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Daily News Briefing: Wednesday, July 4th, 2012

Published by: Clark Barrow

Clark Barrow

DAILY BRIEFING - SUMMARY

  • FISCAL CLIFF - A failure to avoid the “fiscal cliff” could slash the U.S. growth rate to under a 1% annual rate and risk harming the global economy, the International Monetary Fund said in a report released Tuesday.
  • WHITE HOUSE - President Obama will honor the Fourth of July holiday by hosting a naturalization ceremony for active-duty service members.
  • MILITARY GREEN - The U.S. Navy is steaming ahead with an initiative to power ships with biofuel, despite criticism the so-called “green fuel” costs nearly seven times more than conventional fuel.
  • FOOD STAMPS - One in seven Americans are on food stamps, but the government is pushing to enroll more — in many instances working to overcome Americans’ “pride,” self-reliance or failure to see a need.
  •  IRAN - Iran said on Tuesday it had successfully tested medium-range missiles capable of hitting Israel as a response to threats of attack, the latest move in a war of nerves with the West.
  • EGYPT - Egypt's new government is sparking growing outrage in the U.S. for its attempts to win the release of Sheik Omar Abdel Rahman, the blind cleric behind the 1993 bombing of the World Trade Center.
  •  PAKISTAN - U.S. Secretary of State Hillary Clinton apologized Tuesday for the NATO airstrike that killed 24 Pakistani soldiers last year -- and announced that Pakistan has in turn agreed to re-open supply lines into Afghanistan that have been closed since the incident.

WHAT WE KNOW

ECONOMIC NEWS

  • FISCAL CLIFF - A failure to avoid the “fiscal cliff” could slash the U.S. growth rate to under a 1% annual rate and risk harming the global economy, the International Monetary Fund said in a report released Tuesday.
    • The fiscal cliff is the name given to the combination of automatic federal-government spending cuts and expiration of Bush tax cuts that will take effect Jan. 1 without government action.
    • The IMF warned that the fiscal cliff “could reduce growth to well below 1%, with negative growth early next year and significant negative repercussions on an already fragile world economy."
    • Lawmakers should replace the fiscal cliff with a program of small deficit reduction in the short-term with a longer-term fiscal sustainability program, the IMF said.
  • The Dow Jones Industrial Average increased 72.43 points, or 0.6%, to close at 12,943.82.
  • The S&P 500 Index closed up 8.51 points, or 0.6%, at 1,374.02.
  • The Nasdaq Composite index advanced 24.85 points, or 0.8%, to finish at 2,976.08. 

COMMODITIES

  • The U.S. national average for a gallon of regular gasoline is $3.33.
    • 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 80 percent higher than they were when Mr. Obama became president.
  • Oil for August delivery advanced $3.91, or 4.7%, to end at $87.66 a barrel on the New York Mercantile Exchange.
  • Gold for August delivery advanced $24.10, or 1.5%, to end the day at $1,621.80 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 287th day.
  • WHITE HOUSE - President Obama will honor the Fourth of July holiday by hosting a naturalization ceremony for active-duty service members.
    • Obama will deliver remarks while U.S. Homeland Security Secretary Janet Napolitano leads the oath of allegiance to the nation's newest citizens, the White House announced.
    • The event takes place just a few weeks after President Obama announced that his administration would be using prosecutorial discretion not to go after young illegal immigrants in this country who are in good standing.

PRESIDENT’S SCHEDULE

  • During the day, President Obama will hold a naturalization ceremony for active duty service members at the White House.
  • In the evening, the president will host military heroes and their families at the White House for an Independence Day celebration with a barbeque, concert and a view of fireworks.

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

  • MILITARY GREEN - The U.S. Navy is steaming ahead with an initiative to power ships with biofuel, despite criticism the so-called “green fuel” costs nearly seven times more than conventional fuel.
    • This month marks the first time the Navy is using biofuel in an operational setting -- sending five ships to a multi-nation exercise off the coast of Hawaii.
    • The fuel -- which does not require engine modifications -- costs $26 a gallon compared to $3.60 a gallon for conventional fuel. However, the U.S. Navy pointed out the cost was for a one-day supply and that prices will drop when the Pentagon, among the country’s biggest fuel users, buys more.

