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Daily News Briefing: Thursday, August 9, 2012

Published by: Clark Barrow

Clark Barrow

DAILY BRIEFING - SUMMARY

  • STUDENT LOANS - According to data from the U.S. Treasury Department, the federal government is withholding money from a rapidly growing number of Social Security recipients who have fallen behind on federal student loans.
  • WELFARE - A study by the Republican side of the U.S. Senate Budget Committee detailed a startling statistic: More than 100 million people in U.S. are now receiving some form of federal welfare.
  • IMMIGRANT WELFARE - A new report from the Center for Immigration Studies, the study found that 43 percent of immigrants who have been in the U.S. at least 20 years were using welfare benefits, a rate that is nearly twice as high as native-born Americans and nearly 50 percent higher than recent immigrants.
  • WHITE HOUSE - According to the Heritage Foundation, recent initiative by the Obama administration to issue waivers for welfare work-activity requirements weakened the 1996 welfare reforms. The think tank said the measure would establish a new bureaucratic process that will allow for more flexible welfare work standards, thus allowing, in some cases, for unemployed individuals to receive benefits for a longer period of time.
  • LEAKS - U.S. Deputy National Security Adviser John Brennan said Wednesday that some recent leaks of national security secrets have done serious damage, but he also lashed back at critics who have charged that President Obama's White House staff is responsible for the breaches.
  • IRAN - The United States and its Arab allies are knitting together a regional missile defense system across the Persian Gulf to protect cities, oil refineries, pipelines and military bases from an Iranian attack, according to government officials and public documents.

WHAT WE KNOW

ECONOMIC NEWS

  • UNEMPLOYMENT - First-time claims for state unemployment benefits fell unexpectedly in the latest week, the U.S. Labor Department reported Thursday.
    • Initial claims for the week ending August 4 for unemployment benefits slipped 6,000 to a seasonally adjusted 361,000, the Labor Department said. The prior week's figure was revised up to 367,000 from the previously reported 365,000.
    • The number of people still receiving benefits under regular state programs after an initial week of aid rose 53,000 to 3.33 million in the week ended July 28, the claims report showed. A total of 5.75 million Americans were receiving unemployment benefits under all programs in the week ended July 21, down 214,367 from the prior week.
  • STUDENT LOANS - According to data from the U.S. Treasury Department, the federal government is withholding money from a rapidly growing number of Social Security recipients who have fallen behind on federal student loans. From January through August 6, the government reduced the size of roughly 115,000 retirees' Social Security checks on those grounds. That's nearly double the pace of the department's enforcement in 2011; it's up from around 60,000 cases in all of 2007 and just 6 cases in 2000.
    • The amount that the government withholds varies widely, though it runs up to 15%. Assuming the average monthly Social Security benefit for a retired worker of $1,234, that could mean a monthly haircut of almost $190.
    • Roughly 2.2 million student-loan debtors were 60 and older during the first quarter of 2012, and nearly 10% of their loans were 90 days or more past due, up from 6% during the first quarter of 2005, according to the Federal Reserve Bank of New York.
  • The Dow Jones Industrial Average added 7.04 points to 13,175.64.
  • The S&P 500 edged nearly 1 point higher to 1,402.22.
  • The Nasdaq Composite fell 4.61 points, or 0.2%, to 3,011.25

COMMODITIES

  • The U.S. national average for a gallon of regular gasoline is $3.66.
    • 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 98 percent higher than they were when Mr. Obama became president.
  • Crude oil for September delivery retreated 32 cents, or 0.3%, to settle at $93.35 a barrel on the New York Mercantile Exchange.
  • Gold for December delivery advanced $3.20, or 0.2%, to settle at $1,616 an ounce on the Comex division of the New York Mercantile Exchange.

