1. December 28, 2012
DOMESTIC POLICY MATTERS
The Fiscal Cliff Debate. Cutting his family holiday vacation in Hawaii short, President Obama returned to
Washington Thursday, as did the members of the Senate. Speaker of the House John Boehner (R-Ohio)
called for the House to return to session this coming Sunday, with votes expected to take place at 6:30 p.m.,
though nothing specific has yet been scheduled. While he continued to press the Senate to take the next step
in developing a fiscal cliff agreement, Speaker Boehner assured the Republican caucus that he would not put
forth a measure which had more Democratic support than Republican support, even if it had passed the
Senate. In response, Senate Majority Leader Harry Reid (D-Nevada) increased pressure on the House to
pass a Senate-backed measure to extend the Bush-era tax rates for income earners below $250,000.
Meanwhile, the Treasury Department notified Congress Wednesday that it is scheduled to hit the $16.4 trillion
federal debt limit on December 31st. In a letter to congressional leaders, Treasury Secretary Timothy Geithner
said the Department will begin to institute authorized “extraordinary measures” to delay default for
approximately eight weeks, allowing lawmakers additional time before considering whether to raise the debt
limit. With both parties’ continued pessimistic outlook for a compromise by the end of the year, however, stock
prices fell late this week and other economic indicators began showing signs for concern.
On Friday afternoon, President Obama met with congressional leaders in both parties in a last-ditch effort to
negotiate a deal to avert the fiscal cliff, and White House senior staff subsequently held a call with business
leaders to build support for any such agreement. The President then addressed the press Friday evening to
acknowledge he had a “good and constructive discussion” with congressional leaders and is modestly
optimistic an agreement can be reached by the December 31st deadline. President Obama stated that Majority
Leader Reid and Senate Minority Leader Mitch McConnell (R-Kentucky) are working now to meet that
deadline. However, if a deal is not reached in time, he will urge Majority Leader Reid to bring a package to the
floor for an up or down vote which would extend middle class tax rates and unemployment insurance and lay
the groundwork for additional economic growth and deficit reduction measures. The President stressed that
“the American people are watching … we’ve got to get this done.”
On Friday, the Senate passed without amendment a House-backed measure to extend for five years the
Foreign Intelligence Surveillance Act, despite strong opposition to wiretapping provisions from Senator Ron
Wyden (D-Oregon) and others. The measure, now headed to President Obama’s desk for signature, would
allow the federal government to conduct surveillance on certain foreign targets communicating with people in
the United States. After voting on a series of amendments, the Senate passed a bill to complete consideration
of a Hurricane Sandy supplemental spending bill late Friday; however, the House must act on the $60.4
billion measure before December 31st, or lawmakers will have to start the process over in the 113th Congress.
Agriculture Secretary Tom Vilsack urged lawmakers this week to act on an extension or reauthorization bill for
U.S. farm programs, some of which expire on December 31st. Without action, the Agriculture Department
would be forced to implement programs under a 1949 law expected to significantly increase dairy prices in
January.
Political News. On Wednesday, Hawaii Governor Neil Abercrombie (D) surprised many with the appointment
of Lieutenant Governor Brian Schatz (D) to fill the Senate seat left vacant by the death of Senator Daniel
Inouye (D-Hawaii). Senator Schatz, the second-youngest Senator at age 40, was sworn-in by Vice President
Joe Biden on Thursday and will hold the seat at least until a special election in 2014. After Environmental
Protection Agency (EPA) Administrator Lisa Jackson announced Thursday that she will step down after the
State of the Union address in January, President Obama stated, “[U]nder her leadership, the EPA has taken
sensible and important steps to protect the air we breathe and the water we drink”. Former General Norman
Schwarzkopf, commander of U.S.-led coalition forces in the 1991 Gulf War, died Thursday. Former President
George H.W. Bush, who was moved to an intensive care unit this week at Houston’s Methodist Hospital, said
in a statement from his hospital bed that Schwarzkopf was "one of the great military leaders of his generation."
Also on Thursday, Congressman Edward Markey (D-Massachusetts) announced that should Senator John
Kerry (D-Massachusetts) win Senate confirmation to be Secretary of State, he will seek Kerry’s vacant Senate
seat. In a message distributed by the Democratic Senatorial Campaign Committee, Senator Kerry signaled his
support for Representative Markey's prospective candidacy. An election would occur within 160 days following
the vacancy. The 113th Congress will convene at noon on January 3, 2013.

