Obama condemns Egyptian violence and cancels joint military drills

 

Powered by Guardian.co.ukThis article titled “Obama condemns Egyptian violence and cancels joint military drills” was written by Dan Roberts in Washington, for The Guardian on Thursday 15th August 2013 18.30 UTC

Barack Obama has cancelled US military exercises with Egypt in a carefully-calibrated rebuke to its interim government that stopped short of a more significant suspension of aid.

Reacting to the killing of more than 500 anti-government protesters, the US president interrupted his family vacation on Martha’s Vineyard to condemn the bloodshed, but stressed that any move toward peaceful democracy was a difficult process that could take decades.

"We appreciate the complexity of the situation," he said. "We recognise that change takes time. There are going to be false starts and difficult days. We know that democratic transitions are measured not in months or even years, but sometimes in generations."

Obama also issued a reminder of why the US had initially chosen to support the ousting of Egypt’s first elected president following the overthrow of dictator Hosni Mubarak.

"While Mohamed Morsi was elected president in a democratic election, his government was not inclusive and did not respect the views of all Egyptians. We know that many Egyptians, millions of Egyptians, perhaps even a majority of Egyptians, were calling for a change in course."

Nevertheless, the White House statement was designed to reinforce a recent hardening of US criticism of the violence, which began on Wednesday with condemnation from secretary of state John Kerry and tough language from spokesman Josh Earnest.

Obama criticised the "arbitrary arrests" and persecution of Morsi supporters as well as the violence on Wednesday.

After Morsi was removed there remained an "opportunity to pursue a democratic path," Obama said. "Instead we’ve seen a more dangerous path taken."

His statement will disappoint some who hoped for a suspension, or even cancellation of .3bn in annual US military aid to Egypt, but Washington is anxious to retain this link for future leverage over the generals.

The Bright Star military exercise cancelled by the president was due to take place in September, but may have been in jeopardy regardless of US disapproval, since the fragile security situation in Egypt makes it hard to imagine the Pentagon sanctioning the deployment of hundreds of US troops into a hostile environment for mere training purposes.

Obama said he had notified the interim government that he is cancelling the bi-annual exercises and was asking advisers to "assess implications" of interim government’s actions and consider "further steps."

"The Egyptian people deserve better than what we’ve seen over the last several days … The cycle of violence and escalation needs to stop," he added.

Obama ended by saying: "America cannot determine the future of Egypt. That’s a task for the Egyptian people. We don’t take sides with any particular party or political figure."

Obama ignored questions from reporters outside his rented vacation home about whether the US would cut off aid. His audio statement was not initially televised, but video was released later.

Jen Psaki, the State Department spokeswoman, conceded that the cancellation of the joint training scheme would have only a limited, if any, impact on events in Egypt. "I don’t think anyone in the government thinks that simply the cancellation of BrightStar is going to change actions on the ground," she said.

Asked at a press briefing why the US had not curtailed its aid to Egypt in light of the mass killing, Psaki replied: "Given the depths of a partnership with Egypt, our national security interests in this part of the world, our belief, also, that engagement can support a transition back to a democratically elected civilian government, we have sustained that commitment.

"But of course we evaluate and review on a regular if not daily basis."

She added: "This is a rocky road back to democracy. We continue to work at it."

The US criticism of the violence in Egypt was echoed in other western countries, but opposition parties called for a firmer response.

British foreign secretary William Hague is being urged by the Labour opposition to convene an emergency meeting of European Union foreign ministers that could halt EU aid to Egypt.

The UK shadow foreign secretary, Douglas Alexander, also asked the foreign secretary to urge the US to suspend military assistance, saying the west should use "any lever" available to show that such crackdowns could not be tolerated.

In November, following the election of Mohamed Morsi, the European Union pledged nearly €5bn in loans and grants for 2012-13, plus potential loans through the European Investment Bank of up to €1bn a year.

