Politics: Daily Briefing: Mass layoffs surge to three-year high

Published by: Clark Barrow on Friday January 4th, 2013

Clark Barrow

By CLARK BARROW - Also, Fed indicates end to loose monetary policies may be in sight.

DAILY BRIEFING - SUMMARY

· FEDERAL RESERVE - For the first time since the financial crisis started five years ago, the U.S. Federal Reserve has at last made its first signal that its extraordinary loose monetary policy will start to get tougher.

· MASS LAYOFF - In the latest sign that the long-promised economic recovery may be a mirage, mass layoffs of workers has surged to a three-year high, fed by the devastation of Hurricane Sandy and firms worried about the impact of new government regulations, including Obamacare.

· FORWARD - Many businesses plan to bring on more part-time workers next year, trim the hours of full-time employees or curtail hiring because of the new health care law, human resource firms say.

· CONGRESS - U.S. Representative John Boehner (R., Ohio) was re-elected for a second two-year term as House speaker Thursday, despite a bruising two weeks in which the majority of his party and two of his top lieutenants voted against a fiscal-cliff tax law.

· WHITE HOUSE - By law, each April and October, federal agencies are required to release an accounting of proposed regulations that will have an economically significant impact. That didn't happen in 2012. Instead, the Obama administration didn't release its 2012 regulatory agenda until on the Friday before Christmas.

· INVESTIGATION - U.S. Secretary of State Hillary Clinton will testify in front of Congress about the terrorist attack on the American consulate in Benghazi, Libya - despite receiving a concussion and being hospitalized for a blood clot, it was revealed on Thursday.

DOMESTIC POLICY

ECONOMIC NEWS

· FEDERAL RESERVE - For the first time since the financial crisis started five years ago, the U.S. Federal Reserve has at last made its first signal that its extraordinary loose monetary policy will start to get tougher.

o According to the minutes from their meeting last month that were released on Thursday, there was a general sense among U.S. Federal Reserve officials that their bond-buying program would last, at most, until the end of the year.

o Almost all Fed members thought that the $40 billion per-month program to buy mortgage debt started in September was working, but there was also uncertainty about whether the benefits would last and that the potential costs could rise as the size of the Fed’s balance sheet increased. At the December meeting, the Fed boosted its quantitative-easing program by adding $45 billion of monthly Treasury purchases. If the Fed program lasted all year, it would add about $1 trillion to the Fed’s balance sheet.

o At its meeting in December, the Fed also surprised analysts by deciding to keep rates near zero as long as unemployment remains above 6.5% and inflation remains tame. That replaced the Fed’s prior guidance that rates would stay low until mid-2015. Analysts had thought that the Fed would delay setting numerical targets until later this year.

· MASS LAYOFF - In the latest sign that the long-promised economic recovery may be a mirage, mass layoffs of workers has surged to a three-year high, fed by the devastation of Hurricane Sandy and firms worried about the impact of new government regulations, including Obamacare.

o According to the U.S. Bureau of Labor Statistics, November saw 1,759 "mass layoff actions" from firms of 50 workers or more. Some 173,558 workers received pink slips.

o The huge number is a dramatic reversal of a slow, three-year decline in mass layoffs. In November 2009, there were 1,757 "events," hitting 164,454 workers. The last time the number of those being laid off topped November was October of 2009.

· FORWARD - Many businesses plan to bring on more part-time workers next year, trim the hours of full-time employees or curtail hiring because of the new health care law, human resource firms say.

o Their actions could further dampen job growth, which already is threatened by possible federal budget cutbacks resulting from the tax increases and spending cuts known as the fiscal cliff.

o Under the Affordable Care Act, businesses that employ at least 50 full-time workers — or the equivalent, including part-time workers — must offer health insurance to staffers who work at least 30 hours a week. Employers that don't provide coverage must pay a $2,000-per-worker penalty, excluding the first 30 employees.

IN THE DISTRICT

· CONGRESS - U.S. Representative John Boehner (R., Ohio) was re-elected for a second two-year term as House speaker Thursday, despite a bruising two weeks in which the majority of his party and two of his top lieutenants voted against a fiscal-cliff tax law.

o Mr. Boehner received 220 votes, compared with 192 votes for House Minority Leader Nancy Pelosi (D., Calif.), who was backed by the bulk of Democratic lawmakers. While most Republicans backed Mr. Boehner, a handful of lawmakers voted for other candidates such as GOP Reps. Michele Bachmann of Minnesota, Jim Jordan of Ohio, Raul Labrador of Idaho and House Majority Leader Eric Cantor from Virginia. Mr. Cantor received three votes, the most of any alternative candidate.

o An emotional Mr. Boehner was handed the ceremonial gavel of the House by Ms. Pelosi. In a short speech, Mr. Boehner spoke about the need to address the country's debt, saying it was putting the American dream in peril, but didn't offer specifics about the upcoming fiscal policy debates. Instead, he urged the assembled lawmakers "to do something—to do the right thing."

