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As Washington struggles over debt crisis, Obama stays mum on veto threat

By Major Garrett
National Journal

Washington may have become, as President Obama said on Monday, a place where "compromise has become a dirty word," but in the context of the menacing debt-limit crisis there was a far dirtier word he didn't utter.
Veto.
While Obama warned House Speaker John Boehner not to turn Americans into "collateral damage," he did not vow to veto the bill Boehner's now pushing to lift the debt ceiling by $1 trillion (good for six months). Boehner's two-step process would impose $1.2 trillion in spending cuts and establish a select congressional commission to propose an additional $1.8 trillion in savings by Thanksgiving.
If Republican leaders were sifting through Obama's speech for one word it was "veto." Its absence gives Obama, Boehner, and the Senate room to maneuver if, as now appears likely, Boehner's bill squeaks through the House and arrives in the Senate as a viable, though less-than-optimal, alternative to default.
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Clearly, Obama prefers Senate Majority Leader Harry Reid's proposal to extend the $14.3 trillion debt ceiling by $2.7 trillion (enough to last until 2013) with the new credit line financed entirely by spending cuts that spare entitlements and impose no new taxes—even on easy political targets like corporate jets or oil companies. But Obama did not single Reid's bill out as the only option, just a preference. As Obama and every serious player in this tug-of-war knows, the time for preferences is dwindling and the time for least-best options is nigh.
Consider Obama's carefully worded description of the Reid bill and the way forward.
"I think that's a much better path, although serious deficit reduction would still require us to tackle the tough challenges of entitlement and tax reform," Obama said of the Reid bill, which may fail on a procedural vote on Wednesday. "Either way, I have told leaders of both parties that they must come up with a fair compromise in the next few days that can pass both houses of Congress—a compromise I can sign. And I am confident we can reach this compromise."

The compromise remains undefined and Obama made one last bid for a so-called "grand bargain," the elusive $4 trillion combination of discretionary and entitlement spending cuts and tax reform that represents the biggest possible down payment on long-term deficit reduction. Obama asked Americans made weary by the partisan strife to prod Congress with e-mails, phone calls, and social-media pokes. 
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"The American people may have voted for divided government, but they didn't vote for a dysfunctional government," Obama said in what may be the speech's most durable line. "So I'm asking you all to make your voice heard. If you want a balanced approach to reducing the deficit, let your member of Congress know. If you believe we can solve this problem through compromise, send that message."
Notice that a "balanced approach" and "compromise" are no longer the same thing. By endorsing Reid's spending cut-only bill (even with proposals Republicans deride as gimmicks), Obama has given up on the grand bargain and so-called balanced approach. If the nation rallies behind that and tells Congress as much, it will be lobbying in a vacuum. If it calls on Congress to "compromise" it will be theoretically pushing for Reid's bill.
Either way, Obama's call for outside help to isolate Boehner and pressure Republicans into buckling is classic divide-and-conquer politics. Boehner is struggling to hold his conference together behind a proposal that's a retreat from the cut, cap, and balance bill passed only last week. 
TEXT: Full comments from President Obama, House Speaker Boehner
Boehner's taking flak on his right. Now, Obama's depicting House Republicans as stubborn, small-minded, and willing to risk default, higher interest rates, and stock market volatility just to block higher taxes. Obama must position himself against House Republicans—even if he ultimately has to cut a deal with Boehner.
Why? Because even though Obama retains more public confidence and support in this mess than Hill Republicans, this crisis has not elevated his stature. Last week Obama's Gallup weekly approval rating fell to 43 percent, the lowest level of his presidency and lower than Bill Clinton at a similar stage of his budget standoff with Republicans in 1995. The stalemate, as Obama called it, has taken a toll on all players and now the battle is one of short-term leverage.
If Obama can weaken Boehner so much that he can't pass a bill in the House, Reid's bill has a chance in the Senate. Significantly, the current timing (very fluid, to put in mildly) is for the House to vote late on Wednesday and the Senate to follow on Thursday. But if Boehner prevails and his method becomes a live option in the Senate and Reid's bill can't overcome an expected GOP filibuster, Obama's choices will dwindle to two: sign Boehner's bill or come up with something new on the fly. 
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That Obama didn't promise to veto Boehner's bill signals that Obama may already know the sweet spot between divided government and dysfunctional government. He may not sign the Boehner bill, but the absence of a veto threat is a tell-tale sign that, in the end, Obama may tolerate something much closer to it than Monday night's speech conveyed.
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Bad news for Social Security recipients

