Daily News Briefing: Tuesday, August 14, 2012

Published by: Clark Barrow

Clark Barrow

DAILY BRIEFING - SUMMARY

  • JOBS - Citigroup Inc. estimated in a March report that a “reindustrialization” of America could add as many as 3.6 million jobs by 2020 and increase the gross domestic product by as much as 3 percent.
  • GASOLINE - The U.S. national average for a gallon of regular gasoline is $3.70. As of today, average gasoline prices are currently 100 percent higher than they were when Mr. Obama became president.
  • FAST & FURIOUS - A civil lawsuit filed Monday by U.S. House Republicans asks a federal court to enforce a congressional subpoena of U.S. Attorney General Eric H. Holder Jr. in his refusal to turn over documents sought in an investigation by a House committee into the failed Fast and Furious gunrunning operation.
  • WHITE HOUSE - The Obama administration this week will try to encourage reluctant U.S. states to move forward with health insurance exchanges amid fears that time is running out for states to act on a reform provision meant to extend coverage to millions of low-to-moderate income uninsured Americans.
  • GOVERNMENT MOTORS - The U.S. Treasury Department says in a new report the government expects to lose more than $25 billion on the $85 billion auto bailout. That's 15 percent higher than its previous forecast.
  • OIL & NATURAL-GAS PROPOSAL - The Obama administration proposed opening up 12 million acres of Alaska's 23 million-acre National Petroleum Reserve for oil and natural-gas drilling, while restricting energy production on the rest of the acreage.
  • SYRIA - Disparate groups of al Qaeda militants operating in Syria are now coordinating themselves into functional terror cells, using the current unrest in the country to establish a new faction within its borders. U.S. intelligence officials said individual al Qaeda units have begun to join forces and coordinate attacks against government troops in Syria.

WHAT WE KNOW

ECONOMIC NEWS

  • UNEMPLOYMENT BENEFITS - There were 2,362 people who earned a million dollars or more in taxable income in 2009 and who also received federal unemployment benefits that year, according to a report by the Congressional Research Service.
    • In fact, these millionaires collectively raked in more than $20 million in unemployment benefits.
    • U.S. Department of Labor regulations require that unemployment benefits must be paid to all unemployed workers regardless of their income.
  • JOBS - U.S. energy supplies have been transformed in less than a decade, driven by advances in technology, and the economic implications are only beginning to be understood. U.S. natural gas production will expand to a record this year and oil output swelled in July to its highest point since 1999.
    • Citigroup Inc. estimated in a March report that a “reindustrialization” of America could add as many as 3.6 million jobs by 2020 and increase the gross domestic product by as much as 3 percent.
    • The expansion of fossil-fuel production -- coupled with a weak economy and increased energy efficiency -- has helped the U.S. pare its crude oil imports by 17 percent since the 2005 peak, Energy Department data show. Imports in 2011 accounted for 45 percent of U.S. consumption of crude and refined products. The department predicts the share will fall to 39 percent next year, which would be the first time since 1991 that imports dropped below 40 percent of demand.
  • The Dow Jones Industrial Average lost 38.52 points, or 0.3%, to 13,169.43.
  • The S&P 500 lost 1.76 points, or 0.1%, to 1,404.11.
  • The Nasdaq Composite ended up 1.66 points, or 0.1%, to 3,022.52,

COMMODITIES

  • The U.S. national average for a gallon of regular gasoline is $3.70.
    • 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 100 percent higher than they were when Mr. Obama became president.
  • Crude oil for September delivery retreated 14 cents, of 0.2%, to end at $92.73 a barrel on the New York Mercantile Exchange.
  • Gold for December delivery declined $10.20, or 0.6%, to settle at $1,612.60 an ounce on the Comex division of the New York Mercantile Exchange.