· CONGRESS - Many home and business owners flooded out by Superstorm Sandy could get insurance payouts soon through congressional action expected Friday on a $9.7 billion bill to replenish the National Flood Insurance Program.

o The Federal Emergency Management Agency, which runs the program, warned that it will run out of money next week if Congress doesn't give it additional borrowing authority to pay out claims. Congress created the program in 1968 because few private insurers cover flood damage.

o Northeast lawmakers say the money is urgently needed for storm victims awaiting claim checks from the late October storm that was one of the worst to strike the Northeast, ravaging the coast from North Carolina to Maine, with the worst flooding occurring in Atlantic City, N.J., New York City and Long Island and along the Connecticut coastline.

· WHITE HOUSE - U.S. Treasury Secretary Timothy F. Geithner plans to leave the administration at the end of January, even if President Obama and congressional Republicans haven’t reached an agreement to raise the debt ceiling, according to two people familiar with the matter.

o After giving in to Obama’s previous entreaties to stay as long as needed, Geithner has indicated to White House officials and Wall Street executives that he is unlikely to change his departure plans this time, increasing pressure on the president to name his successor at Treasury, said the people, who requested anonymity to discuss the private talks.

o Geithner, 51, is the only remaining member of Obama’s original economic team and was a key figure in the taxpayer- funded bailouts during the 2008 financial crisis. He’s also had a principal role in negotiations with Congress on the budget deal and in past deliberations over the debt ceiling.

· WHITE HOUSE - President Obama continued his use of presidential signing statements Wednesday, expressing regret about parts of the National Defense Authorization Act (NDAA) as he signed it into law.

o While a candidate in 2008, Obama frequently criticized President George W. Bush for issuing such statements, calling them an unconstitutional “end-run” around Congress.

o Obama has not only continued to use presidential signing statements, but has been criticized for executive actions on immigration policy — such as his 2012 order not to deport young illegal immigrants who would have been eligible for amnesty under the Dream Act, which did not pass — that have been called end-runs around Congress.

o President Obama signed the $633 billion defense bill for next year despite serious concerns about the limits Congress imposed on his handling of terror suspects and lawmakers' unwillingness to back the cost-saving retirement of aging ships and aircraft.

· WHITE HOUSE - By law, each April and October, federal agencies are required to release an accounting of proposed regulations that will have an economically significant impact. That didn't happen in 2012. Instead, the Obama administration didn't release its 2012 regulatory agenda until on the Friday before Christmas.

o Since the Dec. 21 release, legal experts and analysts have been pouring through the tens of thousands of pages in order to determine their impact. According to an initial estimate by the American Action Forum, which notes that some entries are missing key fiscal data, the cost of implementing the agenda would top $123 billion. Completing the paperwork could require more than 13 million man-hours.

o In just the last 90 days, according to its own website, the federal government has issued more than 5,500 new regulatory proposals. However, it continues to miss deadlines related to the health care law and the Dodd-Frank law regulating Wall Street. Roughly half of those regulatory deadlines have been missed.

o The Small Business Administration estimates that total regulatory costs on businesses amount to $1.75 trillion annually.

FEDERAL GOVERNMENT

· SURPRISE - Hours after President Obama signed the bill averting the fiscal cliff, the Internal Revenue Service issued new guidelines for employers on how much to withhold from workers' paychecks this year.

o Employers should start using the revised withholding tables as soon as possible, but not later than Feb. 15, the IRS said Thursday. Most employers will be able to comply with that deadline without trouble, according to the American Payroll Association, a trade group.

o The IRS also reminded employers to start withholding 6.2% from paychecks for workers' Social Security taxes, up from 4.2% in 2012 and 2011. The increase is the result of the expiration of the temporary tax cut pushed by the Obama administration to help the economy rebound.

NATIONAL SECURITY

· INVESTIGATION - U.S. Secretary of State Hillary Clinton will testify in front of Congress about the terrorist attack on the American consulate in Benghazi, Libya - despite receiving a concussion and being hospitalized for a blood clot, it was revealed on Thursday.

o Clinton cancelled appearances before the U.S. Senate Foreign Relations Committee and the House Foreign Affairs Committee after she fainted and hit her head on December 9.

o No dates for her testimony have been announced. Some Republicans have threatened to hold up confirmation of Sen. John F. Kerry (D-Mass.) as her successor.

· RELEASED - Only days after U.S. Marine veteran Jon Hammar was thrown into a Mexican prison for carrying an antique shotgun into the country, gangsters in the jail warned him of his likely fate – beheading.

o The gangsters demanded money to let Hammar, 27, remain alive, and the beheading threat was a scare tactic that harkened back to his tours of duty as a U.S. Marine in Iraq.

o Mexican authorities arrested Hammar on Aug. 13 at the Texas-Mexico border when he crossed into Mexico in a motor home with a vintage shotgun that once belonged to his great-grandfather. Authorities slapped weapons charges on him. A traveling companion went free.