2. FOREIGN POLICY MATTERS
Syria. Monday, the State Department condemned the “latest vicious attacks by the Syrian regime against
civilians, most notably the attack on people waiting to buy bread at a bakery in the town of Helfeya;” further
saying such attacks demonstrate the regime has no future in Syria. While Russia has criticized the United
States for recognizing the Syrian National Coalition (SNC), speaking at a news conference in Moscow,
Russian Foreign Minister Sergei Lavrov confirmed the Russian government has reached out to the Syrian
opposition through the Russian Embassy in Egypt to encourage a dialogue between the SNC and Syrian
President Bashar al-Assad. Moaz Alkhatib, the leader of the SNC, however, rejected Moscow’s overtures and
demanded Russia apologize for supporting President Assad.
Friday, a Russian judge issued an acquittal of the only Russian official to have gone to trial in the case of the
death of anti-corruption lawyer Sergei Magnitsky. The acquittal comes four days after President Putin said
Mr. Magnitsky died of natural causes. The U.S. Magnitsky law – inspired by the death of the lawyer and
signed into law by President Obama two weeks ago – sanctions those Russian officials involved in the case.
Although Russian Foreign Minister Lavrov and Science and Education Minister Dmitry Livanov said the Duma-
approved retaliatory bill preventing Americans from adopting Russian children is ill-advised, on Thursday,
President Putin said, “I have not seen any reason why I should not sign it.” Friday morning, President Putin
signed into law the restrictive measure, essentially voiding the U.S.-Russia bilateral adoption agreement that
went into effect November 1. The bilateral adoption agreement mandated more screening for American
adoptive parents and greater scrutiny post-adoption. The State Department expressed “deep” regret Friday
and noted: “The Russian government’s politically motivated decision will reduce adoption possibilities for
children who are now under institutional care.”
Friday, Iran’s Navy commenced a six-day naval drill in the Strait of Hormuz, maneuvers aimed at showcasing
Iran’s military capabilities in a vital oil and gas shipping corridor. Meanwhile, Iranian President Mahmoud
Ahmadinejad fired Iran’s first and only female Minister, Marzieh Vahid-Dastjerdi, after she spoke out against
government cuts to the Health department.
Analysis of recent satellite photos indicates North Korea has repaired flood damage at its nuclear test facility
and could conduct a quick atomic explosion if it chose. Speculation about a possible third nuclear test comes
as South Korea's President-elect Park Geun-hye prepares to take office in February, and as North Korean
leader Kim Jong Un marks his one-year anniversary as supreme commander.
On Tuesday, the State Department said: “This past weekend, the draft Egyptian constitution passed a
public referendum. We have stood with Egyptians as they have engaged in the difficult work of democratic
transition. We have consistently supported the principle that democracy requires much more than simple
majority rule.” While offering no concessions, Wednesday, Egyptian President Mohamed Morsi accepted
responsibility for “mistakes” during the ratification process of the new Constitution. In a televised address, he
appealed for unity and pledged to respect the one-third of voters who cast ballots against the charter.
Meanwhile, former President Hosni Mubarak was moved from prison to a military hospital because of health
concerns.
After international condemnation last week over Israel’s decision to move forward with settlements in the E1
track east of Jerusalem, on Tuesday, Israel announced an additional 1,200 settlement units around
Jerusalem. This latest announcement brings the total number of new settlement units to 5,500 in just over a
week. Thursday, in accordance with the Egyptian-brokered truce deal between Israel and Gaza's Hamas
authorities that ended an eight-day war last month, Israel eased its blockade of Gaza and allowed the territory
to import building materials for the first time since 2007.
In Afghanistan, Australia began drawing down military equipment, with the intention of fully withdrawing its
naval and air force personnel before 2014. The United States is also scheduled to withdraw from Afghanistan
by the end of 2014 and hand over responsibility for security to the Afghan government.
This week, Central African Republic (CAR) President François Bozize pleaded with the international
community – particularly France – to help fend off rebel factions that are approaching the capital city. On
Thursday, the State Department announced the U.S. Embassy in Bangui is temporarily suspending operations
Friday as a result of the deteriorating security situation.
After three weeks of recovery from a stomach virus and a concussion, Secretary of State Hillary Clinton is
expected to return to the State Department next week.
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