Daily News Briefing: Monday, July 9, 2012

Published by: Clark Barrow

Clark Barrow

DAILY BRIEFING - SUMMARY

  • JOBS – While the U.S. Labor Department said the U.S. economy produced weak job growth in June 2012, the U.S. underemployment rate for June increased to 14.9 percent.
  • CONGRESS - The "automatic trigger" cuts in the Budget Control Act (BCA) stipulated that $500 billion be automatically “sequestered” from the U.S. Department of Defense. Not only are there concerns over the sustainability of these cuts, but defense contractors say it will lead to hundreds of thousands of job cuts.
  • WHITE HOUSE - On Friday, President Obama issued an Executive Order putting in place a national security measure and emergency preparedness telecommunications functions. The order includes a number of programs that will allow federal agencies to access telephone and wireless service in the event of high-outages or services disruptions.
  • WHITE HOUSE - President Obama will launch a push to extend middle-class tax cuts in a Monday address from the White House. The president is expected to call for a one-year extension of the Bush-era tax cuts for people making less than $250,000 a year.
  • THE RIGHT DIRECTION - Since January of 2011, the unemployment rate has declined in each of the 17 states that elected Republican governors in 2010. In fact, the unemployment rate in these states has decreased 50 percent faster than the national rate.
  • EGYPT – On Sunday, the head of the Muslim Brotherhood and Egyptian President, Mohamed Morsi, ordered Egypt’s Islamist-dominated parliament back in session, boldly defying the military leaders who had disbanded the body just a month ago.
    • Meanwhile, President Obama has invited Egypt's newly elected Islamist president, Mohamed Mursi, to visit the United States in September 2012.
  • UNITED KINGDOM - British security has so far made 15 terror-related arrests across the country in the run-up to the Olympics that begin at the end of this month.

WHAT WE KNOW

ECONOMIC NEWS

  • JOBS - In a report released Friday, the U.S. Labor Department said U.S. employers added 80,000 jobs in June 2012, barely better than the 77,000 they added in May. The monthly report provided the clearest evidence yet that job growth has slowed sharply from earlier this year.
    • The U.S. unemployment rate was unchanged at 8.2% in June 2012 but the underemployment rate increased to 14.9%.
    • The unemployment rate is calculated based on people who are without jobs, who are available to work and who have actively sought work in the prior four weeks.
    • Meanwhile the U-6 underemployment figure includes everyone in the official rate plus “marginally attached workers” — those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that’s all they could find.
  • Monday morning futures on the Dow Jones Industrial Average fell 62 points to 12,665.
  • Monday morning futures on the S&P 500 declined 6.3 points to 1,345.50.
  • Monday morning futures on the Nasdaq 100 lost 7.5 points to 2,601.50. 