Additional reporting by Rajeev Syal in London

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‘Mint the coin’: why the platinum coin campaign doesn’t even work as satire

Powered by Guardian.co.ukThis article titled “‘Mint the coin’: why the platinum coin campaign doesn’t even work as satire” was written by Heidi Moore, for guardian.co.uk on Friday 4th January 2013 18.59 UTC

Twitter is a great news source and a hotbed of idea generation. But one of its major downsides is that it allows cranks and trolls to quickly and efficiently coalesce around ridiculous ideas. The latest bored-financial-nerd meme is this: the minting of a trillion-dollar platinum coin to save the US economy from the dithering of Congress.

There is a Twitter hashtag – #mintthecoin – and a wan, spindly White House petition created on January 3 that needs around 25,000 signatures and currently has just under 2,000, which makes it resemble the winsomely pathetic Charlie Brown Christmas tree.

Here is the background behind this inane, yet media-consuming, project.

The US is coming up to its debt-ceiling limit soon. The debt ceiling is the amount the US Treasury is allowed to – and has already – spent. Raising the debt ceiling means allowing the US Treasury to pay its bills; if the debt ceiling is not raised, the US will default on its financial commitments and put at risk its credibility as well as the health of the bond and stock markets. The US already went through a bruising debt-ceiling fight in 2011, which resulted in a downgrade. Members of Congress, mostly led by the hapless and disorganized Tea Party, are preparing to do exactly that: hold the debt-ceiling vote hostage and refuse to raise the debt ceiling until they get a giant package of spending cuts.

This is a real problem, and in a couple of months – when we hit the debt ceiling – every American will be so sick of the insane discussion that we may all collectively vomit. But the fact remains: how to get out? What to do?

A small but relentless group of impish bloggers and columnists – including Joe Weisenthal of Business Insider and Josh Barro of Bloomberg, as well as hapless Congressman Jerry Nadler – have created a large-scale trolling project that is meant to pressure the US Treasury into creating a trillion-dollar platinum coin to solve this problem. (The former head of the US mint, Philip Diehl, says it is legal, but legal, of course, doesn’t mean something is a good idea. It just means no one in legislative circles anticipated this particular idiocy.)

Their reasoning is this: the US Treasury has the power to create platinum coins of any size and denomination. It could easily print one with a face value of $1tn and deposit it at the Federal Reserve, thus immediately adding $1tn to the Treasury’s bank account and giving it breathing room to avoid the debt ceiling fight.

This is an elegant solution – if you are a cartoon villain given to sitting in a vast underground bunker and innovating plans for world domination while petting a white cat. It makes less sense for real mortals. In fact, it has all the aspects of a group of well-financed mad scientists plotting to create a giant slingshot to avert an asteroid hurtling towards the earth.

The #mintthecoin project is not meant, of course, to be completely serious, although they may play at it on TV. In the minds of its creators, is supposed to be a kind of Swiftian Modest Proposal that highlights the ridiculousness of the recurring debt ceiling hostage-taking by offering an equally ridiculous solution.

Even as satire, it does not work. Leave aside the strange hashtag and the stringy petition. Leave aside the somewhat science-fiction-like idea of a magic coin, as if the US economy is a video game.

Here is one big problem: the US Treasury spends approximately $100bn per month. A trillion-dollar coin would buy the Treasury only about 10 months of breathing room. It is dubious at best that a Congress full of reckless legislators will surely come to their senses in only 10 months, given that they haven’t for the past 18 months since the same last debacle. Delaying the Debt Ceiling Reunion Tour will not achieve the primary goal here, which is ending it.

Another problem with the trillion-dollar coin is that the US mint probably doesn’t have the capacity to create one out of real bullion, which will likely be required for something with such a historical importance. The US mint no longer produces platinum coins, except in collector’s editions that retail for $1,892 at the moment. A real platinum coin – the American Eagle – that was produced as recently as 2009 contains 31.12 grams of platinum and has a face value of $100. There is not enough platinum in the US in a year’s supply to create that. The US produces all of 3,700 kilograms of platinum a year.

The mint could, on the direction of Treasury, just make a platinum-finished coin that bears the face value of $1tn, but that would just create a nonsensical level of inflation in the value of the US dollar.

