1. July 13, 2012
DOMESTIC POLICY MATTERS
Budget/Sequestration. On Tuesday, Office of Management and Budget Acting Director Jeffrey Zients
agreed to testify before the House Armed Services Committee (HASC) on August 1 regarding the
Administration’s plans for carrying out sequestration. Deputy Secretary of Defense Ash Carter also will testify
at the hearing. In response to a request by HASC Republicans to “immediately” bring to the floor legislation
to repeal the impending cuts to the defense budget under sequestration, Senate Majority Leader Harry Reid
(D-Nevada) sent a letter Thursday insisting that all parties instead agree to “a balanced compromise” that
asks “special interests, millionaires, and billionaires to pay their fair share.”
Fiscal Year (FY) 2013 Appropriations. The House Appropriations Defense Subcommittee plans to mark up
the FY 2013 Defense Appropriations bill next week, following the recent Congressional Budget Office finding
that the Defense Department’s budget request for FY 2013 is $14 billion higher than the spending cap set by
the Budget Control Act (BCA). Although the Senate Appropriations Committee has already approved 9 of the
12 annual appropriations bills, on Tuesday, Majority Leader Reid suggested he may not bring any
appropriations bills to the Senate floor for the foreseeable future because House Republicans have refused to
adhere to the top-line discretionary BCA limits in their appropriations bills.
Five House Democrats joined all voting Republicans to pass legislation to repeal President Obama’s
healthcare law – the Affordable Care Act – on Wednesday. On Monday, the White House issued a veto
threat against the bill, which may not come to a vote in the Democratic-led Senate. Meanwhile, on Tuesday,
the Republican Governors Association sent a letter to President Obama seeking clarification on outstanding
questions related to the law in the wake of the Supreme Court’s decision to largely uphold it. On Monday,
Texas Governor Rick Perry became the sixth Republican governor to announce their state will not accept
expanded Medicaid funding under the law.
“Fast and Furious.” On Monday, Senate Judiciary Committee Ranking Member Chuck Grassley (R-Iowa)
and House Oversight Chair Darrell Issa (R-California) announced the Justice Department’s Inspector General
is investigating allegations that two Bureau of Alcohol, Tobacco, Firearms and Explosives’ officials who spoke
to Congress about the Fast and Furious program later faced retaliation from their agency.
Farm and Agriculture Policy. On Wednesday, the House Agriculture Committee held a mark-up of the
Federal Agriculture Reform and Risk Management (FARRM) Act (H.R. 6083). After considering over 100
amendments, the Committee approved (35-11) the bill, which included over $16 billion in cuts to food aid
programs, early Thursday morning. The Senate passed its “Farm Bill” on June 21st, but House Speaker John
Boehner (R-Ohio) has not publicly addressed the timing of a full House vote. Current program authorizations
covered under the measure are set to expire September 30, 2012.
Tax Reform. On Monday, President Obama called on Congress to pass a one-year extension of the Bush-
era income tax rates – but only for families earning $250,000 a year or less. Despite Senator Reid’s support,
Senate leaders could not agree on how to bring that measure – and a Republican-backed measure to
preserve current rates on all income levels for one year – to a vote in that chamber before adjourning for the
weekend. Also, on Wednesday, the Administration announced a proposal designed to help the nation's small
businesses expand and create jobs, including additional tax write-offs and regulatory reform to improve
investments in low-income communities. The Senate also failed Thursday to advance Senator Reid’s bill (S.
2237) to provide a tax credit to encourage employers to hire new workers.
On Thursday, House Judiciary Committee Chair Lamar Smith (R-Texas) asked the Administration to make
seven senior officials available for interviews with the committee about the recent national security leaks.
Meanwhile, Wells Fargo, the nation’s largest mortgage lender, agreed to settle with the Justice Department
Thursday to resolve allegations that it discriminated against black and Hispanic borrowers.
Political News. The House Ethics Committee announced Monday that it will formally investigate allegations
that Representative Shelley Berkley (D-Nevada) – who is currently campaigning against incumbent Dean
Heller (R-Nevada) for a Senate seat – improperly used her office to the advantage of a business owned by
her husband. Forty-two year incumbent Representative Charles Rangel (D-New York) clinched the
Democratic primary in his strongly Democratic Harlem-area district on Monday, after the New York City Board
of Elections completed a count of all valid ballots cast in the June 26 election. On Wednesday, the office of
Representative Jesse Jackson Jr. (D-Illinois) released a statement from the Congressman’s physician

2. indicating that he is currently undergoing “intensive” medical treatment for a mood disorder. Throughout the
week, prominent Democrats called on presumptive Republican Presidential nominee Mitt Romney to release
additional years of tax returns, in part to document when Romney stepped down as chairman of Bain Capital.
