Daily News Briefing: Wednesday, August 1, 2012

Published by: Clark Barrow

Clark Barrow

DAILY BRIEFING - SUMMARY

  • ARMS TRADE TREATY - The month-long United Nations conference to draw up a global Arms Trade Treaty (ATT) failed to achieve consensus after the United States, Russia, and China requested more time to consider a draft treaty, according to the United Nations.
  • OBAMACARE - New health care benefits kick in Wednesday (today) requiring coverage of preventive services and screenings largely affecting women.
  • HEALTH CARE RATIONING - Sixteen states have set a limit on the number of prescription drugs they will cover for Medicaid patients, according to Kaiser Health News.
  • CONGRESS - Democrats and Republicans in the U.S. Congress have reached a deal to fund federal government activities through next March and eliminate any threat of agency shut downs that could upset voters ahead of the November 6 presidential and congressional elections, congressional aides said on Tuesday.
  • WHITE HOUSE - President Obama said his administration will exempt all military personnel accounts from the $500 billion in defense cuts under sequestration.
  • AL-QAEDA - Al-Qaeda affiliates pose a rising threat exploiting poverty and upheavals in the world's most vulnerable regions even as the core network is on the decline, the U.S. State Department warned Tuesday.
  • CHINA - China has said it will land an exploratory craft on the moon for the first time next year, as part of an ambitious space program that includes a plan to put a man on the moon.
  • EURO ZONE - The number of people unemployed across the 17 countries that use the euro hit a record high in June, official figures showed Tuesday, in a stark reminder that Europe's debt crisis has ramifications beyond the financial markets.

WHAT WE KNOW

ECONOMIC NEWS

  • FEDERAL RESERVE - The U.S. Federal Reserve's top policy makers began a two-day meeting Tuesday, when they were expected to shy away from launching new economic stimulus measures.
    • The interest rate-setting Federal Open Market Committee (FOMC) began the meeting in Washington, D.C. under the shadow of sub-par growth in the world's largest economy.
    • The FOMC is expected to wrap up the meeting Wednesday around 2:15 pm EST.
  • The Dow Jones Industrial Average lost 64.33 points, or 0.5%, to 13,008.68.
  • The S&P 500 index retreated 5.98 points, or 0.4%, to 1,379.32.
  • The Nasdaq Composite dropped 6.32 points, or 0.2%, to 2,939.52.