Another point, perhaps, is that it’s no worse for the Treasury to print a trillion-dollar gold coin than it is for the Federal Reserve to buy trillions in mortgage securities to save banks and the bond market. There is more meat to this – the US government is not nearly done meddling in the world of the economy and the markets, and minting a new coin is very much in the interventionist mold of the past four years. But the Fed’s programs don’t require scouring the US reserves for platinum and creating some unnatural currency beast. It can at least masquerade as an intellectual exercise.

The most insulting thing about the campaign to mint the trillion-dollar platinum coin is this: there are some – a few! – in the financial world who do not have the memory capacity of goldfish. Those people who can think as far back as 2011 remember that we went through the drill on the platinum coin back then – all the commentary, the punditry, the absurd speculation about it was first created at the time of the last debt-ceiling fight. Then, as now, it attracted the efforts of bored bloggers, chattering among themselves. And guess what? It didn’t impress upon Congress the recklessness of their approach. The US came within hours of default anyway. If anything, we have a more unreasonable and humorless Congress, even less likely to be swayed by satire or ridicule. The platinum joke, played once last year, is played out now.

But the biggest disadvantage of the platinum coin campaign is that it is frivolous, when there is a serious failure of US governance at stake. Allowing the “mint the coin” campaign to take over the news cycle may be good for the media exposure of the bloggers involved, but it does nothing to dissuade stubborn lawmakers from a silly path they chose once and are likely to choose again.

A Congress like this doesn’t need to be reminded of how ridiculous it is; it already knows that. It needs to be reminded of the nobility and dignity and importance of the offices they agreed to hold, and which they are now dragging through the mud.

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Stockton, California: ‘This economy is garbage’

Powered by Guardian.co.ukThis article titled “Stockton, California: ‘This economy is garbage'” was written by Aditya Chakrabortty, for The Guardian on Friday 2nd November 2012 17.12 UTC

In some towns, visitors are warned to keep an eye on their stuff, or to watch out late at night. In the Californian city of Stockton, the anxiety is more precise – and it kicks in early. “Take care downtown after 5pm,” one local person told me. “Don’t hang out too long.”

A few hours later, I saw what she meant. Almost as soon as the offices shut, the city centre empties. Then the sun goes down and a different cast takes to the streets: the homeless, the drug dealers, and clusters of young men patrolling up and down on bicycles.

Stockton ranks among America’s 10 most dangerous cities, and everyone here seems to operate under a self-imposed curfew. The commuter admits she doesn’t dare go to the cinema after 8pm; the father expects his 18-year-old daughter home by 10 – “and she totally gets why.” Others prefer not to go out at all. All give the same reason: the spiralling number of violent crimes.

Last weekend, the city notched up its 60th murder of the year, up from 24 for all of 2008. At just under 300,000 residents, this river port has about the same population as a London borough. Imagine a couple of your neighbours getting killed every week, and you’ll understand why almost all the conversations here touch on a recent homicide.

It happened in this park, they tell you; outside that drive-through; on a first date. Then the inevitable coda: “It happened in broad daylight.”

The last time Stockton attracted so much attention was in 2008, as the biggest housing bubble America had ever enjoyed was turning into the biggest bust it had ever suffered.

With nearly one in 10 homes repossessed that year alone, the city became known as the foreclosure capital of the US and formed part of the backdrop of economic catastrophe against which Barack Obama was elected president.

Then: nothing. For the next four years, the name barely cropped up in the news, so that you’d have been forgiven for believing the bad times had eased off. Until this summer, that is, when it became the largest city in America to file for bankruptcy. The bushfire had not died down, far from it – while the rest of the world was not looking, it had escalated.

The two-and-a-half-hour drive there inland from San Francisco moves from coastal grooviness to municipal crack-up. You’re told as much by the local TV news network, whose reports bear the strapline Stockton in Crisis. Or you can infer it from the defensiveness of the signage. “Stockton is Magnificent!” reads one banner. “Don’t give up!!!” says the hoarding over empty shop fronts.

