Congress is in recess this week with the House returning on Monday and Senate on January 21st. The administration is reportedly late in submitting its FY2014 budget due to fiscal cliff negotiations. Vice President Biden is leading a task force on gun violence and will deliver recommendations to the President by next Tuesday. Secretary of State Clinton has returned to work after an illness and met with foreign officials including the Afghan President. President Obama nominated Chuck Hagel for Secretary of Defense and John Brennan to lead the CIA.

1. January 11, 2013
DOMESTIC POLICY MATTERS
Congress is in recess this week. The House returns on Monday, and the Senate returns January 21st.
Debt Ceiling, Budget & the Economy. The President’s Fiscal Year (FY) 2014 budget request, which is
statutorily due the first Monday in February, reportedly could be up to a month late, largely due to the “fiscal
cliff” negotiations that culminated last week. House Budget Committee Chairman Paul Ryan (R-Wisconsin)
asked for a specific timeline in a letter Wednesday to the Office of Management and Budget, warning that “a
delay… affects Congress’s ability to carry out its budget duties.” Meanwhile, on Thursday, the Joint Economic
Committee’s new chair, Congressman Kevin Brady (R-TX), announced he will propose to limit federal
spending to a percentage of Gross Domestic Product. In response to recent threats by some Republicans,
including Senators Pat Toomey of Pennsylvania and John Cornyn of Texas, to shut down the government
instead of unconditionally raising the debt limit, some business leaders spoke out this week against that
scenario, claiming that any sort of loan default or government shutdown will hurt the economy. In anticipation
of further budget battles and impacts to defense spending, Defense Department officials began implementing
measures this week to freeze hiring and curtail administrative, travel and other expenses, as well as plan for
potential sequester cuts. Secretary of Defense Leon Panetta told reporters Thursday, “[W]e really have no
choice but to prepare for the worst.” The Commerce Department reported Friday morning that the value of
imported services and goods increased by 3.8 percent while exports grew at only one percent for the month of
November, marking a continuing trend in the gap between imports and exports.
In his role overseeing the White House task force to curb gun violence created in the wake of the Newton,
Connecticut, school shooting, Vice President Joe Biden this week met with leaders of the National Rifle
Association (NRA) and members of the entertainment and video game industries. While the NRA expressed
disappointment with the meeting, Vice President Biden noted there is general consensus emerging from other
stakeholders to consider banning high-capacity ammunition magazines and tightening background check laws,
from which gun shows are currently exempt. The Vice President signaled earlier in the week that President
Obama could use his executive powers to enact some gun control measures and said Thursday that he will
deliver a full set of recommendations to the President by next Tuesday. Another school shooting occurred
Thursday at a high school in California, where a student opened fire, critically injuring another student.
On Thursday, the Consumer Financial Protection Bureau (CFPB) proposed new mortgage regulations
intended to ensure responsible lending to and borrowing by prospective homebuyers. CFPB Director
Richard Cordray stated, “[O]ur goal here is not only to stop reckless lending but to enable consumers to
access affordable credit.” After the Interior Department announced an expedited high-level review of
drilling operations in Alaskan waters, with a particular focus on the Royal Dutch Shell company’s Kulluk
drilling rig, which accidentally ran aground in December, a coalition of environmental groups sent a letter
Wednesday to Secretary Ken Salazar urging him to suspend oil and gas activities in the Arctic Ocean.
Additionally, on Thursday, Congressman Ed Markey (D-Massachusetts), Ranking Member of the House
Committee on Natural Resources, wrote a letter to Shell disputing the company’s reasoning for moving the
rig. Senator Mark Begich (D-AK) also announced this week plans to hold a hearing on the matter as chair
of the Commerce Committee’s Subcommittee on Oceans, Atmosphere, Fisheries, and the Coast Guard.
Political News. On Monday, President Obama announced he will nominate former Senator Chuck Hagel (R-
Nebraska) to lead the Defense Department and White House counterterrorism advisor John Brennan to lead
the Central Intelligence Agency (CIA). Senator Hagel has come under scrutiny from the right and the left
recently on issues ranging from Israel to Iran to Iraq to defense spending to gay rights, setting up a pointed
confirmation hearing in the Senate Armed Services Committee. On Wednesday, Labor Secretary Hilda Solis
submitted her resignation. A replacement for Secretary Solis has yet to be announced. President Obama
announced Thursday that Jack Lew, the current White House Chief of Staff and a two-time Office of
Management and Budget Director, will be his nominee to replace Timothy Geithner as Secretary of the
Treasury. Secretary Geithner will stay in place until January 25th. Speaker of the House John Boehner (R-
Ohio) officially invited President Obama to deliver his State of the Union address before a joint session of
Congress on February 12th. Senator Jay Rockefeller (D-West Virginia) announced Friday that he will not run
for a sixth term, providing an opportunity for Republicans to pick up a seat in the GOP-leaning state in 2014.

