Politics: Daily Briefing: U.S. credit rating in danger of another downgrade

By CLARK BARROW - Also, Boehner's re-election as Speaker in question. Or is it?

DAILY BRIEFING - SUMMARY

· CONCERN - Moody's Investors Service Inc. said Wednesday that a lack of further deficit-reduction measures could negatively affect the U.S. credit rating, currently at AAA with a negative outlook.

· CONGRESS - A new session of Congress will begin today as the U.S. House and the U.S. Senate will formally convene for the 113th Congress on Thursday. This comes as a draft plan was supposedly circulating on Capitol Hill laying out a possible path for challenging U.S. House Speaker John Boehner. The news of a possible challenge comes as other sources expected Boehner to be reelected as U.S. House Speaker on Thursday.

· CONGRESS - U.S. House Speaker John Boehner announced on Wednesday that he would bring up one part of the aid package to a vote at the end of the week, allowing the U.S. House to vote on a $10 billion extension for the government's flood insurance fund—set to run out next week—on Friday. The speaker said he will bring the other $51 billion in aid to a vote in mid-January.

· WHITE HOUSE - The Obama administration has now changed immigration rules to make it easier for illegal aliens with U.S. relatives to remain in the country while seeking a visa. Meanwhile, additional media reports indicated that President Obama will push legislative immigration reform and legislative gun control reform later this month.

· WHITE HOUSE - A week after rushing to Washington to help end a tense, end-of-year standoff with Congress, President Obama is back in Hawaii for vacation.

· IRAN – U.S. Defense Department leaders are keeping a wary eye on ongoing Iranian naval drills along the hotly contested Strait of Hormuz amid reports Iran has successfully test-fired several long-range missile systems during the exercise.

DOMESTIC POLICY

ECONOMIC NEWS

· CONCERN - Moody's Investors Service Inc. said Wednesday that a lack of further deficit-reduction measures could negatively affect the U.S. credit rating, currently at AAA with a negative outlook.

o In a release Wednesday, Moody's said the fiscal package agreement helps clarify the medium-term deficit and debt trajectory of the federal government, but falls short of providing a basis for a meaningful improvement in the government's debt ratios over the medium term.

o “Although the fiscal package raises some revenue through higher tax rates on individuals earning more than $400,000 ($450,000 for joint filers) and through some other smaller measures, the estimated amount of increased revenue over the next decade is far outweighed by the amount of revenue foregone through the extension of lower tax rates for those with incomes below $400,000, the indexation of the alternative minimum tax, and other measures,” the ratings firm said in a release.

o Moody’s also stated that it expects more fiscal measures in the coming months, but the “lack of further deficit reduction measures could affect the rating negatively. Notably, yesterday's package does not address the federal government's statutory debt limit, which was reached on December 31. The need to raise the debt limit may affect the outcome of future budget negotiations.”

o Moody's Investors Service currently rates the United States Aaa, Fitch rates the country AAA, and Standard & Poor's rates the country AA-plus. All three of those ratings have a negative outlook.

IN THE DISTRICT

· CONGRESS - Despite Congress approving a hard-fought bill late Tuesday night that halts tax hikes for millions of Americans, lawmakers have only set themselves up for another risky battle weeks from now.

o The fiscal cliff compromise bill pushed off for two months a decision on automatic spending cuts originally set to hit Tuesday. And left unaddressed was the debt ceiling, which the country would have hit Dec. 31 if not for emergency measures taken by the Treasury Department.

o Obama, before leaving for Hawaii to rejoin his family vacation, warned Tuesday night that he would not permit another debt-ceiling battle like the one in the summer of 2011.

· CONGRESS - A new session of Congress is set to begin Thursday. The U.S. House and the U.S. Senate will formally convene for the 113th Congress just hours after they wrapped up a notably unproductive and acrimonious two years with a desperate series of votes aimed at averting economic calamity and minimizing political chaos.

o Amid the angst, a draft plan was supposedly circulating on Capitol Hill laying out a possible path for challenging U.S. House Speaker John Boehner. The news of a possible challenge comes as other sources expected Boehner to be reelected as U.S. House Speaker on Thursday.

o The plan includes a two-stage process for challenging Boehner. First, it calls for somebody coming forward to urge a vote by secret ballot -- which would allow members to vote without fear of retaliation. Then, the plan suggests, challengers could emerge. The process for the vote is a bit complicated. For the time being, the only candidates for nomination would be Boehner and House Democratic Leader Nancy Pelosi.

