DOMESTIC POLICY MATTERS
Fiscal Year (FY) 2013 Appropriations/Sequestration. On Tuesday, Senate Majority Leader Harry Reid (D-Nevada) and Speaker of the House John Boehner (R-Ohio) announced a deal on a six-month Continuing Resolution, which will keep the government funded at current spending levels through March 2013. Both chambers of Congress are expected to vote on the resolution after they return from recess on September 10th. Meanwhile, the Senate continued to mark-up FY 2013 appropriations bills this week, reporting the Defense and Legislative Branch appropriations bills out of committee on Thursday. On Monday, the Department of Labor issued guidance stating that in light of the uncertainty about whether sequestration will go forward as scheduled, government contractors do not have to issue layoff notices under the WARN Act, which would have required that notices be sent out just days before the November elections. The Office of Management and Budget (OMB) followed with a letter Tuesday announcing that all military personnel accounts will be exempt from sequestration for FY 2013. Acting OMB Director Jeffrey Zients testified at a House Armed Services Committee hearing Wednesday, where Democrats and Republicans blamed each other for failing to come up with a viable plan to avert sequestration.
On Tuesday, House Republicans pulled their one-year farm bill extension in favor of a narrower $383 million disaster aid package to assist farmers and ranchers impacted by drought across the country. The House passed the bill Thursday (223-197), but Senate Agriculture Committee Chair Debbie Stabenow (D-Michigan) said she is not prepared to move ahead with the disaster aid measure as a substitute for a five-year farm bill. A procedural motion failed in the Senate Thursday to advance cybersecurity legislation backed by most Democrats and the White House, after the U.S. Chamber of Commerce and most Republicans had opposed the bill’s voluntary guidelines for private industry. Senate Commerce Committee Chair Jay Rockefeller (D-West Virginia) called the result “disappointing” and called cybersecurity “our top national security priority.”
Tax Policy. On Wednesday, after defeating a Democratic alternative to extend tax cuts for all household incomes below $250,000, the House voted (256-171) to extend the Bush-era tax cuts for all taxpayers through 2013. Senate Finance Committee Chair Max Baucus (D-Montana) and Ranking Member Orrin Hatch (R-Utah) announced a bipartisan agreement on a tax extenders package Wednesday. At a mark-up the next day, the Committee approved (19-5) the measure, which includes more than $205 billion in tax cut extensions. On Friday, President Obama again called on Congress to extend tax cuts for the middle class, expressing strong support for the Senate-passed bill targeting families earning up to $250,000. Meanwhile, the Senate is highly unlikely to pass the House bill extending all Bush-era tax cuts.
Jobs & the Economy. The Federal Reserve (Fed) said Wednesday that it will not take further steps to stimulate the economy at this time; however, the Fed committed to closely monitor economic developments and “provide additional accommodation as needed to promote a stronger economic recovery.” On Friday, the Labor Department announced that while the U.S. economy added a larger-than-expected 163,000 jobs in July, the unemployment rate rose from 8.2 percent to 8.3 percent for the month.
Political News. Congressman Geoff Davis (R-Kentucky), who already had announced his retirement for later this year, resigned Tuesday night, citing family health reasons. A special election for the solidly Republican seat will take place in November. Ohio Congressman Steve LaTourette (R) stated Tuesday that he does not plan to seek re-election to his Republican-leaning seat due to an increasingly polarized environment in Washington. After the House Ethics Committee released its report on the investigation of Congresswoman Laura Richardson (D-California), the House voted Thursday to reprimand and fine the Congresswoman for campaign misconduct in 2010. Tea Party favorite Ted Cruz won the Republican primary runoff in Texas Tuesday night to fill the seat of retiring Senator Kay Bailey Hutchison (R). Cruz, a former state solicitor general, defeated Lieutenant Governor David Dewhurst and is now favored to win the general election.
FOREIGN POLICY MATTERS
Iran. On Tuesday, President Obama announced new sanctions, via an Executive Order, intended to place further pressure on the National Iranian Oil Company. That same day, the Treasury Department announced it will impose sanctions against two alleged violators of existing sanctions – the Bank of Kunlun in China and Elaf Islamic Bank in Iraq. Administration officials reported the two financial institutions have processed significant financial transactions for blacklisted Iranian banks, allegedly facilitating the movement of millions of dollars that may have been used for proliferation activities. Meanwhile, the Senate and House passed new sanctions Wednesday – consensus legislation introduced Monday (H.R. 1905) that has been negotiated over the past month by Senate Banking Committee Chair Tim Johnson (D-South Dakota), House Foreign Affairs Committee Chair Ileana Ros-Lehtinen (R-Florida), and others. H.R. 1905 tightens loopholes in existing energy sector sanctions and deems as sanctionable any commercial activity – financial services, insurance, technology, transportation or infrastructure – with Iran’s oil and natural gas sectors.