COMMODITIES

  • The U.S. national average for a gallon of regular gasoline is $3.52.
    • 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 90 percent higher than they were when Mr. Obama became president.
  • Crude for September delivery retreated $1.72, or 1.9%, to $88.06 a barrel on the New York Mercantile Exchange.
  • Gold for August delivery fell $9.20, or 0.6%, to end at $1,610.50 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 315th day.
  • ARMS TRADE TREATY - The month-long United Nations conference to draw up a global Arms Trade Treaty (ATT) failed to achieve consensus after the United States, Russia, and China requested more time to consider a draft treaty, according to the United Nations. The draft treaty, which would have required national gun registration, required unanimity among the nations assembled in order to advance.
    • Proponents of the global gun control measure argued that the ATT draft treaty would not have impacted private firearms ownership in the United States under the Second Amendment, as the treaty was nominally directed to international transfer of firearms. Opponents such as the National Rifle Association and other supporters of the Second Amendment said while draft versions of the ATT did not explicitly call for the ban on privately held firearms, they did call for national gun registration and vague “control” measures that could be implied to include gun collection.
    • The Obama administration was under pressure to delay or walk away from an agreement. Fifty-one U.S. senators had urged the administration not to sign it in a letter sent Thursday. That letter sent an important signal of defeat because ratification requires 67 Senate votes.
  • OBAMACARE - New health care benefits kick in Wednesday requiring coverage of preventive services and screenings largely affecting women. Beginning August 1, 2012, all new and non-grandfathered insurance plans will be required to cover a wide range of early detection services, including mammograms and cervical cancer screenings, without co-payments or other cost sharing requirements.
    • The new policy requires insurers to cover a comprehensive set of set of preventive services, including both prenatal and postnatal care, breastfeeding supplies, domestic violence counseling, and screening for gestational diabetes.
    • But by far the most controversial aspect of the new policy is its contraception coverage. Under the new rules, all employers -- including religiously affiliated institutions -- must cover Food and Drug Administration-approved contraceptives such as birth control pills and the so-called Plan B "morning after" pill. While churches are exempt, hospitals and schools with religious affiliations must comply.
  • HEALTH CARE RATIONING - Sixteen states have set a limit on the number of prescription drugs they will cover for Medicaid patients, according to Kaiser Health News.
    • Seven of those states, according to Kaiser Health News, have enacted or tightened those limits in just the last two years.
    • Medicaid is a federal program that is carried out in partnership with state governments. It forms an important element of President Barack Obama's health-care plan because under the Patient Protection and Affordable Care Act--AKA Obamcare--a larger number of people will be covered by Medicaid, as the income cap is raised for the program.
    • With both the expanded Medicaid program and the federal subsidy for health-care premiums that will be available to people earning up to 400 percent of the poverty level, a larger percentage of the population will be wholly or partially dependent on the government for their health care under Obamacare than are now.
  • CONGRESS - Democrats and Republicans in the U.S. Congress have reached a deal to fund federal government activities through next March and eliminate any threat of agency shut downs that could upset voters ahead of the November 6 presidential and congressional elections, congressional aides said on Tuesday.
    • The deal, which congressional leaders were expected to announce later on Tuesday, would fund discretionary federal programs - from defense and foreign aid to education, transportation and medical research - at levels specified in last year's debt limit deal, about $1.047 trillion.
    • The full U.S. House of Representatives and U.S. Senate would still need to approve the measure by September 30, the end of the current fiscal year.
  • WHITE HOUSE - President Obama is championing the profits of a European-owned carmaker as proof the auto bailout worked. But the president failed to mention that Fiat, an Italian car company, bought a controlling stake in Chrysler from the U.S. Treasury in 2011.
    • American taxpayers provided Chrysler a $12.5 billion bailout in 2009 to save the company, $3 billion of which will never be paid back, according to the latest U.S. Inspector General Report.
    • Those losses have doubled since March, when Team Obama released a campaign video championing the bailout as a “success” despite the $1.3 billion Chrysler failed to pay back at that time.
  • WHITE HOUSE - President Obama will exempt all military personnel accounts from the $500 billion in defense cuts under sequestration, the Obama administration said in a letter to Capitol Hill on Tuesday.
    • Acting U.S. Office of Management and Budget Director Jeffrey Zients told Congress the president is exercising his authority in the Budget Control Act to exempt military personnel from the 10-year sequestration cuts.
    • The decision to exempt personnel will place further strain on the budget accounts that defense contractors rely on for weapons programs, should the automatic spending cuts occur.

PRESIDENT’S SCHEDULE

  • In the morning, President Obama will depart Washington, D.C. and travel to Mansfield, Ohio.
  • Later in the morning, the president will deliver remarks at a campaign event at Mansfield Central Park in Mansfield, Ohio.
  • In the afternoon, the president will depart Mansfield, Ohio and travel to Akron, Ohio.
  • Later in the afternoon, the president will deliver remarks at a campaign event at the John S. Knight Center in Akron, Ohio.
  • In the evening, the president will depart Akron, Ohio and return to 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.

TOPICS OF INTEREST

NATIONAL SECURITY

  • AL-QAEDA - Al-Qaeda affiliates pose a rising threat exploiting poverty and upheavals in the world's most vulnerable regions even as the core network is on the decline, the U.S. State Department warned Tuesday.
    • In its Country Reports on Terrorism 2011, the department also branded Iran "the world's leading sponsor of terrorist activity" providing funds and support "for terrorist and militant groups throughout the Middle East."
    • The report said the loss of Osama bin Laden and these other key operatives put the network on a path of decline that will be difficult to reverse, but while the core group of Al-Qaeda may have been weakened over the past year, U.S. officials said they have seen the rise of affiliated groups around the world.

DOMESTIC ISSUES

STATE ISSUES

  • GEORGIA - Voters voted against a one percent sales tax referendum to pay for transportation projects in nine of 12 regions in Georgia, including in metro Atlanta.
    • Voters in 12 individual regions across Georgia were asked to decide on the referendum that has potential to generate more than $18 billion for transportation projects across the state over the next decade. The measure lost in nine of 12 regions, including metro Atlanta. The TSPLOST referendum lost in all 10 metro counties in the Atlanta region.
    • Meanwhile, State Rep. Doug Collins of Gainesville and conservative talk radio host Martha Zoller will advance to a runoff on August 21, 2012 in the race for Georgia's 9th District.