FOREIGN POLICY MATTERS
Syria. With the U.N. mandate authorizing the U.N. monitoring mission due to expire next week, the U.N.
Security Council (UNSC) met behind closed doors Thursday to discuss disparate British and Russian draft
U.N. resolutions on Syria. The United States favors the United Kingdom’s draft resolution that maintains the
monitoring mission and immediately imposes Chapter 7 sanctions if a ceasefire does not take hold within 10
days and Syrian President Bashar al-Assad’s forces did not withdraw heavy weapons from population areas.
Russia opposes Chapter 7 sanctions, calling this a “red line.” Friday afternoon, Secretary Clinton expressed
sadness and outrage over the reported Thursday massacre of at least 200 people, mostly civilians, by Syrian
government forces in Traymseh (Hama province). On Wednesday, the Syrian Ambassador to Iraq joined
several other high-level Syrian officials in announcing his defection and intention to seek asylum. On
Tuesday, the media reported a flotilla of four Russian naval ships had departed for Tartus, Syria, where
Russia maintains a naval facility.
Iran. On Thursday, the United States imposed additional sanctions on Iran, identifying more than 50 energy
companies, banks, shipping lines and other entities that the Iranian government allegedly uses as fronts to
circumvent sanctions. Treasury Undersecretary for Terrorism and Financial Intelligence David Cohen said
the latest U.S. action is “… taking direct aim at disrupting Iran’s nuclear and ballistic missile programs as well
as its deceptive efforts to use front companies to sell and move its oil.”
Burma Sanctions Eased. On Wednesday, President Obama and Secretary Clinton announced the easing
of sanctions on Burma, permitting the first new U.S. investment in the country in nearly 15 years. The
Administration maintained some restrictions in an attempt to ensure responsible and transparent investments.
Meanwhile, while in Cambodia Friday, Secretary Clinton met Friday with Burmese President U Thein Sein,
noting she had brought a “very distinguished” business delegation to meet with him. The Secretary also
encouraged President Thein Sein to continue with economic and political reforms, including addressing
human rights issues. This weekend over 70 U.S. company representatives will travel to Burma to explore
investment opportunities.
Secretary of State Travel. Last Saturday, President Obama and Secretary Clinton congratulated the
Libyan people for casting ballots for representatives of a National Congress that will lead the next stage of
Libya’s transition. By week’s end, partial election tallies showed an insurmountable lead for the moderate
National Forces Alliance led by Mahmoud Jibril, who served as the opposition’s Prime Minister during the
uprising against the Gaddafi regime. Secretary Clinton, meanwhile, was in Kabul last Saturday; meeting with
Afghan President Hamid Karzai, after President Obama had designated Afghanistan as a major non-NATO
ally of the United States. Sunday, the Secretary met with Japanese Prime Minister Yoshihiko Noda and
Foreign Minister Koichiro Gemba in Tokyo. On Monday in Mongolia, Secretary Clinton met with President
Tsakhiagiin Elbegdorj and Prime Minister Sukhbaatar Batbold, praising Mongolia’s economic reforms and
“pluralistic political system”. The Secretary next travelled to Vietnam Tuesday, meeting with Prime Minister
Nguyen Tan Dung and Foreign Minister Pham Binh Minh to promote closer ties and human rights protections.
Wednesday in Vientiane, Secretary Clinton met with Lao Prime Minister Thongsing Thammavong and
Deputy Prime Minister and Foreign Minister Thongloun to look for “new ways to partner for the future”. Later
that afternoon in Cambodia, the Secretary participated in the U.S.-ASEAN Ministerial Meeting and met with
Cambodian Prime Minister Hun Sen to discuss U.S. investment, Cambodian debt, and other bilateral issues.
The ASEAN Regional Forum concluded amid disagreements over how to address territorial claims in the
South China Sea, specifically those claimed by China and in part by the Philippines, Vietnam, Malaysia, the
island of Taiwan, and Brunei. Secretary Clinton pressed for discussion of a multinational agreement to ease
tensions. On Friday, still in Cambodia, Secretary Clinton also participated in the fifth Lower Mekong
Initiative Ministerial Meeting.
On Thursday, President Obama authorized the use of up to $10 million to respond to the refugee needs
resulting from the conflict in northern Mali, where Islamists largely have gained control following the fall of the
civilian central government in March. The United States continues to support the Economic Community of
West African States (ECOWAS) in its mediation efforts to facilitate a political transition in Mali. On Tuesday,
President Obama announced his intention to nominate the following as U.S. Ambassadors: Dawn Liberi
(Burundi), Stephen Mull (Poland), and Walter North (Papua New Guinea, the Solomon Islands, and Vanuatu).
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