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 oil for August delivery was off 45 cents to $84.90 a barrel on the New York Mercantile Exchange.
  • Gold for August delivery increased $4.60 to $1,609.40 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 292nd day.
  • CONGRESS - The "automatic trigger" cuts in the Budget Control Act (BCA) stipulated that $500 billion be automatically “sequestered” from the U.S. Department of Defense. Not only are there concerns over the sustainability of these cuts, but defense contractors say it will lead to hundreds of thousands of job cuts.
    • With more than $50 billion in new Pentagon cuts set to kick in in early January, industry officials say they must begin notifying employees of potential layoffs or plant closings this fall, consistent with state and federal laws. In an election year, however, it's unclear whether lawmakers can agree on a deal to reverse some of the cuts.
    • It's also unclear how extensive the job cuts would be. The National Association of Manufacturers said in a June 21 report that Pentagon spending cuts may lead to the loss of more than 1 million jobs, including 130,000 manufacturing jobs, by 2014.
    • The defense and aerospace industry is already bracing for an initial round of Pentagon cuts that will scale back U.S. military spending by around $487 billion over the next 10 years. But unless Congress changes the law, the Budget Control Act imposes additional spending cuts of $1.2 trillion over the next decade, roughly half of which will fall on the Defense Department.
  • CONGRESS - Republicans and Democrats on Sunday squared off anew over extending the Bush tax cuts as lawmakers return to Washington, D.C. after their July 4 recess.
    • Both sides are trying hard to win voters with their tax policies just four months ahead of the November elections. Later this month, House Republicans plan a vote on extending the 2001 and 2003 tax cuts for another year, and Senate Democrats have scheduled a vote this week on small-business tax cuts, including one geared toward spurring investment in equipment.
    • Republicans want tax cuts to be extended for all Americans, saying it is a matter of fairness. President Obama, on the other hand, has called for extending the Bush tax cuts only for middle-class Americans, exposing households making more than $250,000 a year to higher taxes. Mr. Obama appears to be sticking to his guns, in spite of pressure to give in because of the still anemic U.S. economy.
  • CONGRESS - Republicans in the U.S. House will vote Wednesday on a bill that would repeal the Obama health law.
    • Republicans are expected to vote for the law's repeal, while Democrats will denounce the effort as a partisan waste of time. The bill is expected to get through the U.S. House, and then go nowhere in the U.S. Senate.
    • The GOP-led House has attempted to repeal the Affordable Care Act numerous times. GOP presidential candidate Mitt Romney has vowed that if elected he would repeal the legislation on his first day in the White House.
  • WHITE HOUSE - On Friday, President Obama issued an Executive Order putting in place a national security measure and emergency preparedness telecommunications functions. The order includes a number of programs that will allow federal agencies to access telephone and wireless service in the event of high-outages or services disruptions.
    • In this order President Obama established the Executive Committee on National Security and Emergency Preparedness Communications, or NS/EP communications, to be staffed with high-ranking officials from eight agencies and departments.
    • The Executive Order said "The federal government must have the ability to communicate at all times and under all circumstances to carry out its most critical and time sensitive missions." The EO said the federal government must have the ability to produce "survivable, resilient, enduring and effective communications" during emergencies.
    • In March 2012, the White House released the "National Defense Resources Preparedness" executive order. The National Defense Resources Preparedness order gives the Executive Branch the power to control and allocate energy, production, transportation, food, and even water resources by decree under the auspices of national defense and national security. The order is not limited to wartime implementation, as one of the order’s functions includes the command and control of resources in peacetime determinations.
  • WHITE HOUSE - President Obama will launch a push to extend middle-class tax cuts in a Monday address from the White House. The president is expected to call for a one-year extension of the Bush-era tax cuts for people making less than $250,000 a year.
    • U.S. House Republicans have been pushing for an extension of the tax cuts for everyone, not just the middle class. They also are fighting to keep reductions on wealthier income earners.
    • The president has made what he refers to as "tax fairness" a key aspect of his re-election bid, saying his presumed Republican challenger Mitt Romney favors tax cuts for the rich. He has repeatedly urged Congress to make tax cuts on middle-income earners permanent.

PRESIDENT’S SCHEDULE

  • In the morning, President Obama will meet with senior advisors and receive the Presidential Daily Briefing at the White House.
  • In the afternoon, the president will participate in interviews with local TV anchors from the following markets across the country, New Orleans, Louisiana, Manchester, New Hampshire, Louisville, Kentucky, Miami, Florida, Raleigh, North Carolina, Davenport, Iowa, Milwaukee, Wisconsin, and Las Vegas, Nevada.
  • Later in the afternoon, the president will attend a campaign event at the Mandarin Oriental Hotel 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 in session today.
 

DOMESTIC ISSUES

STATE ISSUES

  • THE RIGHT DIRECTION - Since January of 2011, the unemployment rate has declined in each of the 17 states that elected Republican governors in 2010.
    • In 2010, influenced by the Tea Party and its focus on fiscal issues, 17 states elected Republican governors. And, according to an Examiner.com analysis, every one of those states saw a drop in their unemployment rates since January of 2011.
    • Furthermore, the average drop in the unemployment rate in these states was 1.35%, compared to the national decline of .9%, which means, according to the analysis, that the job market in these Republican states is improving 50% faster than the national rate.