NEWS TO WATCH

  • ELECTION - As of today, there are 89 days until the November 2012 presidential election.
  • WELFARE - A study by the Republican side of the U.S. Senate Budget Committee detailed a startling statistic: More than 100 million people in U.S. are now receiving some form of federal welfare.
    • Food stamps and Medicaid make up a large--and growing--chunk of the more than 100 million recipients. "Among the major means tested welfare programs, since 2000 Medicaid has increased from 34 million people to 54 million in 2011 and the Supplemental Nutrition Assistance Program (SNAP, or food stamps) from 17 million to 45 million in 2011," says the Senate Budget Committee. "Spending on food stamps alone is projected to reach $800 billion over the next decade."
    • The data come "from the U.S. Census’s Survey of Income and Program Participation shows that nearly 110 million individuals received a welfare benefit in 2011.
  • IMMIGRANT WELFARE - Immigrants lag behind native-born Americans on most measures of economic well-being — even those who have been in the U.S. the longest, according to a report from the Center for Immigration Studies, which argues that full assimilation is a more complex task than overcoming language or cultural differences.
    • The study, which covers all immigrants, legal and illegal, and their U.S.-born children younger than 18, found that immigrants tend to make economic progress by most measures the longer they live in the U.S. but lag well behind native-born Americans on factors such as poverty, health insurance coverage and homeownership.
    • The study, based on 2010 and 2011 census data, found that 43 percent of immigrants who have been in the U.S. at least 20 years were using welfare benefits, a rate that is nearly twice as high as native-born Americans and nearly 50 percent higher than recent immigrants.
  • EMPLOYED ILLEGALS - One of the nation’s top immigration think tanks estimates that 1.76 million illegal immigrants could attempt to benefit from an Obama administration decision to shield them from deportation, temporarily, and grant them two-year work permits. Moreover, the Migration Policy Institute in Washington, D.C. estimates in its new report that 58 percent of this population who are now between 15 and 30 years old are already in the U.S. labor force.
    • As of Aug. 15, the administration is opening up the process for certain undocumented youths brought here as children to apply for the two-year reprieve. It represents one of the biggest undertakings by U.S. immigration officials in years. It is not a program for permanent residency, but it does provide youths who meet the criteria temporary protection from deportation, as well as the ability to work legally and stop using fake Social Security cards or laboring off the books.
    • The Obama policy, outlined in June 15 memo, is limited to youths who were brought here before they turned 16 and have lived continuously in the United States for five years since their arrival. The youths must also be in school or have graduated from high school or obtained a GED. They cannot be over 30 at the time of the policy was announced. And they must pass a biometric and national-security screening and cannot have committed certain crimes.
  • WHITE HOUSE - The Obama Administration came out swinging against its critics on welfare reform, with Press Secretary Jay Carney saying the charge that the Administration gutted the successful 1996 reform’s work requirements is “categorically false” and “blatantly dishonest.” Even former President Bill Clinton, who signed the reform into law, came out parroting the Obama team’s talking points and saying the charge was “not true.”
    • Under the current system, states must meet certain quotas to receive federal welfare dollars under Temporary Assistance for Needy Families (TANF): certain percentages of enrolled households must meet “work activity” requirements, including work training, job searches, “job clubs” that offer job-search advice, and job searches with verified paperwork from employers where jobs were sought. Under the new changes by the U.S. Health and Human Services Department, states can propose pilot programs, which can include changes to how qualified welfare recipients are counted. If HHS approves a state’s program, it will grant a waiver from federal work-activity requirements.
    • According to the Heritage Foundation, this action by the administration weakened the 1996 welfare reforms by establishing a new bureaucratic process that will allow for more flexible welfare work standards, thus allowing, in some cases, for unemployed individuals to receive benefits for a longer period of time.
    • Since the Obama administration was unable to eliminate welfare work standards legislatively, the U.S. Health and Human Services Department claimed authority to grant waivers that allow states to get around the work requirements. The Heritage Foundation said the HHS now claims that states receiving a waiver must “commit that their proposals will move at least 20 percent more people from welfare to work compared to the state’s prior performance.” But given the normal turnover rate in welfare programs, the easiest way to increase the number of people moving from “welfare to work” is to increase the number entering welfare in the first place.
    • According to the Heritage Foundation, the new HHS “standard” is merely a ploy that will allow HHS to exempt liberal states from the regular TANF participation rates without clearly stating what they are doing.
    • While President Clinton said Republican governors in 2005 requested that a waiver be established for the welfare work requirement, the Heritage Foundation said Clinton's statement is inaccurate and that Republicans made no attempts to repeal the reforms. In fact, new strict welfare work requirements were enacted during the George W. Bush administration.

PRESIDENT’S SCHEDULE

  • In the morning, President Obama will attend a grassroots event at the Colorado Springs Fairgrounds in Pueblo, Colorado.
  • In the afternoon, the president will depart Pueblo, Colorado and travel to Colorado Springs, Colorado.
  • Later in the afternoon, the president will attend a grassroots event at Colorado College in Colorado Springs, Colorado.
  • 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 not in session today.