NYC boy's gruesome killing shocks community

NEW YORK (AP) — Walking home alone from day camp for the first time, 8-year-old Leiby Kletzky disappeared.
A day-and-a-half search led police to the Brooklyn home of a man seen on a surveillance video with the young Orthodox Jewish child. They asked: Where is the boy?
The man nodded toward the kitchen, authorities said, where blood stained the freezer door. Inside was the stuff of horror films — severed feet, wrapped in plastic. In the refrigerator, a cutting board and three bloody carving knives. A plastic garbage bag with bloody towels was nearby.
"It is every parent's worst nightmare," Police Commissioner Raymond Kelly said Wednesday, following the arrest of 35-year-old Levi Aron on a charge of second-degree murder.
Leiby disappeared Monday afternoon while on his way to meet his mother on a street corner seven blocks from his day camp, the first time the young Hasidic child was allowed to walk the route alone. Authorities said he had evidently gotten lost after missing a turn, and had reached out to Aron, a stranger, for help.
The gruesome killing shocked the tight-knit Hasidic community in Borough Park, in part because it is one of the safest sections of the city and because Aron is himself an Orthodox Jew, although not Hasidic. The Hasidim are ultra-Orthodox Jews.
"This is a no-crime area," said state Assemblyman Dov Hikind, whose district includes the area. "Everybody is absolutely horrified," he said. "Everyone is in total shock, beyond belief, beyond comprehension ... to suddenly disappear and then the details ... and the fact someone in the extended community ... it's awful."
While the medical examiner's office said it was still investigating how the boy was killed, the body was released so that the boy could be buried Wednesday evening according to Jewish custom.
Thousands gathered around a Borough Park synagogue for the funeral service. Speakers broadcast over a loudspeaker, chanting and speaking in Yiddish and Hebrew. They stressed the community's resilience and unity after what one called an unnatural death.
"This is not human," said Moses Klein, 73, a retired caterer who lives near the corner where the boy was last seen.
The break in the case came when investigators watched a grainy video that showed the boy, wearing his backpack, getting into a car with a man outside a dentist's office. Detectives tracked the dentist down at his home in New Jersey, and he remembered someone coming to pay a bill. Police identified Aron using records from the office, and 40 minutes later he was arrested, shortly before 3 a.m. Wednesday.
Aron told police where to find the rest of the body; it was in pieces, wrapped in plastic bags, inside a red suitcase that had been tossed into a trash bin in another Brooklyn neighborhood, Kelly said.
Police said there was no evidence the boy was sexually assaulted, but they would not otherwise shed any light on a motive except to say Aron told them he "panicked" when he saw photos of the missing boy on fliers that were distributed in the neighborhood. Police were looking into whether Aron had a history of mental illness.
Police said Aron, who is divorced, lives alone in an attic in a building shared with his father and uncle.
Kelly said it was "totally random" that Aron grabbed the boy, and aside from a summons for urinating in public, he had no criminal record. A neighbor told authorities her son had said Aron had once tried to lure him into his car, but nothing happened and she didn't think much of it until the news of the killing, police said.
He lived most of his life in New York and worked as a clerk at a hardware supply store around the corner from his home, authorities said. Co-workers said Aron was at work on Tuesday.
"He seemed a little troubled," said employee Chamin Kramer, who added Aron usually came and went quietly.
Aron lived briefly in Memphis, Tenn., and his ex-wife, Deborah Aron, still lives in the area. She said he never showed signs of violence toward her two children from a previous relationship.
"It's utter disbelief," she said from the toy-littered backyard of her home in the Memphis suburb of Germantown. "This ain't the Levi I know."
Deborah Aron said the couple divorced about four years ago after a year of marriage. She described Levi Aron as a person who was shy until he got to know you and said he enjoyed music, karaoke and "American Idol." She said he attended Orthodox Jewish services in Memphis.
He was "more of a mother's boy than a father's boy," who lived at home until he met her, she said.
She said Levi injured his head when he was hit by a car while riding his bike at the age of 9 and suffered problems stemming from that accident.
___
Associated Press Writers Karen Matthews and Karen Zraick in New York and Adrian Sainz in Memphis, Tenn., contributed to this report.

Mila Kunis Accepts Marine's Invite to Corps Ball

Mila Kunis, reporting for duty!
When Sgt. Scott Moore posted a YouTube video last week inviting the Black Swan actress to accompany him to the Marine Corps Ball on Nov. 18, it probably seemed like a long shot. But at the urging of her Friends With Benefits costar, Justin Timberlake, Kunis agreed to head to Greenville, North Carolina to be Moore's date!
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In the video, Moore addressed the actress directly from Afghanistan. "Hi Mila, I just want to take a moment out of my day to invite you to the Marine Corps Ball with yours truly," he said. "So take a second to think about it, and get back to me."
When FOX411 asked the actress if she knew about the invitation, Timberlake, 30, made certain that Kunis would go. "Have you seen this? Have you heard about this?" he asked her. "You need to do it for your country!"
"I'm going to work on this, man," he said in a message to Scott. "This needs to go down!"
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"I'll go. I'll do it for you," Kunis said, before asking Timberlake if he was going to attend as well.
"They don't want me!" he exclaimed. "They want you."
Check out Sgt. Scott Moore's invitation below:

