Daily News Briefing: Wednesday, August 22, 2012

Published by: Clark Barrow

Clark Barrow

DAILY BRIEFING - SUMMARY

  • JOBS - A study by the American Automotive Policy Council warned the United States could lose 2,600 auto industry jobs and thousands more in the broader economy if Japan is allowed to join a proposed free trade pact at the center of President Obama's trade agenda.
  • SHORT SALE - U.S. homeowners with collapsed property values could have an easier time selling their homes for less than the outstanding mortgage amount under changes rolled out by the U.S. Federal Housing Finance Agency.
  • WHITE HOUSE - President Obama accused rival Mitt Romney of being oblivious to the burdens of paying for college on Tuesday, telling young voters in battleground Ohio that his opponent's education policies amount to nothing more than encouraging them to tap their parents for money or "shop around" for the best deal.
  • STIMULUS - The U.S. Labor Department paid out hundreds of thousands of dollars in federal stimulus funds to a public relations firm to run more than 100 commercials touting the Obama administration’s “green training” job efforts on two popular MSNBC cable shows.
  • COAL - A U.S. federal appeals court Tuesday rejected the Environmental Protection Agency's latest effort to limit soot- and smog-forming air pollution that blows across state lines, providing a short-term lifeline for aging coal-fired power plants and removing a significant accomplishment from the Obama administration's environmental resume.
  • MEDICAID - A new study by HealthAffairs reveals that nearly one-third of doctors nationwide are unwilling to accept new Medicaid patients. The reason is that the government doesn’t pay enough to cover the cost of treating them. According to the Centers for Medicare and Medicaid Services Office of the Actuary, Medicaid physicians were paid only 58 percent of what private insurance paid in 2008.

WHAT WE KNOW

ECONOMIC NEWS

  • JOBS - A study by the American Automotive Policy Council warned the United States could lose 2,600 auto industry jobs and thousands more in the broader economy if Japan is allowed to join a proposed free trade pact at the center of President Obama's trade agenda.
    • The study found that Japanese automakers are increasingly exporting cars from the United States and lowering barriers through a comprehensive trade agreement with Japan and other Asian trading partners can only serve to further encourage this trend and increase U.S. jobs.
    • The study estimated eliminating the current 2.5 percent U.S. tariff on Japanese auto imports would boost Japan's exports to the United States by 105,000 units, resulting in "a loss of 2,600 direct U.S. automotive manufacturing jobs.  It estimated another 9,000 jobs would be lost among manufacturing and services companies that supply U.S. auto firms, and an additional 14,900 jobs would be lost in the broader U.S. economy because of lower income.
    • The study was paid for by Ford Motor Co., which has led the U.S. auto industry charge against Japan joining talks on the proposed Trans-Pacific Partnership pact.
  • SHORT SALE - U.S. homeowners with collapsed property values could have an easier time selling their homes for less than the outstanding mortgage amount under changes rolled out by the U.S. Federal Housing Finance Agency.
    • The U.S. Federal Housing Finance Agency, along with the mortgage-finance giants it regulates, Fannie Mae and Freddie Mac, on Tuesday announced a set of steps to make these "short sales" easier to obtain.
    • Under the changes, which are effective Nov. 1, homeowners with missed mortgage payments and serious financial problems would need to submit fewer documents to be approved for a short sale.
    • In addition, homeowners will be eligible to be considered for a short sale even if they haven't missed any mortgage payments. Lenders will be permitted to go ahead with those sales without Fannie's and Freddie's approval if the borrower is experiencing a financial hardship such as a death in the family, divorce, job loss or job relocation of more than 50 miles.
  • DROUGHT - More than 18 percent of Americans say there have been times this year when they couldn't afford the food they needed, according to a Gallup poll released on Tuesday.
    • That plight could grow because of the country's worst drought in half a century. The U.S. Department of Agriculture warned last month that Americans should expect to pay 3 to 5 percent more for groceries next year because of the drought.
    • Gallup said the 18.2 percent of Americans who so far in 2012 reported having problems is on par with the 18.6 percent who had trouble affording food in 2011. Feedinghunger.org says one in six people in the U.S. go without food for several meals or even days.
  • The Dow Jones Industrial Average dropped 68.06 points, or 0.5%, to 13,203.58.
  • The S&P 500 index lost 4.96 points, or 0.4%, to 1,413.17.
  • The Nasdaq Composite fell 8.95 points, or 0.3%, to 3,067.26.

