Conservatives, Progressives Discuss Debt Ceiling

Rep. Michelle Bachmann will vote against House Speaker John Boehner debt ceiling plan because it lifts the debt ceiling, and she has promised her fans she won't vote for that. As she speaks to National Press Club Thursday, MoveOn.org holds a rally opposing cuts to programs on Capitol Hill.

Source: http://www.npr.org/2011/07/28/138795713/conservatives-progressives-speak-on-debt-talks?ft=1&f=1003

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Medicare Board Could Be Obama's Achilles' Heel

Doug Schoen, Huff PostAs President Obama continues to push for an ambitious deficit-reduction deal in advance of the August 2nd deadline for raising the debt limit, one thing is clear: Medicare reform will be a critical part of any budget agreement -- now and in the future.And while essential to curbing our government's rising spending, reform must be done in a way that protects policies and programs that work while eliminating or avoiding policies and programs that prove both costly and ineffective.

Source: http://www.realclearpolitics.com/2011/07/27/medicare_board_could_be_obama039s_achilles039_heel_260187.html

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Fear Over Debt Fight Hits Wall Street

Anxiety about a deadline to raise America's debt ceiling swept across Wall Street on Wednesday and drove the Dow Jones industrial average down almost 200 points. With Washington showing no sign it will find a solution, financial planners around the country said their clients were increasingly worried.

The Dow took a sharp drop during the last two hours of trading and closed down for the fourth session in a row. The declines have grown each day. The market turmoil was a sign that consequences of the debt fight were beginning to materialize in earnest.

With six days to go until the Treasury Department's Tuesday deadline — raise the national borrowing limit or face an unprecedented federal default and unpredictable fallout in the economy — analysts suggested the market would only grow more volatile.

"The longer we go without any type of hope or concrete plans for resolution, the more concerned investors are going to become," said Channing Smith, a managing director at the financial firm Capital Advisors Inc.

While no one was panicking, financial professionals who handle the investment accounts of everyday Americans, college funds, retirement accounts and other nest-eggs, said their customers were growing more worried by the day. One said he had not seen this level of anxiety since the 2008 financial crisis.

"We're getting a ton of calls," said Bob Glovsky, president of Mintz Levin Financial Advisors in Boston. `"It's all 'What happens if the U.S. defaults? What's going to happen to me?'"

The Dow finished the day down 198.75 points, at 12,302.55. About half of the decline came between 2 and 4 p.m. local time, when the market closes for the day. It was the worst fall for the Dow since June 1, with 28 of the 30 component stocks losing value.

While the decline was not close to the stomach-churning days of the fall of 2008, when the Dow lurched lower and higher by 700 points some days, there were signs that fear on Wall Street was growing. The Dow fell 43 points Friday, 88 points Monday and 91 points Tuesday, then more than twice that on Wednesday.

"Right now the clouds are gathering," said Chris Long, a financial planner in Chicago.

Without a deal by Tuesday, the Obama administration has said the government will be unable to pay all its bills, and could miss checks to Social Security pension recipients, veterans and others who depend on public help. In addition, credit rating agencies could downgrade their assessment of the government's finances, further unnerving financial markets and perhaps causing interest rates to rise for everyone.

Financial advisers typically tell their clients not to tinker with their portfolios or try to play a short-term move in the market to their advantage. Of course, leaving investments alone could be a test of patience for the rest of this week.

On Friday afternoon, for example, it's plausible that Congress could reach a deal in mid-afternoon and send the Dow soaring 300 points in the final hour of trading. It's also plausible that there's still no deal and traders decide staying in the market over the weekend is too risky, and send the Dow plunging.

Investors who rode out the financial turbulence in 2008 without rejiggering their portfolios have made up most of their losses. The stock market has almost doubled since its post-meltdown low in March 2009. Many people who withdrew their money from the stock market during the worst haven't come close to breaking even.

"Trying to adjust to something on a day-to-day basis is how you get hurt," Glovsky said. "You've got to take a long-term approach."

The memory of October 2008 remains vivid. The Dow plunged 777 points in a single day when Congress surprised investors by rejecting an early version of $700 billion legislation to bail out the nation's biggest banks.

"We've been through this, or something like it," said Leisa Aiken, a financial planner in Chicago. "I think what we went through in 2008 has toughened clients up a little. They realize that they will get through it if they don't give in to a knee-jerk reaction."