NEWS TO WATCH

  • ELECTION - As of today, there are 84 days until the November 2012 presidential election.
  • FAST & FURIOUS - A civil lawsuit filed Monday by U.S. House Republicans asks a federal court to enforce a congressional subpoena of U.S. Attorney General Eric H. Holder Jr. in his refusal to turn over documents sought in an investigation by a House committee into the failed Fast and Furious gunrunning operation.
    • U.S. House Speaker John A. Boehner said in a statement the lawsuit seeks to overturn the Obama administration’s “frivolous executives privilege claims,” forcing the Justice Department to make public documents the House Oversight and Government Reform Committee claims could show who at the department was aware of the botched investigation and what they did about it.
    • Mr. Boehner said President Obama and his team were ignoring an Oct. 11 congressional subpoena — something the courts have long recognized as valid — and that lawmakers were left with no choice but to ask the U.S. District Court in Washington to referee
  • WHITE HOUSE - The Obama administration this week will try to encourage reluctant U.S. states to move forward with health insurance exchanges amid fears that time is running out for states to act on a reform provision meant to extend coverage to millions of low-to-moderate income uninsured Americans.
    • The U.S. Department of Health and Human Services has scheduled four regional meetings this month to discuss the exchanges and other aspects of President Barack Obama's healthcare reform law with state officials and others. The meetings begin on Tuesday in Washington, D.C., and continue in Atlanta, Chicago and Denver until August 22.
    • Because the healthcare law requires the U.S. government to set up federal exchanges in states that do not create their own, the administration could face the daunting task of establishing federal exchanges in dozens of states -- raising questions about a possible delay in the implementation of reform.
    • A health insurance exchange is a set of state-regulated and standardized health care plans in the United States, from which individuals may purchase health insurance eligible for federal subsidies.
  • WHITE HOUSE - President Obama on Monday ripped Republican vice presidential candidate Paul Ryan for standing in the way of the farm bill.
    • Obama chose Iowa, where the farm bill is a priority, to make his pitch just days after Republican presidential hopeful Mitt Romney energized his party by picking Ryan as his running mate.
    • The Senate approved a bipartisan farm bill earlier this year that included disaster-relief measures, but GOP leaders in the House chose not to bring up a farm bill that could have divided Republicans. The House did move its own drought-relief measure through the chamber.
    • The U.S. House already passed its own farm bill in early August 2012. The U.S. House farm bill would cut U.S. Department of Agriculture programs by $35.1 billion over the next decade. Democrats are resisting the $16 billion in cuts over a decade to the food-stamp nutrition program for low-income Americans. The U.S. Senate’s agriculture bill, passed last month, is designed to save $23.1 billion over a decade, cutting food stamps by about $4 billion.

PRESIDENT’S SCHEDULE

  • In the morning, President Obama will deliver remarks at a campaign event at the Nelson Pioneer Farm and Museum in Oskaloosa, Iowa.
  • In the afternoon, the president will deliver remarks at a campaign event at B.R. Miller Middle School in Marshalltown, Iowa.
  • In the evening, the president will deliver remarks at a campaign event at the Waterloo Center for the Arts in Waterloo, Iowa.
  • The president will remain overnight in Cedar Falls, Iowa.

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

  • BORDER-PATROL - The U.S. military is joining with border-patrol officials in a new initiative that could bring dozens of surveillance blimps from the battlefields of Afghanistan to America's border with Mexico.
    • Over the next few weeks, the military will oversee a test in south Texas to determine if a 72-foot-long, unmanned surveillance blimp—sometimes called "the floating eye" when used to spot insurgents in Afghanistan—can help find drug runners and people trying to cross illegally into the U.S.
    • The project is part of a broader attempt by U.S. officials to establish a high-tech surveillance network along the border and find alternative uses for expensive military hardware that will be coming back from Afghanistan, along with the troops.

FEDERAL BUDGET

  • GOVERNMENT MOTORS - The U.S. Treasury Department says in a new report the government expects to lose more than $25 billion on the $85 billion auto bailout. That's 15 percent higher than its previous forecast.
    • In a monthly report sent to Congress on Friday, the Obama administration boosted its forecast of expected losses by more than $3.3 billion to almost $25.1 billion, up from $21.7 billion in the last quarterly update.
    • The U.S. Treasury still owns 26.5% of GM, or 500 million shares. Taxpayers are still out $26.4 billion in direct aid. But the Obama administration essentially gifted $45 billion in write-offs to GM. Include that $18 billion gift, and taxpayers' true loss climbs to nearly $35 billion.