HEALTH CARE

· OBAMACARE - The federal health overhaul law charges employers a penalty if they “dump” lower-income workers off their coverage and into federally-subsidized plans offered on the new insurance exchanges.

o But what about coverage for employees’ families? The situation there is murkier, with potentially big implications. The law does say that employers are supposed to offer coverage for workers’ dependents, and a proposed regulation says that means children up to age 26. However, a key test of whether the coverage is adequate – which requires that it cost the employee no more than 9.5% of his income – pegs that “affordability” threshold to the cost of insurance for just the individual worker. That same requirement doesn’t apply to the worker’s contribution for family coverage.

o Such a setup would likely tempt a low-wage worker to send his dependents to the exchange. However, there’s still regulatory uncertainty about whether kids and spouses offered “unaffordable” employer coverage would be able to get the exchange subsidies, leaving them potentially expensive to cover.

STATE ISSUES

· ILLINOIS - National and state firearms groups are fighting back against a pair of sweeping and controversial gun control bills being pushed through the Illinois state legislature during the final days of a lame-duck session.

o On Wednesday night, a state Senate committee advanced two measures to restrict semiautomatic weapons and high-capacity magazines. It's unclear at this point whether the full Senate will take them up before the new General Assembly class is sworn in Jan. 9, when the process would have to restart.

o The bills would face an uphill climb in the Senate, particularly as gun groups were mounting a flash campaign against them. FoxNews.com was told late Thursday that Democrats were still trying to line up the votes, after the measures passed on party lines out of committee the night before.

· SHUFFLE - Governments across the country, including Fort Lauderdale, Fla., and the state of Illinois, have taken the same approach as Oakland in recent years, borrowing a combined $53 billion between 1986 and 2009 as their retirement liabilities have grown, according to a 2010 study by the Center for Retirement Research at Boston College.

o Cities and states struggling with pension obligations can choose to borrow, or they can make difficult choices, as some governments have, to raise taxes, cut services and staff, or try to reduce retirement benefits.

o By some estimates, Oakland has an unfunded liability of $2 billion for the pensions and medical benefits owed to all its current and retired workers. It's trying to reduce the amount owed to 1,000 retired police and firefighters with the $213 million it borrowed in July at an interest rate of 4.46 percent.

o If the investments in the city's police and firefighter pension fund yield at least that much, Oakland's gamble will pay off. The borrowing has improved the status of Oakland's system from 37.5 percent funded to nearly 70 percent, with assets now valued at $466 million.

FOREIGN POLICY

MIDDLE EAST

· SYRIA - From their New Hampshire home, the parents of a foreign journalist who has been missing in Syria since he was kidnapped more than a month ago appealed to his captors for compassion and any information about their son's health and welfare.

o Thirty-nine-year-old James Foley was kidnapped in northwest Syria by unknown gunmen on Nov. 22, his parents said Thursday. He was in the country contributing videos to Agence France-Press, which has vowed to help secure his release.

o The death toll in Syria now exceeds 60,000, the United Nations says. U.N. officials have warned that another 100,000 may die this year. About 220 were killed on Wednesday alone.

· IRAN - Iranian officials unveiled a new combat chopper on Wednesday called the Toufan II (Storm II).

o The chopper belongs to a new generation of combat helicopters and enjoys modern and advanced technologies, including high-precision targeting capability, according to the report.

o Toufan II employs Iran's latest indigenous achievements in electronics, optics, laser and armament capabilities, said the Iranian minister, adding that the production of the chopper is a symbol of creativity and self-sufficiency in the face of the enemies' sanctions.

o President Obama has signed a $633 billion defense bill for next year that tightens penalties on Iran and bolsters security at diplomatic missions worldwide after the deadly attack in Benghazi, Libya.

SOUTH AMERICA

· VENEZUELA - President Hugo Chavez is due to be sworn in for a new term in less than a week and his closest allies still aren't saying what they plan to do if the ailing leader is unable to return from a Cuban hospital to take the oath of office.

o Chavez hasn't been seen or heard from since his Dec. 11 cancer surgery, and speculation has grown that his illness could be reaching its final stages. The president's elder brother Adan joined a parade of visitors to Havana this week, while the vice president apparently delayed plans to return home after at least two bedside visits with Chavez. The government has provided few details but describes Chavez's condition as "delicate."

o His health crisis has raised contentious questions ahead of the swearing-in set for Jan. 10, including whether the inauguration could legally be postponed, whether Supreme Court justices might travel to Havana to administer the oath of office, and, most of all, what will happen if Chavez can't begin his new term.