Apart from the odd grocery store and a giant wig emporium, what downtown Stockton has in abundance is abandoned shops.

What makes the dereliction disconcerting is that it nestles amid civic grandeur, some of it quite recent. Stockton rivalled Seattle and San Francisco for importance as a transport hub during the gold rush on the 19th-century west coast, which must help to account for its grand boulevards, spacious enough to march elephants.

But there are also marbled bank offices, refurbished theatres and government offices, none of which look more than a few years old.

“The downtown could have been like Paris’s 6th arrondissement!” local property developer Dan Cort tells me. While it sounds preposterous now, his claim underscores one thing: there can’t be many cities in America unravelling as fast as this one.

Yet it would be wrong to dismiss Stockton as a curio, an outlandish disaster that couldn’t happen here, for three reasons. First, many other towns in California, a state of 40 million that on its own would count among the 10 biggest economies on earth, are scrambling to avoid bankruptcy. This tale shares elements of the debacles in Greece, Spain and Britain, too – almost as if all the factors behind the western meltdown had been chucked in a Walmart blender and poured over one small town. What’s unfurling here sums up the distinctive, dangerous way in which the great slump is playing out. Extreme it may be, but Stockton’s story is also one version of a future that awaits many other cities, including those in Britain.

Let’s begin with that last point. Most recessions follow a familiar waltz. First, there is the economic downturn, then there are the politicians’ responses, before the social fallout: cause, effect, aftermath. But Stocktonians don’t talk about a recession; they call it a depression. With one in eight workers out of a job, unemployment is almost double the national average. Six years after the peak of the market, house prices are still around half what they once were.

The local council’s cash used to come from property and sales taxes; when those dried up, it rammed through cuts: the police force was shrunk by 25%, the fire department slashed by 30%, libraries and community centres either closed or are on short hours. Finally, this summer, officials ran out of services to shut, and declared the city bust.

As has happened in southern Europe, and threatens to happen under David Cameron too, this slump has been so severe and so prolonged that the economic, political and social crises are now overlapping, and amplifying each other.

To see that play out, head to Weston Ranch, a southern suburb devastated by the sub-prime mortgage crisis. According to research by Maianna Voge at George Washington University, almost one in three houses on some blocks suffered foreclosure in the bust.

When a Guardian reporter last dropped by, in 2008, he noted a forest of estate agents’ boards and window signs: “Bank-owned – no trespassing”. Four years on, there’s much less of either. Buyers have since come along – but, rather than the families of old, they’re often speculators, holding out for a blip in the market before offloading their auction bargains. While waiting, they rent the properties out carelessly and cheaply. Among these Frank Capra-esque homes, the signs of distress are now more subtle: cracked windows and lawns with overgrown brown grass.

On this afternoon, the only activity is on one driveway with a removals van. Sure enough, the bank is foreclosing on Susan and her family in the morning. Within a few minutes it all comes out: how her father moved them all here from Fremont in San Francisco’s Bay Area; how his ultra-low “teaser rate” mortgage repayments rocketed without warning. How, just as that happened, property prices plunged so that they were “upside down”, with the house worth less than they’d paid for it. How the lender didn’t return their calls. How her father was diagnosed with cancer. Finally: how he’d died at the start of this month, just as the new buyer, one of the investors taking over the area, had offered her $3,000 to return the keys and leave without smashing the place up.

The story you’re sometimes told about the sub-prime bubble is that it was a bunch of people who should never have been lent a dime suddenly being given the keys to the palace of debt. Wherever that applies, it isn’t Weston Ranch. As Voge points out, household incomes here average between $60,000 and $80,000 a year: enough to warrant a middle class lifestyle, but insufficient to afford one in the pricey Bay Area. So, just as Susan’s father did, they moved further and further out.

“At 4am, you’d see the house lights come on,” is how another Weston Ranch resident, Alicia Calhoun, remembers life during the supposed good times. “By 6am – click! — the garage doors would go up and the street would empty out.” Calhoun worked in customer services for a bank in Palo Alto: at least a four-hour round trip, on top of the 9-5 job and looking after her kids.