This time around, analysts say, the chances of similar turmoil are small but growing. Standard & Poor's, one of the rating services, has said that "the reverberations of the showdown may be deep and wide — particularly if Washington does not come to a timely agreement on the debt ceiling."

Bond traders were still betting on a last-minute deal on the debt. The yield on the 10-year Treasury note, which should rise when investors believe there is a greater risk they won't get their money back, has stayed near 3 percent all month.

Even if Washington sails past the deadline without raising the debt limit, bond traders believe the Obama administration will keep up its interest payments and cut spending on everything else. The resulting shock to the economy and other financial markets would make Treasury bonds a safe place for investors to hide, which could result in lower yields.

For individual investors, experts are cautioning against overreaction.

One measure of investor concern, the Vix, or volatility index, shot up 14 percent on Wednesday. The tone of the market changed this week, as nervous investors began moving money out of stocks, said Howard Ward, a chief investment officer at asset manager GAMCO.

He said the stock market will likely become more volatile as the weekend nears, and while he said he was not repositioning his portfolio, he admitted: "Right now I'm pretty worried."

Source: http://www.npr.org/2011/07/27/138764844/fear-over-debt-fight-hits-wall-street?ft=1&f=1014

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King: Al-Shabaab has recruited 40 Americans

Washington (CNN) -- Al-Shabaab, the al Qaeda-affiliated militant group in Somalia, has recruited more than 40 Muslim-Americans and 20 Canadians, U.S. Rep. Peter King said Wednesday as he opened a third congressional hearing on Muslim-American radicalization.

Wednesday's hearing of the Committee on Homeland Security will focus on al-Shabaab and the results of a committee investigation into the threat it poses to the United States, said King, a New York Republican, according to a transcript of his opening statement. "The committee has been briefed by intelligence agencies and we have interviewed dozens of experts on al-Shabaab," the transcript said.

The committee has learned that more than 40 Muslim-Americans and 20 Canadians have joined al-Shabaab inside Somalia, a finding King called "alarming." The committee has learned at least 15 of the Americans and three Canadians "are believed to have been killed fighting with al-Shabaab, according to King's transcript.

"Three Muslim-Americans became suicide bombers, such as Shirwa Ahmed from Minneapolis -- the first confirmed American suicide bomber in our history," the transcript said. Ahmed, 27, killed himself and 29 others in the fall of 2008.

But, King also mentioned "radicalized converts like al-Shabaab commander Omar Hammami, who was raised a Baptist in Alabama, and who has repeatedly threatened the U.S. homeland." Hammami was one of 14 Americans indicted on terrorism charges last summer.

Another "would-be bomber from Minneapolis" was shot and killed by peacekeepers in Mogadishu before he could detonate his suicide explosives vest, according to King's transcript.

Three American al-Shabaab fighters were arrested after returning home, he said, and a fourth was apprehended in the Netherlands. Somalia, he noted, "is now much easier to get to for jihad than Afghanistan, Iraq, Pakistan or Yemen."

"As many as two dozen Muslim-Americans with al-Shabaab -- who in many cases were trained by top al Qaeda leaders -- remain unaccounted for," King's transcript said.

Federal prosecutions for funding, recruiting and attempting to join the Somali militant group "are the largest number and most significant upward trend in homegrown terror cases filed by the Justice Department over the past two years," King's transcript said. At least 38 cases in 10 states have been unsealed since 2009.

The Justice Department believes al-Shabaab is recruiting inside mosques in Somali-American communities in cities such as Minneapolis and San Diego, according to King.

Somali-Americans travel frequently between east Africa and U.S. cities, he said. While most of the travel is legitimate, "senior U.S. counterterror officials have told the committee they are very concerned about individuals they have not identified who have fallen in with al-Shabaab during trips to Somalia, who could return to the U.S. undetected."

"With a large group of Muslim-Americans willing to die as 'martyrs' and a strong operational partnership with al Qaeda leaders in Pakistan and in Yemen, al-Shabaab now has more capability than ever to strike the U.S. homeland," according to King.

King's first hearing on American Muslims, in March, sparked international controversy and garnered intense media scrutiny. A second hearing in June focused on the threat of Muslim-American radicalization in U.S. prisons.

Source: http://rss.cnn.com/~r/rss/cnn_allpolitics/~3/FsJfATqQbTw/index.html

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