $83.45 a barrel on the New York Mercantile Exchange.
  • Gold for August delivery declined $16 to $1,588 an ounce 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 285th day.
  • OBAMACARE - The U.S. Supreme Court’s decision upholding President Obama’s health-care reform law may have cleared up some legal questions, but the landmark ruling does little to remove the uncertainty that has been hovering over the industry and the broader economy about the looming regulations.
    • Along with Obamacare's at least 20 new or higher taxes, the act also includes:
      • 159 new bureaucracies
      • 47 new agencies, boards, and commissions
      • 68 new grant programs
      • 12,000 pages of already-issued regulations, and
      • 16,500 new IRS agents, who are needed just to enforce
    • According to CBO and the Joint Committee on Taxation (JCT),  75 percent of the mandate penalty (now confirmed as a tax) falls on Americans earning less than $120,000 a year (500% of poverty). President Obama repeated again and again during the campaign that he would not raise taxes on any family making less than $250,000 a year.
    • According to the U.S. Congressional Budget Office, the full implementation of Obamacare will mean the creation of 800,000 to 1 million fewer jobs over the next decade. The CBO said the health care law will reduce employment by 0.5 percent by 2021 because some people will no longer have to work just to afford health insurance.
    • Obamacare imposes a penalty—or tax increase—on Americans who do not purchase health insurance. The U.S. Congressional Budget Office estimates that most of those paying these taxes are middle-class individuals and families making less than 500 percent of the federal poverty level: $59,000 for an individual and $120,000 for a family of four. Three million lower-income and middle-class Americans will pay an estimated $2 billion in these “mandate taxes.”
    • According to the Centers for Medicare and Medicaid Services Office of the Actuary (OACT), growth in health spending will remain modest until 2014, when Obamacare expands Medicaid to an additional 19.6 million Americans and creates exchanges to regulate private insurance and administer new federal subsidies. Once these changes go into effect, Medicaid spending will increase by 18 percent, and private health insurance premium spending will increase by 7.9 percent. The Centers for Medicare and Medicaid Services (CMS), a component of the U.S. Department of Health and Human Services (HHS), administers Medicare and Medicaid.
    • CMS officials attributed the growth to an expansion of the insured population. Under the plan, an estimated 23 million Americans are expected to obtain insurance in 2014, largely through state-based exchanges and expanded Medicaid eligibility.
    • Beginning in 2014, Obamacare dumps an additional 19.6 million Americans into Medicaid. According to the Heritage Foundation, on average, Medicaid physician payments are only 56 percent of what private insurance pays. Lower payment rates already discourage doctors from accepting Medicaid beneficiaries, which has led to access issues and hospital emergency room overcrowding. As more patients enroll in this broken program, it will place even more financial strain on physicians who treat them.
  • FAST & FURIOUS - The U.S. Justice Department said Friday its prosecutors won't pursue criminal charges against their boss, Attorney General Eric Holder, over his refusal to turn over documents sought by U.S. House Republicans.
    • The move was an expected response to a vote in the Republican-controlled House Thursday citing Mr. Holder with contempt of Congress. Under the law, it is the responsibility of the U.S. attorney for the District of Columbia to enforce the House contempt finding, including pursuing a criminal prosecution before a grand jury.
    • Republicans have said they want to see the documents to find out how the Fast and Furious operation got under way and how officials in Washington learned about it. Some of those questions could be answered within the next few weeks, when the Justice Department's inspector general is expected to produce the first definitive account of what went wrong.
    • Meanwhile, U.S. House Speaker John Boehner said the GOP would likely take the Fast and Furious case to federal court in the next several weeks.
  • CONGRESS - U.S. Representative Darrell Issa (R-CA) managed to push the details of a secret wiretap application from the botched “Fast and Furious” gunwalking operation into the public domain this week when he entered summaries into the Congressional Record, apparently using Congress‘ protection under the speech and debate clause to get around legal boundaries.
    • The summary of a March 2010 wiretap application shows that federal agents repeatedly lost track of guns they knew were being trafficked back to cartels in Mexico — a violation of Justice Department policy that should have raised red flags with top department officials who signed off on the wiretaps, said Mr. Issa.
    • Mr. Issa introduced the summary as part of the House’s debate Thursday before lawmakers held a historic vote to to hold Attorney General Eric H. Holder Jr. in contempt of Congress.
    • Mr. Issa contends the wiretap application contradicts Mr. Holder’s claim that nothing in there would have shown gunwalking was going on.
  • CONGRESS - The U.S. Congress on Friday approved legislation that will extend federal highway programs through 2014, a low interest rate on student loans for one year, and the National Flood Insurance Program (NFIP) for five years.
    • Leaders in the U.S. House and U.S. Senate negotiated the giant package, leaving no doubt that it would have enough support to pass. The bill will likely be the last major piece of legislation approved by Congress until after the November elections.
    • The U.S. House voted 373-52 in favor of the bill, which was supported by every voting Democrat, while 52 Republicans opposed it. In the Senate, the tally was 74-19, with 23 Republicans joining every Democrat in voting for the measure. Sen. Olympia Snowe (R-Maine) voted present, while Sen. Daniel Inouye (D-Hawaii) missed the vote.
    • The final bill does not include language that would require approval of the Keystone XL oil pipeline. House Republicans had pushed for a provision on Keystone, but dropped the demand after winning a concession from Democrats to streamline permitting of transportation projects.
  • WHITE HOUSE - In his weekly radio and Internet address, President Obama praised the coordinated response to Colorado’s wildfires and said trying times bring Americans together.
    • Obama acknowledged that choosing the fires as the topic of his weekend address was unusual, but said it was an opportunity to focus on the problem facing the people of Colorado.
    • Obama emphasized the role the federal government was playing in addressing the disaster, a lesson learned from the Bush administration’s widely criticized response to Hurricane Katrina in 2005.