ENERGY

  • OIL & NATURAL-GAS PROPOSAL - The Obama administration proposed opening up 12 million acres of Alaska's 23 million-acre National Petroleum Reserve for oil and natural-gas drilling, while restricting energy production on the rest of the acreage.
    • U.S. Interior Secretary Ken Salazar said Monday the proposal strikes "an important balance" between energy production and environmental conservation. The National Petroleum Reserve, a swath of land on Alaska's North Slope, is home to bears, wolves and falcons, as well as caribou herds used by Alaska native villages for subsistence. The plan quickly attracted critics who say the proposal is too restrictive.
    • Mr. Salazar said the proposal targets areas that hold the majority of energy resources. The areas targeted for oil and natural-gas leasing are thought to hold 550 million barrels of economically recoverable oil and 8.7 trillion cubic feet of economically recoverable natural gas, the Interior Department said.
    • The proposal released Monday, identified as the administration's "preferred alternative," is similar to one of four possible management plans unveiled by the Interior Department earlier this year. The department will make its formal choice later this year.
  • ALASKAN OIL - A report from the U.S. Congressional Budget Office (CBO) estimates that lifting the ban on federal oil drilling in certain areas could increase U.S. petroleum reserves by 30 percent, including an estimated 8 billion barrels of oil in the Alaska National Wildlife Refuge (ANWR).
    • Using estimates from the U.S. Department of the Interior (DOI), CBO said that lifting federal drilling restrictions could bring billions more barrels of oil and gas to market.
    • “CBO estimates that about 175 billion barrels of oil equivalent (BOE) exists in undiscovered oil and gas reserves on federal lands (excluding most of the natural gas reserves in Alaska)—nearly half of it in the central and western parts of the Gulf of Mexico,” CBO said.
    • Thus, by lifting federal drilling bans in place in areas like ANWR and areas of the Outer Continental Shelf, oil-producing companies could gain access to an additional 30 percent of U.S. reserves – 52.5 billion barrels.

FOREIGN POLICY

MIDDLE EAST

  • SYRIA - Disparate groups of al Qaeda militants operating in Syria are now coordinating themselves into functional terror cells, using the current unrest in the country to establish a new faction within its borders. U.S. intelligence officials said individual al Qaeda units have begun to join forces and coordinate attacks against government troops in Syria.
    • The al Qaeda cells currently on the ground inside Syria have been operating independently alongside anti-government forces looking to force current Syrian president Bashar Assad from power.
    • U.S. Defense Department officials have repeatedly stated al Qaeda operatives have not infiltrated the ranks of the Free Syria Army (FSA), the largest opposition force battling against Assad's troops.
  • IRAN - Iran on Tuesday said it is dismissing Israeli threats of an imminent attack against it, explaining that even some Israeli officials realized such a "stupid" act would provoke "very severe consequences."
    • Israeli media have underlined the threat, reporting that a decision could be made within weeks. They have also highlighted opposition to the idea by current and former Israeli military officials.
    • The United States has recently multiplied visits by top officials to Israel in what appears to be an attempt to dissuade the Jewish state from targeting the Islamic republic.

AFRICA

  • EGYPT - For the first time since the toppling of then-Egyptian President Hosni Mubarak 18 months ago, Egypt is being governed by a person with zero ties to the previous regime, the result of a series of stunning personnel and constitutional changes that Mubarak’s successor, President Mohammed Morsi, announced Sunday.
    • Morsi consolidated nearly every facet of government power for himself, including overseeing the military and legislative functions, leaving only the judiciary independent. He also gave himself final say over the writing of a permanent constitution. On Monday, his spokesman, Yasser Ali, said Morsi wouldn’t reinstate Parliament, which was dissolved in June after a court ruled that the elections of some of its members were unconstitutional.
    • Together, Morsi’s changes appeared to strip a military that’s governed Egypt in some way since its independence 60 years ago of any direct power and left himself in complete control.

EUROPE

  • EURO ZONE - Euro zone output is seen declining in the second quarter when the European Union releases data on Tuesday, as the debt crisis hurts confidence, making businesses reluctant to invest and consumers worried about spending.
    • Gross domestic product (GDP) in the zone likely shrank 0.2 percent from the first quarter of the year, according to an average of estimates of 55 economists polled by Reuters. The most pessimistic forecast a contraction of 0.7 percent.
    • The downturn comes amid political events that have further rattled the continent. In June, the success of anti-bailout parties in the run up to a Greek vote raised the specter of it leaving the euro zone. Spain rescued the struggling lender Bankia (BKIA.MC), increasing worries over the euro zone's fourth-largest economy.