FOREIGN POLICY

MIDDLE EAST

  • SYRIA - The U.S. has given a Washington-based group clearance to provide direct financial assistance to the Free Syrian Army, a new bid by the Obama administration to support Syria's opposition.
    • The U.S. Treasury Department's Office of Foreign Assets Control approved a license last week allowing the Syrian Support Group to engage in otherwise prohibited financial activities with the Free Syrian Army.
    • The license doesn't permit the group to ship military equipment or hardware, but it does authorize it to send financial aid. The Syrian Support Group was established earlier this year to lobby for U.S. backing for the Free Syrian Army. It includes Syrian expatriates and works with retired Syrian military officers.
  • IRAN - The Obama administration and Congress moved separately Tuesday to tighten the economic screws on Iran, betting that additional pressure from sanctions will force Iranian officials to accept a compromise to curb their nuclear activities.
    • The White House imposed new penalties on two foreign banks — one in China, another in Iraq — for allegedly acting as surrogates for Iranian financial institutions that have been nearly shut down by previous rounds of U.S. and European sanctions.
    • Iran has balked at proposals — put forward by the United States and five other powers during talks over the past three months — to curb its uranium enrichment program and take additional steps to ease international concerns about its nuclear ambitions. The most recent rounds of talks, held last week in Istanbul, ended without a deal and with no additional negotiations scheduled. Iranian
  • IRAN - Iran has allowed the Taliban to open an office in eastern Iran and discussed providing them with surface-to-air missiles, ramping up the potential for cooperation with the insurgents, according to senior Afghan and Western officials.
    • Iran's shift came after the U.S. and Afghanistan sealed a long-term partnership agreement in May, and in an effort to expand its options for retaliation should its nuclear facilities be attacked, the officials said.
    • Iran, a Shiite theocracy, wasn't friendly with the Sunni Taliban government ousted by the U.S. in 2001 and hasn't permitted an official Taliban presence in the country until now. But these days both sides "see America as the bigger enemy" a Western official in Kabul said.

ASIA

  • AFGHANISTAN - U.S. officials see new evidence that Taliban leaders, under pressure from NATO and Afghan forces, are ready to talk about a settlement that might end the Afghanistan war.
    • The Obama administration's efforts earlier this year to negotiate with Taliban leaders largely failed due to differences between the group and Washington—and inside the Taliban's own ranks.
    • The last attempt at talks with the hard line Islamist group fizzled this spring, but the Obama administration signaled Tuesday it is ready to try again. The signal is the latest sign the White House is eager to end the decade-long war even faster than its own timeline to remove Western troops by the end of 2014.
  • INDIA - Grids supplying electricity to half of India's 1.2 billion people collapsed on Tuesday, trapping coal miners, stranding train travelers and plunging hospitals into darkness in the second major blackout in as many days.
    • Stretching from Assam, near China, to the Himalayas and the northwestern deserts of Rajasthan, the outage was the worst to hit India in more than a decade and embarrassed the government, which has failed to build up enough power capacity to meet soaring demand.
    • Prime Minister Manmohan Singh has vowed to fast-track stalled power and infrastructure projects as well as introduce free market reforms aimed at reviving India's flagging economy. But he has drawn fire for dragging his feet.
  • CHINA - China has said it will land an exploratory craft on the moon for the first time next year, as part of an ambitious space program that includes a long-term plan to put a man on the moon.
    • China's third lunar probe will blast off in the second half of 2013 and attempt to land and transmit back a survey of the moon's surface.
    • If it succeeds, experts said it would be the first craft to land on the moon as part of a mission -- as opposed to performing a controlled crash landing at the end of one -- since the Soviet space program achieved the feat in the 1970s.

EUROPE

  • EURO ZONE - The number of people unemployed across the 17 countries that use the euro hit a record high in June, official figures showed Tuesday, in a stark reminder that Europe's debt crisis has ramifications beyond the financial markets.
    • Eurostat, the EU's statistics office, said 17.801 million people were out of work in the eurozone in June. That was 123,000 more than May, and is the highest level since the euro was formed in 1999. The increase was the 14th in a row and means that around 2.25 million people have lost their jobs since April 2011.
    • The eurozone unemployment is nearly three percentage points higher than the U.S.'s equivalent 8.2 percent. Europe's unemployment rate for May had originally been estimated at 11.1 percent.