TOPICS OF INTEREST

NATIONAL SECURITY

  • LEAKS - U.S. Deputy National Security Adviser John Brennan said Wednesday that some recent leaks of national security secrets have done serious damage, but he also lashed back at critics who have charged that President Obama's White House staff is responsible for the breaches.
    • Following a series of leaks about Obama's involvement with "kill lists" for terrorist suspects, U.S. ties to a computer virus that set back Iran's nuclear program, and the infiltration of an Al Qaeda-linked operation by a double agent, Republicans have singled out National Security Adviser Tom Donilon as a likely source of the leaks. Some news accounts have asserted that, Brennan himself may have fueled the disclosure of the double agent's involvement in the aborted terror operation.
    • The FBI is investigating at least some of the leaks, but many Republicans have demanded a special prosecutor to oversee the politically sensitive inquiries.
  • SEQUESTRATION - With lawmakers focused on the impact to the U.S. Defense Department from impending automatic cuts, a top U.S. State Department official warned Tuesday that sequestration would also devastate that department's ongoing national security missions.
    • The U.S. State Department's steadily growing role in Defense Department-led counterinsurgency and contingency operations worldwide has made the department a de facto national security agency, Andrew Shapiro, assistant secretary of state for political-military affairs, said Tuesday.
    • As a national security agency, the U.S. State Department would suffer the same fate as DOD and the intelligence agencies if budget cuts under sequestration go forward, he said during a speech at the Washington-based Center for Strategic and International Studies.
    • All defense and national security coffers are set to receive a $500-billion, across-the-board cut as part of the sequestration plan, triggered by the failure of the so-called congressional "supercommittee" to agree on $1.2 billion in deficit reduction.

FEDERAL GOVERNMENT

  • FANNIE & FREDDIE - Fannie Mae swung to a second-quarter profit after booking a large benefit for credit losses, the latest sign the housing market is making tentative steps toward a recovery.
    • The mortgage financing company also said Wednesday it didn’t require funding from the U.S. Treasury Department for the second quarter and paid $2.9 billion in senior preferred dividends to the Treasury in the period. To date, Fannie Mae has received $116.1 billion in support and paid $25.6 billion in dividends.
    • Fannie and sister company Freddie Mac don’t lend to consumers; rather, they buy mortgages from banks and securitize them for purchase by investors. This allows lenders to continue making loans to consumers. The companies were put into government conservatorship in 2008 as the housing-market collapse drove a surge in losses at the companies. Since then, they have stayed afloat through several infusions of taxpayer money.

FOREIGN POLICY

MIDDLE EAST

  • SYRIA - As anti-government forces look to carve out a stronghold in the northern part of the country, U.S. policymakers are not ruling out establishing a series of no-fly zones to protect those rebel enclaves.
    • White House counterterrorism chief John Brennan said on Tuesday that the administration is analyzing all options. The fierce fighting in Aleppo and across Syria has only heightened calls for military action against the Assad regime. Using American and allied airpower to set up no-fly zones have long been championed by some members of Congress, led by Sens. John McCain (R-Ariz.) and Joe Lieberman (I-Conn.).
    • Brennan's comments come as rebel fighters looking to topple Syrian President Bashar Assad are slowly gaining ground in the north, concentrating their forces in the city of Aleppo.
  • IRAN - The United States and its Arab allies are knitting together a regional missile defense system across the Persian Gulf to protect cities, oil refineries, pipelines and military bases from an Iranian attack, according to government officials and public documents.
    • It is an enterprise that is meant to send a pointed message to Tehran, and that becomes more urgent as tensions with Iran rise. But it will require partner nations in the gulf to put aside rivalries, share information and coordinate their individual arsenals of interceptor missiles to create a defensive shield encompassing all the regional allies.
    • U.S. Secretary of State Hillary Rodham Clinton, among the first to raise the need for the missile shield three years ago, sought to spur the gulf allies on during a recent visit to Saudi Arabia.

AFRICA

  • EGYPT - Egypt's army on Wednesday launched helicopter missile attacks in the Sinai Peninsula, killing as many as 20 suspected terrorists in a lawless region where a military crackdown on smuggling routes into the Gaza Strip is worsening an energy crisis and heightening violence in the area.
    • The airstrikes — the first in the Sinai since 1973 — were carried out as part of an offensive to restore control of the peninsula after the killings of 16 Egyptian soldiers Sunday at the Kerem Shalom crossing linking Egypt, Israel and Gaza.
    • Egypt's military, which blames Palestinian militants across the border for Sunday’s lethal assault, for several weeks has been filling in tunnels between Gaza and the Sinai that have long served as routes for smuggling people, fuel and goods — including weapons from Libya.

EUROPE

  • EURO ZONE - The euro has fallen against most major currencies in recent months as volatility on the foreign exchange markets has increased in the debt crisis, the European Central Bank said Thursday.
    • "On August 1, the nominal effective exchange rate of the euro, as measured against the currencies of 20 of the euro area's most important trading partners, stood 4.4 percent below its level at the end of April 2012 and 8.2 percent below its average level in 2011," the ECB said.
    • Between April 30 and August 1, the euro lost 6.9 percent against the US dollar, 9.1 percent against the Japanese yen and 3.1 percent against the pound sterling, it said.