FEDERAL GOVERNMENT

  • FOOD STAMPS - One in seven Americans are on food stamps, but the government is pushing to enroll more — in many instances working to overcome Americans’ “pride,” self-reliance or failure to see a need.
    • The U.S. Department of Agriculture says its common goal is to increase participation in the Supplemental Nutrition Assistance Program (SNAP). The USDA has adopted a range of strategies and programs designed to bring more people to SNAP, including taking on “pride."
    • The agency says that there are many hurdles — including reticence to accept government aid — that SNAP advocates must overcome in order to make eligible people accept the government’s help. According to the USDA, 65 percent of those eligible claim SNAP benefits, a number the agency has been working to increase.
    •  U.S. Senator Jeff Sessions (R-AL) recently attempted to reform SNAP in the 2012 farm bill — 80 percent of which was food stamp spending — but his reforms were voted down by the Democratic majority in the U.S. Senate.
  • GOVERNMENT MOTORS - General Motors (GM) stock shares fell to a new low of 19.57 on Monday.
    • The U.S. Treasury still owns 26.5% of GM, or 500 million shares. Taxpayers are still out $26.4 billion in direct aid. Shares would have to hit $53 for the government to break even. Those shares were worth about $9.8 billion as of Monday. That would leave taxpayers with a loss of $16.6 billion.
    • But that's not the full tally. Obama let GM keep $45 billion in past losses to offset future profits. Those are usually wiped out or slashed, along with debts, in bankruptcy. But the administration essentially gifted $45 billion in write-offs (book value $18 billion) to GM. So when GM earned a $7.6 billion profit in 2011 (more on that below), it paid no taxes. Include that $18 billion gift, and taxpayers' true loss climbs to nearly $35 billion.

DOMESTIC ISSUES

STATE ISSUES

  • NORTH CAROLINA - The Republican-led North Carolina legislature voted to override Democratic Governor Beverly Perdue on the annual budget late on Monday, a state record 11th time in the last two years they have overturned her veto.
    • It was the third time this week that the legislature has overridden Perdue's veto. Earlier on Monday they differed with the governor and voted to open the door to shale gas exploration in North Carolina using hydrofracturing technology and horizontal drilling, known as fracking.
    • They enacted a third bill over the governor's objection on Monday that will limit death row prisoners' ability to use statistical evidence of racial bias to challenge their sentences.

FOREIGN POLICY

MIDDLE EAST

  • SYRIA - In an effort to suppress opposition against Syrian President Bashar al-Assad, Syria has been running a network of 27 torture centers, the international Human Rights Watch announced Tuesday in a report.
    • The Human Rights Watch is asking the United Nations Security Council to have the International Criminal Court enact sanctions against those behind the abuses. It urged Syria to release all detainees and suspend security force members suspected of human rights violations, pending investigations.
  • IRAN - Iran said on Tuesday it had successfully tested medium-range missiles capable of hitting Israel as a response to threats of attack, the latest move in a war of nerves with the West.
    • Israel says it could attack Iran if diplomacy fails to secure a halt to its disputed nuclear energy program. The United States also has military force as a possible option but has repeatedly encouraged the Israelis to be patient while new economic sanctions are implemented against Iran.
    • The Islamic Republic announced the "Great Prophet 7" missile exercise on Sunday after a European embargo against Iranian crude oil purchases took full effect following another fruitless round of big power talks with Tehran.
    • Meanwhile, the United States and other world powers agreed with Iran on Wednesday to move toward a resumption of full negotiations to ensure that Iran’s nuclear fuel enrichment does not turn into a weapons program.

AFRICA

  • EGYPT - Egypt's new government is sparking growing outrage in the U.S. for its attempts to win the release of Sheik Omar Abdel Rahman, the blind cleric behind the 1993 bombing of the World Trade Center.
    •  In Cairo, President-elect Mohamed Morsi proclaimed to hundreds of thousands of supporters in Tahir Square on Friday that he will gain the release of Rahman, who is in a federal prison in North Carolina after having been convicted of masterminding the bombing that killed six and unsuccessfully plotting to blow up other landmarks, including the United Nations.
    • Meanwhile, Morsi is under pressure to move quickly to create some tangible improvement in the daily lives of his fellow Egyptians, who are suffering from high unemployment, rising prices and shortages in basic commodities.

ASIA

  • PAKISTAN - U.S. Secretary of State Hillary Clinton apologized Tuesday for the NATO airstrike that killed 24 Pakistani soldiers last year -- and announced that Pakistan has in turn agreed to re-open supply lines into Afghanistan that have been closed since the incident.
    • The deadly airstrike last November crippled already-damaged relations between the United States and Pakistan. Islamabad retaliated by shutting down vital supply lines into Afghanistan, and the two sides had been struggling ever since to reach a deal -- with a U.S. apology said to be a key demand of the Pakistanis.
    • The Obama administration resisted until now. Clinton, for the first time, delivered that apology Tuesday morning during a phone call with Pakistani Foreign Minister Hina Rabbani Khar.