This Week in Washington - October 19, 2012

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DOMESTIC POLICY MATTERS

Congress is in recess until November 13th.  

Budget, Sequestration, & The Economy.  Lawmakers continue to work on a number of alternatives to sequestration.  Senator Chris Coons (D-Delaware) announced Wednesday he is considering pursuing options to replace the automatic cuts with a down payment of approximately $75 billion in more tailored spending cuts for next year.  Other lawmakers have floated similar sequestration deferment plans, and Senate Minority Whip Jon Kyl (R-Arizona) noted he would be open to discussing the option if a tax cut extension were part of the deal.  In a letter Thursday to President Obama and Members of Congress, key executives from 16 large financial services firms urged lawmakers to find a solution to the pending expiration of the “Bush tax cuts” and automatic spending cuts under sequestration, collectively known as the “fiscal cliff.”  Without a bipartisan solution, warned the authors, interest rates could increase and a second debt rating downgrade could occur, causing further damage to the U.S. economy. The White House remained consistent in statements this week that President Obama would veto any measure that does not include a tax increase for the wealthiest Americans. Despite the “fiscal cliff” looming, Speaker of the House John Boehner (R-Ohio) told House colleagues Wednesday that he and President Obama have not spoken directly about the issue since July.  Also on Wednesday, the Commerce Department announced that 872,000 new homes went under construction in September – the most since July 2008 – a strong indication the housing market is recovering.

2012 Elections.  On Tuesday night, President Obama and Republican presidential nominee Mitt Romney participated in a spirited town hall-style debate in Hempstead, New York – the second of three encounters between the candidates.  The final debate, set to focus on foreign policy issues, is scheduled for Monday.  While attendees asked questions focused on domestic issues such as education, gun control, energy production, taxes, and jobs, women’s issues also took center stage, as each candidate strives to win over undecided female voters.  By most analysts’ accounts, President Obama scored a modest win, with the President improving his performance from the candidates’ first encounter while Governor Romney also received solid marks from most political commentators.  Both candidates also participated in a comedic roast Thursday at the Catholic Archdiocese of New York’s annual charity benefit.  Meanwhile, new polling and campaign spending trends suggest the Obama-Biden and Romney-Ryan tickets are increasing their focus on eight battleground states:  Colorado, Florida, Iowa, Nevada, New Hampshire, Ohio, Virginia, and Wisconsin.

Former Senator Arlen Specter, who represented the state of Pennsylvania in the Senate for thirty years, mostly as a moderate Republican before switching to the Democratic Party in 2009, died at the age of 82 on Sunday.  On Monday, the Justice Department sought to dismiss a case filed against it by House Republicans concerning documents relating to the Fast and Furious gun-tracking operation, claiming the judicial system is not the proper venue to settle the dispute.  The number of people who have died in a national meningitis outbreak reached 20 this week, with hundreds more sickened.  On Tuesday, federal agents raided the lab linked to the outbreak and accused of illegally handling controlled substances.  On Thursday, Senator Richard Blumenthal (D-Connecticut) sent a letter to Assistant Secretary of Defense Jonathan Woodson asking for more information on the contract between the U.S. Army Medical Command and a Massachusetts company, Ameridose, which reportedly has the same ownership as the compounding pharmacy center allegedly related to the outbreak.  U.S. intelligence officials uncovered a terrorist plot against the New York Federal Reserve Bank and indicted the suspect on Wednesday, after he allegedly attempted to detonate a bomb there. In a briefing on Thursday, the State Department confirmed that the suspect was in the United States legally on a student visa.  On Thursday, a second federal appeals court ruled that the 1996 Defense of Marriage Act (DOMA) definition of marriage between a man and woman is unconstitutional.  Congressional Republicans have organized legal defenses of the law since the U.S. Department of Justice stopped doing so last year.  With this ruling, the U.S. Supreme Court is more likely to review the law in its current term, which has implications for insurance and tax benefits for gay couples.  Meanwhile, new polling on two statewide referendums shows a modest majority of voters in favor of continuing to allow gay marriage in Maryland while the Minnesota electorate is currently deadlocked on a proposal to ban gay marriage in the state.

FOREIGN POLICY MATTERS
 
Late Monday evening, Secretary  of State Hillary Clinton took “full responsibility” for the apparent security lapses at the U.S. Consulate in Benghazi, Libya.  The Consulate attack was contested by both candidates during the Wednesday presidential debate.  President Obama asserted he is “ultimately responsible” for security decisions affecting U.S. personnel and interests.  He then denounced Governor Romney’s suggestions the White House obfuscated the rationale behind the attacks for political gain.  Governor Romney countered and claimed it took the President two weeks to assert the tragedy was a terrorist attack.  President Obama then referred to his remarks in the White House Rose Garden the day after the September 11th attack, in which the President said, “No acts of terror will ever shake the resolve of this great nation….Today we mourn four more Americans who represent the very best of the United States of America.”