Why Gas Prices Should Be Lower Soon

Oil markets were roiled today when the United States and the International Energy Agency jointly announced that they would release a combined 60 million barrels of oil into international markets over the coming month.
Where is the oil coming from?
The U.S. said it will sell 30 million barrels from the Strategic Petroleum Reserve, while other countries that are members of the International Energy Administration will provide the rest from their reserves.
But didn't President Obama tell you just a couple of weeks ago that he wasn't planning to do this?
Indeed he did. At a meeting with finance journalists on June 8, I specifically asked whether he was considering releasing oil from the SPR.  His response:

"I won't make any news on that today. I will say that my general view is that the SPR is to be used where you don't have just short-term fluctuations in the market, but a significant disruption event. Libya has taken 1.25 m barrels per day off the market. We're examining broadly what that means in terms of the oil market."

So what's changed in the past two weeks?
A couple of things. First, the administration has apparently concluded that the situation in Libya isn't going to improve in the short term. As Energy Secretary Steven Chu put it today: "We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries, and their impact on the global economic recovery," said Energy Secretary Steven Chu. While Libya accounts for only a tiny portion of global oil production, its oil is the most cherished (and easy to process) light, sweet crude.
Second, an OPEC meeting two weeks ago ended in disarray, with members disagreeing about higher production. That suggests that the production we're losing from Libya won't be replaced anytime soon.
But why release the oil now? After all, oil prices have been falling since May.
It's true that oil prices have been falling. Since peaking at $114 per barrel in May, oil prices had fallen about 16.7 percent before today's announcement.  (For a longer term chart, go here) Meanwhile, gasoline prices have fallen in the last two weeks, from a nationwide average of $3.78 per gallon to $3.65 per gallon. But that's still up 91 cents per gallon from a year ago, and the peak summer driving season is about to begin. Simply put, higher gas prices hurt the economy more in the summer than they do in the spring.
Cynics would say that politics are also coming into play.
As I discuss with my colleagues Aaron Task and Jeff Macke in the accompanying video, you don't have to be cynical to think that. While the economy is slowing, there seems to be little hope of further aid or stimulus. In his press conference yesterday, Federal Reserve Chairman Ben Bernanke indicated that the central bank was pretty much done with its efforts to boost demand.  On Capitol Hill, talks are centering on anti-stimulative spending cuts and tax increases. And so releasing oil from the SPR is one way President Obama can stimulate the economy without action from the Fed or Congress. In theory, greater supplies of oil bring down the price. And cheaper oil functions as a tax cut for businesses and consumers.

Will gas prices come down as a result?
Yes. Crude oil prices have fallen more than 20 percent from their May peak. But don't expect a sharp decline in the price at the pump in the next few weeks. Gasoline station owners buy new supplies every couple of days. So when their costs rise, they feel compelled to pass along the higher prices to consumers instantly — as a matter of survival. The opposite dynamic takes hold when oil prices are falling.  As wholesale gas falls in price, profit margins expand, and station owners are in no rush to ratchet down the price at the pump.
Of course, in the scheme of things, 60 million barrels isn't much. In 2010, the U.S. consumed about  19.15 million barrels per day, and the world ran through about 85.3 million barrels per day. Put another way, this 60 million barrels is about what the U.S. consumes in three days, or what the world consumes in 17 hours.
Even though it's a small amount, it seemed to have a big market impact. Why?
Right after the announcement, the price of oil fell about five percent, to below $90 per barrel.That's a pretty dramatic move. And it can be explained by a few factors. This represents new supply and takes away some of the worries about disruptions. In addition, speculation has played a role in keeping oil prices high. And some investors and analysts believe that this may be part of a concerted effort to fight speculators. The 30 million barrels the U.S. is releasing is equal to 4.2 percent of the total in the SPR, so there could be more to come. In addition, other economic news — the Fed ratcheting down its projection for economic growth in the second half of 2011 yesterday, and general concerns about a slowdown in China — point to lower prices.
Is this unprecedented?
No. When there are disruptions — a barge accident, a refinery explosion — the SPR lends out small amounts of oil to refineries, as it did in 2006. After Hurricane Katrina in the fall of 2005, the SPR offered to sell up to 30 million barrels to help keep the industry supplied. Ultimately, 11 million barrels were sold.
Will this move alone bring oil prices back to earth?
All things being equal, additional supply should lead to lower prices. But in the oil market, all things are never equal. The strength of the dollar, the pace of growth in China, politics in Iran, instability in the Middle East, new finds, OPEC decisions and more play into the ultimate price of oil.
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His most recent book is Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation.