COMMODITIES

  • The U.S. national average for a gallon of regular gasoline is $3.71.
    • 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 101 percent higher than they were when Mr. Obama became president.
  • Oil for September delivery advanced 71 cents, or 0.7%, to $96.68 a barrel on the New York Mercantile Exchange.
  • Gold for December delivery advanced $19.90, or 1.2%, to $1,642.90 an ounce on the Comex division of the New York Mercantile Exchange.

NEWS TO WATCH

  • ELECTION - As of today, there are 76 days until the November 2012 presidential election.
  • CONGRESS - Approval of Congress has matched its all-time low, according to a Wall Street Journal/NBC News poll to be released in full later Tuesday. Meantime, voters have a slightly more positive view of the Democratic Party over the GOP as both sides prepare for their national conventions.
    • The survey of registered voters found that just 12% approve of the work lawmakers do on Capitol Hill, on par with voter sentiment in October 2008 when America plunged into an economic crisis. Another 82% in the new poll said they disapprove. The WSJ/NBC News poll has been asking the question since 1990.
    • Last week, a Gallup poll reported that Congress’s approval rating had hit 10%, matching a 38-year-low in that poll last reached in February 2011.
  • CONGRESS - The U.S. Congress could delay billions of dollars in 2013 U.S. tax refunds, dealing a blow to the economy, if it waits too long after the November 6 elections to finalize tax law, a top tax oversight official said.
    • The political uncertainty about what Congress may do after the elections has tax officials foreseeing some potentially bad outcomes for the filing season next year that for most U.S. taxpayers runs from mid- to late January until April 15.
    • A delay in refunds is troubling, but if Congress misses the December 31 deadline to extend expired tax provisions, then the impact "would be rather catastrophic," Paul Cherecwich, chairman of the Oversight Board for the tax-collecting Internal Revenue Service, said in an interview on Friday.
  • WHITE HOUSE - President Obama accused rival Mitt Romney of being oblivious to the burdens of paying for college on Tuesday, telling young voters in battleground Ohio that his opponent's education policies amount to nothing more than encouraging them to tap their parents for money or "shop around" for the best deal.
    • Democrats have tried to use Ryan's budget proposal to undermine Romney's pitch to blue-collar voters, and Obama's appeal on higher education was no different. Democrats contend that Ryan's budget proposal, which failed to pass the Democratic-controlled Senate, would cut $115 billion from the Education Department, costing 1 million college students their Pell Grants over the next decade. Democrats argue those moves would punish many middle class and low income families trying to gain an education.
    • Those estimates, however, assume the cuts in Ryan's budget are applied evenly across all programs starting in 2014 — something Ryan aides say would not happen. His budget does not directly address Pell Grant funding, and his aides say the cuts would not take a one-size-fits-all approach.
    • Ryan, who prefers that students take loans instead of receiving grants, would keep the top Pell Grant award in the coming school year at $5,500 but in future years reduce the number of students eligible, not the award sums. In other words, fewer students would receive them but the neediest would not see their awards changed. More than 9.7 million students are expected to get grants for the academic year that is about to begin.