o The only way for someone to win the speakership is to win a majority (more than 50 percent) of all votes cast. If everybody votes, that means the winner must ultimately attract 218 votes. There are 234 Republicans in the new Congress, but if Boehner loses 17 of them, it's enough to kick the vote to a second ballot -- something that hasn't happened since 1923.

o Pelosi could conceivably win the speakership, but only if Republicans cross over to vote for her or if enough Republicans actually abstain from voting. More likely, if there are enough defections, is that the vote would move into multiple rounds of ballots, with anti-Boehner conservative members basically trying to drum up a viable Republican challenger to Boehner on the spot.

· CONGRESS - U.S. Rep. Tom Price says the House GOP is divided between red-state Republicans and blue-state Republicans. Price said the chamber needs leaders from red states.

o Price stopped short of saying Ohio's John Boehner should not be re-elected as speaker on Thursday. But his comments were a clear dig at Boehner after the speaker supported a so-called fiscal cliff deal that most House Republicans opposed.

o Price noted that an overwhelming majority of the Republicans who joined Democrats in supporting the deal come from states that President Barack Obama won in November. The top four House Republicans, including Boehner, hail from Obama states.

· CONGRESS - U.S. House Speaker John Boehner insisted on Wednesday he is committed to passing a Superstorm Sandy disaster aid bill this month after his decision to deny a vote on the package drew scathing criticism from East Coast lawmakers and governors.

o Speaker Boehner announced on Wednesday that he would bring up one part of the aid package to a vote at the end of the week, allowing the U.S. House to vote on a $10 billion extension for the government's flood insurance fund—set to run out next week—on Friday. The speaker said he will bring the other $51 billion in aid to a vote in mid-January.

o New Jersey Gov. Chris Christie (R) unloaded on House Republicans and Speaker John Boehner (R-Ohio) Wednesday for their "disgusting" decision to delay a vote on Hurricane Sandy relief.

o In a joint statement, Governors Andrew Cuomo of New York, a Democrat, and Republican Chris Christie of New Jersey called the U.S. House's failure a "dereliction of duty." Cuomo and Christie last month had personally lobbied Congress for passage of a relief bill that was even larger, at about $82 billion.

o Still, the U.S. House Appropriations Committee produced a bill Tuesday that significantly pared back the U.S. Senate version, bringing it down to $27 billion. The initial plan was to put that bill for a vote, and then allow a separate vote on a $33 billion amendment -- many Republicans were expected to oppose the second half, while potentially approving the $27 billion component.

o According to the Heritage Foundation, the original disaster aid package by the Obama Administration requested roughly $28 billion for future disaster-mitigation projects on the East Coast. The full cost of the original measure would exceed $60 billion.

o Experts at the Heritage Foundation said that once unnecessary spending is removed, only $12.8 billion in the funding bill would need to be spent now.

· WHITE HOUSE - It took a year, but the Obama administration has now changed immigration rules to make it easier for illegal aliens with U.S. relatives to remain in the country while seeking a visa.

o Illegal immigrants who have family members -- a spouse, children, or parents -- who are already U.S. citizens usually have to return to their home country in order to apply for a visa to stay in the U.S. Those who had already been in the U.S. for more than 6 months illegally would also have to apply for a waiver to ignore their unlawful presence before their visa application could be considered.

o Last January, the U.S. Department of Homeland Security began the process of amending the rules affecting those who have family members who are U.S. citizens. A proposed rule change was published in the Federal Register on April 2, 2012, and after taking comments the final rule was published today with a few modifications.

o The new rule allows illegal immigrants to apply for a provisional unlawful presence waiver while still in the U.S. (rather than having to leave the country to do so). As the rule explains, the change "is expected to result in a reduction of the time that U.S. citizens are separated from their immediate relatives, thus reducing the financial and emotional hardship for these families." The rule change will take effect in 60 days.

o Meanwhile, additional media reports indicated that President Obama will push legislative immigration reform and legislative gun control reform later this month.

· WHITE HOUSE - A week after rushing to Washington to help end a tense, end-of-year standoff with Congress, President Obama is back in Hawaii for vacation.

o The president arrived in Honolulu before 5 a.m. local time and immediately rejoined his family in their rented beachside vacation home in Kailua, a picturesque Honolulu suburb on the east side of Oahu. Kailua Beach is a popular place for wind sports and paddle surfing.

o The decision to resume his vacation will cost taxpayers an additional $3 million, bringing the total cost of the Obama's Hawaii vacation to more than $7 million.