FDA Unveils Graphic Images for Cigarette Packs

TUESDAY, June 21 (HealthDay News) -- In a dramatic bid to get more Americans to quit smoking, the U.S. Food and Drug Administration on Tuesday released nine graphic warning labels that will appear on all packs of cigarettes by no later than September 2012.
One image shows a man's face and a lighted cigarette in his hand, with smoke escaping from a hole in his neck -- the result of a tracheotomy. The caption reads "Cigarettes are addictive." Another image shows a mother holding a baby as smoke swirls about them, with the warning: "Tobacco smoke can harm your children."
A third images depicts a distraught woman with the caption: "Warning: Smoking causes fatal lung disease in nonsmokers."
A fourth picture shows a mouth with smoked-stained teeth and an open sore on the lower lip. "Cigarettes cause cancer," the caption reads.
In addition to the images, the label on packs of cigarettes will include a phone number -- 1-800-QUIT-NOW -- so smokers will know where to go for help quitting.
By law, the labels must appear on every pack of cigarettes sold in the United States and on all cartons and in all cigarette advertising. The campaign marks the first major change to cigarette packaging in the last 25 years, the FDA said.
"President Obama is committed to protecting our nation's children and the American people from the dangers of tobacco use. These labels are frank, honest and powerful depictions of the health risks of smoking and they will help," U.S. Health and Human Services Secretary Kathleen Sebelius said in a news release. "These labels will encourage smokers to quit, and prevent children from smoking. President Obama wants to make tobacco-related death and disease part of the nation's past, and not our future."
Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, called the new warnings the "most dramatic change in cigarette warnings in the history of the United States. For the first time the warnings are large enough to be seen and graphic enough to catch the attention of consumers."
The labels will fill the top half of all cigarette packs.
Myers said the images on the labels are exactly the kind of measure that has been shown to be effective in encouraging children not to smoke and getting adults to quit. But, to keep the message vibrant, the images need to be changed regularly because as people get used to them, the impact of the warning weakens, he added.
"For the first time we have labels that not only tell people that smoking is dangerous, but provide them the kind of information they need to now how dangerous it is," he said. "The warning labels have the potential to dramatically reduce the number of our kids who start, but they will be most effective if they are complemented by comprehensive tobacco-control programs in every state."
Many such programs have been curtailed in recent years as cash-strapped states have diverted funding from tobacco-control efforts to pay for constituent services or to hold down tax increases. In states that have maintained funding, the number of smokers continues to drop, Myers said.
The new labels are a part of the requirements of the new Family Smoking Prevention and Tobacco Control Act, signed into law in 2009 by President Barack Obama, who has struggled for many years to quit smoking. For the first time, the law gave the FDA significant control over tobacco products.
The FDA hopes these new warnings will have a "significant public health impact by decreasing the number of smokers, resulting in lives saved, increased life expectancy, and improved health status."
The agency said it chose the nine images from 36 originally proposed. The agency also said it reviewed the relevant scientific literature, analyzed the results from an 18,000-person study and reviewed more than 1,700 comments from a variety of groups, including the tobacco industry, retailers, health professionals, public health and other advocacy groups, state and local public health agencies, medical organizations and consumers.
Dr. Jonathan Whiteson, director of the Cardiac and Pulmonary Wellness and Rehabilitation Program at NYU Langone Medical Center in New York City, is concerned that the images may be too graphic.
"The 'fear factor' of the negative message can lose its potency -- we become immune to the negative warnings over time, and if too graphic, we often hide behind the denial wall stating, 'This just can't possibly happen to me.' The more graphic the image, the more likely the message will become marginalized and thrown out as too wild and extreme a possibility for the smoker," he said in a statement."
Whiteson thinks that to get kids not to take up smoking, messages have to convey the idea that smoking isn't cool.
Smoking is the leading cause of early and preventable death in the United States, resulting in some 443,000 fatalities each year, according to the U.S. Centers for Disease Control and Prevention, and costs almost $200 billion every year in medical costs and lost productivity.
Over the last decade, countries as varied as Canada, Australia, Chile, Brazil, Iran and Singapore, among others, have adopted graphic warnings on tobacco products. Some are downright disturbing: in Brazil, cigarette packages come with pictures of dead babies and a gangrened foot with blackened toes.
Currently, the United States has some of the weakest requirements for cigarette package warnings in the world, David Hammond, an assistant professor in the department of health studies at the University of Waterloo in Ontario, Canada, told HealthDay. The text-only warnings on packages have changed little since 1984.
Elsewhere, graphic warnings seem to be helping to drive down smoking rates. In Canada, about 13 percent of the population smokes daily, a 5 percent drop since graphic warnings were adopted in 2000, according to Hammond.
More information
For more on the warning labels and to see the images, visit this FDA website.