PRESIDENT’S SCHEDULE

  • In the morning, President Obama will participate in a roundtable discussion with teachers and deliver remarks at Canyon Springs High School in Las Vegas, Nevada.
  • Later in the morning, the president will depart Las Vegas, Nevada and travel to New York, New York.
  • In the evening, the president will attend a campaign event and deliver remarks at a campaign event at Lincoln Center in New York, New York.
  • Later in the evening, the president will depart New York, New York and travel 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

FEDERAL GOVERNOMENT

  • STIMULUS - The U.S. Labor Department paid out hundreds of thousands of dollars in federal stimulus funds to a public relations firm to run more than 100 commercials touting the Obama administration’s “green training” job efforts on two popular MSNBC cable shows.
    • The commercials ran on MSNBC on shows hosted by Rachel Maddow and Keith Olbermann in 2009, but the contract didn’t report any jobs created.
    • Spending reports under the federal Recovery Act show $495,000 paid to McNeely Pigott & Fox Public Relations LLC, which the Labor Department hired to raise awareness “among employers and influencers about the [Job Corps] program’s existing and new training initiatives in high growth and environmentally friendly career areas” as well as spreading the word to prospective Job Corps enrollees.

HEALTH CARE

  • MEDICAID - A new study by HealthAffairs reveals that nearly one-third of doctors nationwide are unwilling to accept new Medicaid patients. The reason is that the government doesn’t pay enough to cover the cost of treating them. According to the Centers for Medicare and Medicaid Services Office of the Actuary, Medicaid physicians were paid only 58 percent of what private insurance paid in 2008.
    • Obamacare attempts to remedy this problem by increasing Medicaid payment rates for primary care to match those of Medicare. The study suggests that this may help increase access to care for Medicaid beneficiaries. However, the pay increases are temporary. After 2014, either Medicaid physicians will take a huge pay cut or taxpayers will be asked to step up and maintain the increased rates.
    • The increased payment rates are scheduled to disappear the year after Obamacare asks—rather than requires (thanks to the Supreme Court decision)—states to expand Medicaid eligibility to 138 percent of the federal poverty level. The Congressional Budget Office projects that, even if some states opt out of the expansion, 11 million more Americans will be added into Medicaid by 2022, making access to care even more scarce. The program already covers 62.5 million people—about 20 percent of America’s population—and federal spending on Medicaid has no limit.

ENERGY

  • COAL - A U.S. federal appeals court Tuesday rejected the Environmental Protection Agency's latest effort to limit soot- and smog-forming air pollution that blows across state lines, providing a short-term lifeline for aging coal-fired power plants and removing a significant accomplishment from the Obama administration's environmental resume.
    • In a 2-1 decision, the U.S. Court of Appeals for the District of Columbia Circuit said the rule targeting emissions from coal-fired power plants "exceeds the agency's statutory authority" by requiring some states to clean up more than their fair share of pollution.
    • The EPA regulation, known as the Cross-State Air Pollution Rule, covered about 1,000 power plants in more than two dozen states in the eastern half of the U.S. To comply, companies with older coal-fired plants would have had to run them less often, shut them down or pay for credits to offset the pollution. The rule would have required emissions cuts as soon as this year.