FEDERAL GOVERNMENT

· SEQUESTRATION - Washington’s approval of a two-month delay in across-the-board spending cuts that were set to take effect on Wednesday is being greeted with trepidation by Pentagon officials, military contractors and defense analysts.

o While the deal averted immediate cuts, President Obama and congressional leaders will have to craft a new deal by the beginning of March to prevent the cuts from taking place in March.

o Todd Harrison, a military budget specialist at the non-partisan Center for Strategic and Budgetary Assessments, warned that the short-term deal might actually make it harder to enact a long-term agreement to prevent the cuts, known as sequestration, from happening. The plan reduces the amount of defense cuts from $54 billion over nine months to $42 billion over seven months, said Mr. Harrison. That ensures that immediate defense cuts wouldn’t be any deeper.

o Defense Secretary Leon Panetta warned Wednesday that the “specter of sequestration has cast a shadow” over the Pentagon’s efforts to develop a long-term strategic plan that is already facing $487 billion in cuts over the next decade.

· GUNS - The number of FBI background checks required for Americans buying guns set a record in December, as the Connecticut school massacre stirred interest in self-defense and prompted renewed talk of limits on firearms, according to FBI data.

o The FBI said it recorded 2.8 million background checks during the month, surpassing the mark set in November of 2 million checks. The number was up 49 percent over December 2011, when the FBI performed a then-record 1.9 million checks.

o Consumer demand for guns appears to have accounted for the uptick in activity. There were no changes in FBI background check procedures that would have affected the December numbers, FBI spokesman Stephen Fischer said.

FOREIGN POLICY

MIDDLE EAST

· SYRIA - The United Nations gave a grim new count Wednesday of the human cost of Syria's civil war, saying the death toll has exceeded 60,000 in 21 months - far higher than recent estimates by anti-regime activists.

o The day's events illustrated the escalating violence that has made recent months the deadliest of the conflict: As rebels pressed a strategy of attacking airports and pushing the fight closer to President Bashar Assad's stronghold in Damascus, the government responded with deadly airstrikes on restive areas around the capital.

o A missile from a fighter jet hit a gas station in the suburb of Mleiha, killing or wounding dozens of people who were trapped in burning piles of debris, activists said.

· IRAN – U.S. Defense Department leaders are keeping a wary eye on ongoing Iranian naval drills along the hotly contested Strait of Hormuz amid reports Iran has successfully test-fired several long-range missile systems during the exercise.

o Reports claim Iranian warships let loose a new cruise missile dubbed the "Qader" and revamped version of its "Nour" long-range missiles.

o On Wednesday, the U.S. Department of Defense declined to comment on the validity of the Iranian reports, but said department officials were "monitoring closely" recent events in the Strait.

AFRICA

· EGYPT - Later this month, the new government in Egypt is scheduled to begin taking delivery of 10 F-16 fighter jets and 200 Abrams tanks – courtesy of U.S. taxpayers.

o The $213 million deal is part of a foreign aid package signed when American ally Hosni Mubarak was president, but a growing chorus of critics say the Obama administration should pull the plug. They cite Egypt’s new Muslim Brotherhood government’s mixed signals to the U.S. and Israel, as well as America’s fiscal problems, as reasons for rescinding the deal.

o The petition has garnered more than 150,000 signatures, and ACLJ Executive Director Jordan Sekulow believes it could bolster mounting opposition in Washington. Although the deal has already been approved by Congress and could only be rescinded by President Obama, Sekulow said lawmakers have leverage because Obama needs their backing for some $1.5 billion in aid earmarked for Egypt later this year.

SOUTH AMERICA

· VENEZUELA - Venezuela's vice president is returning home Wednesday from a visit with Hugo Chavez in Cuba and says the ailing president's condition remains "delicate" three weeks after his cancer surgery.

o With rumors swirling that Chavez had taken a turn for the worse, Vice President Nicolas Maduro said Tuesday that he had met with the president twice and had spoken with him.

o Both supporters and opponents of Chavez have been on edge in the past week amid shifting signals from the government about the president's health. Chavez has not been seen or heard from since the Dec. 11 operation, and officials have reported a series of ups and downs in his recovery -- the most recent, on Sunday, announcing that he faced new complications from a respiratory infection.