2. FOREIGN POLICY MATTERS
On Monday, Secretary of State Hillary Clinton returned to work after being indisposed for most of
December and early January with influenza and a related blood clot. The Secretary spoke Wednesday with
Qatari Emir Hamad bin Khalifa Al Thani. On Thursday, Secretary Clinton met with Chinese Vice Foreign
Minister Cui Tiankai. Later that day, the Secretary met with Afghan President Hamid Karzai and hosted a
working dinner for him. The media reported this week Secretary Clinton may testify January 22nd before the
Senate Foreign Relations Committee on the September 11, 2012, attack on the U.S. Consulate in Benghazi,
Libya. Senator Lindsey Graham (R-South Carolina) has already indicated he may try to slow John Brennan’s
confirmation as CIA Director, saying he wants answers on the intelligence community’s response to the
terrorist attack in Benghazi.
Defense Secretary Panetta also met Thursday with President Karzai, reassuring the United States remains
committed to Afghanistan, while planning for the expected 2014 withdrawal of most U.S. troops from the
country. President Karzai reportedly requested the United States consider maintaining a sizeable military
presence in-country beyond the NATO drawdown deadline. On Friday, President Obama met with President
Karzai to discuss the NATO coalition transition timetable, counterterrorism efforts and regional security.
President Obama said, at a joint press conference after the meeting, “Starting this spring, U.S. forces will have
a different mission – training, advising and assisting Afghan soldiers,” no longer serving the lead role in
providing security in Afghanistan. President Obama also said there will be no U.S. troops in Afghanistan
beyond 2014 without guarantees of immunity from prosecution under Afghan law.
Syria. On Sunday, the State Department said: “Bashar al-Assad’s speech today is yet another attempt by the
regime to cling to power and does nothing to advance the Syrian people’s goal of a political transition.…
Assad has lost all legitimacy and must step aside to enable a political solution and a democratic transition that
meets the aspirations of the Syrian people.” After a Wednesday prisoner swap resulted in 48 Iranians being
freed by the Syrian opposition for over 2,000 opponents of the Syrian regime, the State Department noted
most of the detained Iranians are members of the Revolutionary Guard and emphasized the regime values the
lives of “surrogates” over its own citizens. On Thursday, Defense Secretary Panetta said the United States is
reviewing, in consultation with Middle East governments, steps needed to ensure that Syria's chemical and
biological weapons sites are secure. U.S. Ambassador to Syria Robert Ford attended the Thursday
conference in the United Kingdom on planning for the post-Assad transition. Also Thursday, the Syrian
government criticized U.N. and Arab League Special Envoy Lakhdar Brahimi and accused him of being biased
after suggested in an interview there is no future for Assad in Syria. Meanwhile, severe winter storms this
week caused flooding in some refugee camps in neighboring Lebanon and Jordan, and food shortages to
civilians sheltering from the freezing temperatures and snow in unheated buildings in Syria.
U.S. banks apparently were again the target of cyber attacks on Wednesday. The State Department stated
Iran is suspected of being behind the attacks, which, if confirmed, would constitute “destabilizing behavior.”
On Friday, the media reported major U.S. banks have requested the National Security Agency to assist them in
protecting their computer systems.
Former New Mexico Governor Bill Richardson and Google Executive Chairman Eric Schmidt returned Friday
from a private trip to North Korea, where they pressed for openness, including via the Internet. The trip was
also focused on the U.S. citizen detained late last year in North Korea, Kenneth Bae, but Pyongyang denied a
meeting with him. The State Department warned last week the timing of such a trip is “unfortunate,” especially
coming after North Korea test fired a long-range missile last month.
Lawmakers in Venezuela voted Tuesday to delay President Hugo Chavez’s Thursday inauguration, since the
ailing leader continues to struggle with complications a month after cancer surgery in Cuba. Wednesday,
Venezuela's Supreme Court ruled it is constitutional to postpone the ceremony, allowing President Chavez to
take the oath of office at a later date. The State Department maintains it is “…up to the Venezuelans to decide
on next steps…,” amid reports of some U.S. efforts to reach out to improve the bilateral relationship.
With Islamist forces making further gains in northern Mali, the State Department said Thursday: “…we are
eager to see the swiftest possible implementation of U.N. Security Council Resolution (UNSCR) 2085,”
acknowledging issues need to be resolved in order for a peacekeeping force to be dispatched. Meanwhile,
French troops arrived in Mali Friday to help bolster security. French President François Hollande said: "I have
decided that France will respond, alongside our African partners, to the request from the Malian authorities.”
Thursday evening, Moscow announced the new Russian law banning adoptions by Americans will not go
into effect until 2014. A protest against the Russian law is planned for Sunday in Moscow.
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