FOREIGN POLICY

MIDDLE EAST

  • ISRAEL - Israel's economy would incur damages of as much as 167 billion shekels ($42 billion) should Israel attack Iran over its nuclear program, business information group BDI-Coface has projected.
    • Israel, widely believed to be the only atomic power in the Middle East, views Iran's nuclear program as an existential threat, citing threats made by leaders of Islamist Iran to destroy the Jewish state.
    • Prime Minister Benjamin Netanyahu is frustrated that Western diplomacy to try to force Iran to rein in its nuclear program has so far proved fruitless. Senior Israeli officials have said a final decision about whether to attack Iran has not yet been taken, with the military hierarchy unhappy about the prospect of going it alone without full U.S. backing.
  • IRAN - Amid increasing talk of a possible Israeli strike on its nuclear facilities, Iran has begun construction of a new, state-of-the-art, anti-aircraft missile base.
    • The new base, located near the city of Abadeh, in southern Iran, will cost $300 million, be home to 6,000 personnel, and host seven battalions, Iran’s Fars news agency reported Tuesday.
    • Last month, a senior Iranian air defense commander asserted that all Iranian air defense units and systems are fully prepared to repel possible enemy air raids
  • IRAQ - Iraq is fast becoming an oil producing powerhouse, but while oil revenues are increasing, the quality of life for everyday Iraqis is not.
    • Frequent power cuts, the state’s inability to prevent near-daily bloodshed and yawning gaps in basic services have left ordinary Iraqis convinced they are sharing little in the country’s growing oil wealth. Insurgent attacks have killed more than 200 people just since the start of this month. Many Iraqi's believe the billions being made off Iraq’s oil are simply being stolen by government officials and sent to banks outside of Iraq.
    • Iraq last month crept into second place behind Saudi Arabia among OPEC’s top oil exporters, according to the latest figures from the International Energy Agency. The shift marks a symbolic victory over neighboring Iran, long the bloc’s No. 2.
    • Citizens in other oil rich Middle East countries enjoy income levels, pensions and standards of health care far higher than their Iraqi counterparts. Their modern metropolises — which in the UAE’s case host some of the tallest and most innovative buildings in the world — bear little resemblance to crumbling, concrete Baghdad and other strained Iraqi cities.

AFRICA

  • EGYPT - Looking to increase security in the Sinai Peninsula, U.S. Defense Secretary Leon Panetta is offering Egypt a package of classified intelligence-sharing capabilities designed to help it identify military threats in the area and reassure Israel that Egypt can deal with rising militancy along Israel's border, according to a senior Pentagon official.
    • At the core, is an offer to supply Egypt's military in Sinai with truck-mounted sensors that provide an electronic signal identifying which nation is operating the vehicle. This technology, commonly known as "blue force tracker," has been widely used in Iraq and Afghanistan to identify vehicles at great distances. It is also possible a commercial version of the technology will be offered to the international peacekeeping force in Sinai that includes 700 U.S. troops.
    • The United States is also offering Egypt increased intelligence sharing, including satellite imagery and drone flights and intercepts of cell phone and other communications among militants suspected of planning attacks, according to an Obama administration official.

ASIA

  • AFGHANISTAN - The conflict in Afghanistan generates barely a whisper on the U.S. presidential campaign trail. It's not a hot topic at the office water cooler or in the halls of Congress - even though more than 80,000 American troops are still fighting here and dying at a rate of one a day.
    • Americans show more interest in the economy and taxes than the latest suicide bombings in a different, distant land. They're more tuned in to the political ad war playing out on television than the deadly fight still raging against the Taliban.
    • Public opinion remains largely negative toward the war, with 66 percent opposed to it and just 27 percent in favor in a May AP-GfK poll.
    • The U.S.-led coalition's combat mission will wind down in the next few years, leading up to the end of 2014 when most international troops will have left or moved into support roles. Military analysts say the U.S. envisions a post-2014 force of perhaps 20,000 to hunt terrorists, train the Afghan forces and keep an eye on neighboring Iran and other regional powerhouse nations.

EUROPE

  • EURO ZONE - The Greek government, struggling with depression-like conditions that have pushed the economy to the brink, is likely to need many billions of euros of additional aid to avoid bankruptcy.
    • If Greece doesn't get the money, it may be forced to leave the euro, an outcome that would undermine financial markets' tenuous confidence in other vulnerable southern euro members, including Spain and Italy.
    • Since the euro-zone crisis began in Greece in late 2009, critics have accused German Chancellor Angela Merkel of playing for time, putting off difficult decisions until the last minute. Greece's penury could force her hand, however: Athens could run out of cash by October unless European authorities and the International Monetary Fund release its next slices of international aid. But for the IMF especially, that requires the bailout math for coming years to add up.