PRESIDENT’S SCHEDULE

  • President Obama is currently at Camp David in Sabillasville, Maryland.
  • The president will remain at Camp David through Tuesday. 

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.

FOREIGN POLICY

MIDDLE EAST

  • SYRIA - A plan by world powers for a Syrian political transition appeared doomed Sunday, with Bashar al-Assad's regime interpreting the outcome as a fresh lifeline from Russia—its principal international backer—while the lack of any reference in the plan to Mr. Assad's departure from office angered the Syrian opposition.
    • With no sign of any commitment by Syria's warring sides to embrace the transition plan outlined in Geneva on Saturday, many warned that violence could worsen even beyond the levels seen in June, which is now believed to have been the bloodiest month in the Syrian conflict.
    • According to the Syrian Observatory for Human Rights, a U.K.-based opposition group, nearly 4,000 people, including members of the security forces, have been killed since May 26.
  • IRAN - Iran announced missile tests on Sunday and threatened to wipe Israel "off the face of the earth" if the Jewish state attacked it, brandishing some of its starkest threats on the day Europe began enforcing an oil embargo and harsh new sanctions.
    • The European sanctions - including a ban on imports of Iranian oil by EU states and measures that make it difficult for other countries to trade with Iran - were enacted earlier this year but mainly came into effect on July 1.
    • They are designed to break Iran's economy and force it to curb nuclear work that Western countries say is aimed at producing an atomic weapon. Reporting by Reuters has shown in recent months that the sanctions have already had a significant effect on Iran's economy.
    • Israel says it could attack Iran if diplomacy fails to force Tehran to abandon its nuclear aims. The United States also says military force is on the table as a last resort, but U.S. officials have repeatedly encouraged the Israelis to be patient while new sanctions take effect.

AFRICA

  • EGYPT – The Muslim Brotherhood’s Mohammed Morsi became Egypt's first freely elected president on Saturday, in a daylong series of ceremonies that showcased the Islamist leader's rise from persecuted opponent of a now-ousted regime to leader of the Arab world's most-populous nation.
    • Mr. Morsi, a 60-year-old former leader in the powerful Muslim Brotherhood, swore the presidential oath in front of Egypt's Supreme Constitutional Court Saturday morning before delivering his first address as president in front of an audience of foreign and Egyptian dignitaries at Cairo University.
    • In three separate speeches Saturday, Mr. Morsi lavished praise on a military leadership and justice system who once swore loyalty to Mr. Mubarak and have recently acted to rein in Mr. Morsi's authority even before he took office.

ASIA

  • NORTH KOREA - After more than a month's delay due to Chinese objections, the United Nations on Friday published a report on North Korea that says a panel of independent experts is investigating reports of possible North Korean arms deals with Syria and Myanmar.
    • U.N. panel of experts' sanctions reports are highly sensitive. China, which is named in the report as a transit hub for illicit North Korean arms-related breaches, has prevented the 15-nation Security Council from publishing past reports.
    • The report says Pyongyang continues to defy the U.N. sanctions, though the panel received no new reports of "violations involving transfer of nuclear, other (weapons of mass-destruction)-related or ballistic missile items."