FOREIGN POLICY

MIDDLE EAST

  • SYRIA - Syria's navy fired live missiles from ships and helicopters over the weekend, state media said on Sunday, in an exercise aiming at showcasing its ability to "defend Syria's shores against any possible aggression".
    • But while President Bashar al-Assad has faced sanctions and international condemnation over his crackdown on dissent which has left thousands dead, major Western and Arab powers have shied away from the idea of direct military action.
    • Turkey has reinforced its border and scrambled fighter aircraft several times since Syria shot down a Turkish reconnaissance jet on June 22 over what Damascus said were Syrian territorial waters in the Mediterranean. Ankara said the incident occurred in international air space.
  • IRAN - As negotiations over Iran’s nuclear program closed in a stalemate last Wednesday, the Persian regime began flexing its military might and threatening Israel, leading former U.S. officials and observers on Capitol Hill to warn that Iran does not deem the Obama administration’s threat of a military strike as credible.
    • Iran maintained during the talks that “enrichment is an inalienable and chartered right” and refused to forfeit the elements of its clandestine enrichment program that have caused the most concern, including an underground facility believed to be housing a weapons program, according to the Iranian proposal that was presented last month before the P5 + 1, a delegation of Western nations involved in the negotiations.
    • Iran’s aggressive stance—combined with recent military moves and threats against Israel—led some observers to blame the Obama administration for failing to present Iran with a serious military threat.

AFRICA

  • LIBYA - A coalition led by a Western-educated political scientist appeared on Sunday to be beating its Islamist rivals in Libya’s first election after Col. Muammar el-Qaddafi, breaking an Islamist wave that swept across neighboring Egypt, Tunisia and Morocco in the aftermath of the Arab Spring uprisings.
    • The preliminary results, characterized by independent monitors and party representatives who witnessed the vote count for a new national assembly, reflect in part the well-known name and tribal connections of the coalition’s founder, Mahmoud Jibril. He is the former interim prime minister who helped lead the de facto rebel government in Benghazi, and he is also a member of Libya’s most populous tribe, the Warfalla.
    • The apparent success of Mr. Jibril’s party over the Muslim Brotherhood’s bloc makes him perhaps the most important voice in the next stage of Libya’s transition, though he is barred for now from elected office.
  • EGYPT - President Mohamed Morsi on Sunday ordered Egypt’s Islamist-dominated parliament back in session, boldly defying the military leaders who had disbanded the body just a month ago. The generals went into an emergency session within hours of the decree.
    • According to Egypt’s official news agency, Morsi reversed the June 15 annulment of parliament by the military council, which had been ruling the country until he took office late last month, and ordered lawmakers back to work. A majority of the legislators are members of the Muslim Brotherhood’s Freedom and Justice Party — to which Morsi belongs — or other Islamist groups.
    • The decree further confuses Egypt’s tumultuous transition from dictatorship to democracy just one week before a planned visit to Cairo by U.S. Secretary of State Hillary Clinton. Morsi’s gambit could mark the start of a prolonged game of brinksmanship between an entrenched military and a government with popular support.
    • Meanwhile, President Obama has invited Egypt's newly elected Islamist president, Mohamed Mursi, to visit the United States in September 2012.

ASIA

  • AFGHANISTAN - International donors led by the U.S. and Japan agreed Sunday to provide Afghanistan with at least $16 billion in development aid through 2015—in return for fresh Afghan pledges on economic and political overhauls.
    • The aid comes as the war-strained nation prepares for elections and the withdrawal of foreign military forces in 2014. It follows a separate commitment by major donors in May to provide $4.1 billion annually for the Afghan army and police after 2014.
    • In a sign of donor nations' unease with Kabul's reform efforts, Sunday's agreement for the first time includes benchmarks; they measure progress in five areas, among them free and fair elections, human rights (specifically including women's rights) and the fight against corruption and drug trafficking.

EUROPE

  • UNITED KINGDOM - An alleged al-Qaeda militant was caught crossing through the Olympic Park five times, breaking a ban imposed by the British Government.
    • The 24-year-old -- named only as CF -- is suspected of being a militant for Somalia's Al-Qaeda-allied Shebab rebels.
    • British security has so far made 15 terror-related arrests across the country in the run-up to the Olympics that begin at the end of this month.