On Thursday, Secretary Clinton gave a speech on Energy Diplomacy at Georgetown University.  The Secretary emphasized, “The United States has an interest in…keeping energy supplies and markets stable through all manner of global crises, ensuring that countries don’t use their energy resources or proximity to shipping routes to force others to bend to their will or forgive their bad behavior ….”  Secretary Clinton shared she will issue new guidance to every U.S. Embassy, “instructing them to elevate their reporting on energy issues and [to] pursue more outreach to private sector energy partners.”   The Secretary also divulged some insight into the “painstaking diplomacy” that has occurred behind the scenes to implement “unprecedented” economic pressure on Iran, “while minimizing the burdens on the rest of the world.”  According to Secretary Clinton, the United States is also working to ensure “resource rich” developing countries have “the building blocks of good governance, …transparent finances, and effective laws and regulations.”  

Iran and Cyber Threats.  This week, cybersecurity experts sought to heighten attention on Iran’s increased cyber military capabilities, which Secretary of Defense Leon Panetta acknowledged last Friday while declaring the Pentagon is prepared to take action if the United States is threatened.  Although the media reported last week U.S. authorities believe Iranian-based hackers may have been responsible for August cyber attacks on Saudi-based Aramco and Qatar-based RasGas, the Secretary did not directly link Iran to the attacks.  This week, cyber attacks targeted the U.S. banking system.  While the group Izz ad-Din al-Qassam Cyber Fighters is claiming responsibility for the U.S. attacks, saying they will continue until an allegedly anti-Islamic film clip is removed from the Internet, unofficially U.S. intelligence officials have suggested the group is backed by Iran.

Syria.  On Wednesday, Iran declared support for U.N.-Arab League Special Envoy Lakhdar Brahimi’s ceasefire proposal, which is suggested to begin with the Islamic Eid al-Adha on October 26th.  Envoy Brahimi has called on the Syrian government to initiate the truce, saying he had guarantees from rebel leaders that they would observe it, if the government acts first.  On Friday, the United States endorsed the ceasefire plan and called on all parties in Syria to cease all violence during Eid al-Adha next week.  Meanwhile, the U.N.-Arab League Envoy is expected to meet Syrian Foreign Minister Walid al-Moallem in Damascus on Saturday.  After a deadly car bomb attack Friday in Beirut, Lebanon accused Syrian President Bashar al-Assad of assassinating Sunni intelligence chief Wissam al-Hassan.  The deceased Lebanese official had uncovered a bomb plot that led to the arrest and indictment in August of former Lebanese Minister Michel Samaha.

On Friday, the Washington Post reported the Central Intelligence Agency (CIA) is urging the White House to approve an expansion of the agency’s budget for armed drones.  An increase in the CIA’s drone fleet would enable the agency to expand its campaigns against al-Qaeda targets in Pakistan, Yemen, and elsewhere.  

Wednesday, Assistant Secretary of State for Democracy, Human Rights and Labor Michael Posner concluded the first-ever U.S.-Burma Human Rights Dialogue in Nay Pyi Taw.  The Assistant Secretary led a 22-member interagency delegation, establishing what the State Department characterized as an “open channel” with the Government of Burma to discuss human rights.

On Tuesday, White House Press Secretary Jay Carney welcomed the signing of the Framework Agreement between the Government of the Philippines and the Moro Islamic Liberation Front, describing it as a step toward ending insurrection and restoring good governance.  The Press Secretary commended Malaysia for its role as a facilitator.  Also Tuesday, Deputy National Security Advisor Denis McDonough met with Iraq President Jalal Talibani, Prime Minister Nouri al-Maliki, and other officials, discussing President Obama’s continued support for Iraq and the need for an inclusive dialogue on national reconciliation, and he urged any investigation into Iraq’s Central Bank should be transparent.  McDonough was in Afghanistan the following two days, meeting with U.S. civilian and military leaders about the 2014 transition.  Thursday, U.S. Senators Barbara Mikulski (D-Maryland) and Kay Bailey Hutchison (R-Texas), along with thirteen other bipartisan female Senators, wrote a letter to Pakistani Prime Minister Raja Pervez Ashraf, calling on the government of Pakistan to ensure those who carried out the attack against fourteen-year old Malala Yousafzai are brought to justice.  Late last Friday, National Security Council spokesman Tommy Vietor congratulated the European Union for winning the Nobel Peace Prize.  On Friday, the State Department announced Secretary Clinton will travel to northern Haiti on October 22 to deliver remarks at the formal opening of Caracol Industrial Park.   
 

Published In: Elections & Politics Updates, Finance & Banking Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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