Syria. President Obama and Turkish Prime Minister Recep Tayyip Erdoğan spoke Monday to attempt to accelerate a political transition in Syria. On Tuesday, the Syrian Chargé d’Affaires to Great Britain defected. Fighting increased this week between the Syrian opposition and President Assad’s forces for control over Aleppo, with the Free Syrian Army (FSA) claiming Friday it now controls 50 percent of Syria’s largest city. Reports also emerged this week of alleged torture and killing of regime loyalists in Aleppo, leading the FSA to issue a statement noting "these reprehensible acts do not conform with the ethics of the FSA or the Syrian revolution." On Wednesday, the Senate Foreign Relations Committee held a hearing on Syria, discussing what more the United States could be doing. On Thursday, Kofi Annan announced his resignation as the U.N.-Arab League Special Envoy to Syria. Secretary Clinton issued a statement saying the United States remains committed to an effective political transition as envisioned under the Annan framework. The State Department further noted the United States will continue its strategy to accelerate sanctions to hurt the Syrian regime financially, to assist the opposition with organization, and to provide communication equipment, nonlethal and increased humanitarian assistance. In addition, U.S. media reported this week that President Obama had signed a covert order authorizing clandestine support for the Syrian rebels from the CIA and other U.S. intelligence agencies. Meanwhile, the U.N. General Assembly voted 133-12 Friday in favor of a resolution, drafted by Saudi Arabia, to pressure the U.N. Security Council to take further action against the Assad government. U.S. Ambassador to the U.N. Susan Rice praised the vote, stating, “The General Assembly demanded once more that the first step in the cessation of violence be made by the Assad regime.”
Trade. On Thursday, the House passed a trade bill, previously passed by the Senate, which reauthorizes the Administration’s ability to ease or re-impose sanctions on Burma and to extend through 2015 the Third-Country Fabric Program for Sub-Saharan Africa. The bill has been submitted to President Obama for signature. Before recessing, neither the House nor the Senate brought to a floor vote the legislation granting Permanent Normal Trade Relations (PNTR) status to Russia and Moldova – and containing a version of the Sergei Magnitsky Accountability Act. The legislation may come up in September.
Secretary Clinton is on a ten-day trip to Africa, with stops in Senegal, South Sudan, Uganda, Kenya, Malawi, South Africa, and Ghana. The Secretary met with Senegalese President Macky Sall and gave a speech Wednesday on building sustainable partnerships in Africa. On Friday, the Secretary met with President of South Sudan Salva Kiir and Foreign Minister Nhial Deng, encouraging progress in negotiations with Sudan on security, oil and citizenship issues. In Uganda Friday, Secretary Clinton highlighted the additional $25 million the U.S. government recently committed to help Uganda eliminate mother-to-child transmission of HIV.
Late last Friday, the State Department issued a statement on the inability of U.N. Member negotiations to reach consensus on the U.N. Arms Trade Treaty, noting negotiators’ “considerable” progress. The State Department said the United States prefers another round of negotiations to address U.S. concerns related to the Second Amendment of the U.S. Constitution – the right to bear arms.
On Tuesday, presumptive Republican Presidential nominee Mitt Romney concluded his overseas trip with a visit to Poland. Governor Romney praised the U.S. ally’s post-Communist economic and political liberalization while noting that Russia’s “once-promising advances toward a free and open society have faltered.” On Sunday, Governor Romney had visited Jerusalem, meeting separately with Israeli Prime Minister Benjamin Netanyahu and Palestinian Prime Minister Salam Fayyad and subsequently stating, “We should employ any and all measures to dissuade the Iranian regime from its nuclear course….We recognize Israel’s right to defend itself, and that it is right for America to stand with you.”
President Obama spoke with French President François Hollande and Italian Prime Minister Mario Monti Wednesday, welcoming the recent declarations by the European Central Bank and European leaders on the need to do what is necessary to preserve the eurozone. President Obama also discussed the situation in Syria with both leaders. This week, President Obama announced his intention to nominate the following individuals: Kevin Washburn to be Assistant Secretary for Indian Affairs (Interior) and Christopher Meade to be General Counsel (Treasury). Late Thursday, the Senate confirmed James Cunningham as U.S. Ambassador to Afghanistan. This week, the State Department released its 2011 International Religious Freedom Report (Monday), and its 2011 Country Reports on Terrorism (Tuesday).