That commute, those dodgy mortgages, this entire “bedroom community” deep in the Central Valley: all were products of a country growing vastly more unequal within a generation. According to IMF researchers Michael Kumhof and Romain Rancière, by 2007 the richest 5% of Americans were pocketing 34 cents of every dollar earned in the US; a level of inequality last seen just before the Wall Street Crash of 1929. Most of the rest of the country saw negligible rises in their wages, and had to rely instead on borrowing. What followed was the crash of 2008 – and human and civic wreckage in places such as Stockton.

In T-shirt and shorts, Susan’s mood flits between volcanic and eve-of-holiday. “You know how many homes here have been foreclosed? That one. That one. That one.” She’s jabbed her finger along almost the entire cul-de-sac. “Only the family next door haven’t. I give them six months.”

Weston Ranch, which is about 80% non-white, is basically Obamaville: full of the middle-class families he claims as his bedrock. But throughout the sub-prime freefall, his administration in effect delegated responsibility to local governments and market forces. And even in the last days of this campaign, neither Obama nor Mitt Romney has seriously addressed the housing crash. Yet according to the Chicago economist, Amir Sufi, the property bust and the recession have between them wiped out the 20 years’ worth of savings by middle-income and poor families.

Susan’s brother Dusty has been helping shift boxes. Another jabbing finger: “He fought in Iraq and now he’s back here and the only jobs around are in warehouses at $9 an hour.” Breath. “This economy is garbage.”

The rec where Susan used to stroll has got so violent it’s been dubbed Bullet Park. And last summer, she says, about 60 teenagers got into a pitched battle on the grass in front of her house. “They were going at each other with metal poles.” Her husband phoned the police again and again, but they were too short-staffed to help. “It went on for hours.”

When I run this story by police sergeant Kathryn Nance, she is puzzled: “We would have come out for an incident like that.” Yet as we sit in her patrol car, she taps at the laptop: 6.30 on a Friday evening and there are already 27 outstanding calls for assistance. Top of the list is a rape reported an hour and a half ago, yet which no officer is free to deal with.

Nance’s officers pile into a run-down area to chase some warrants. It’s a sweep that the accompanying local TV reporter seems ecstatic about filming, but which feels like a formulaic show of police strength; strength that the downsized force no longer has. A colleague, Mark, estimates there are promising leads on more than a dozen murder cases but no manpower to investigate them. Nance talks about how the cuts made by various council departments are making parts of Stockton into no-go areas. She drives past one block and sighs: “There used to be parks and it was cleaned up. In the past four years it’s gone bad again: dope dealers and vagrants.”. And hassling drug dealers has become an occasional pursuit

If you don’t want your area to go bad, you have to lay on your own services. On the “miracle mile”, the boutiques spend their former marketing budget on a security patrol and street sweepers. They even maintain municipal car parks. A local hotelier pays to keep two public swimming pools open.

Such a sudden, drastic downgrade in what Stocktonians can expect from their mortgage lender, their council, their police, their neighbours, not to mention their own homes and pensions is dizzying even for the well-off.

As a developer of affordable housing, Carol Ornelas patiently talks me through what the sub-prime crisis means for her customers. Then she mentions her own situation – and the rush of words is like letting the air out of a balloon: “I used to live in middle-class America; now I don’t know where I live. What I’ve seen come into my neighbourhood after all the foreclosures … I don’t even want to be around it.” Again, she talks of fights in the yard just opposite.

Yet a quarter of an hour’s drive from Nance’s block-gone-bad is Brookside: an empty six-lane highway, a country club, and a string of small gated communities bearing such names as Nostalgia, where houses back on to fake lakes. Sneak inside and you see marble statues of cherubs. One cliché about recessions is that they make rich and poor slightly more equal. Not this time: according to Berkeley economist Emmanuel Saez, the top 1% saw their incomes soar by 11.6% in 2010; the wages of the other 99% grew only 0.2%.

“The American dream used to be within reach of the middle class,” says Ornelas. “Now it’s on offer only to an elite.”

Stockton’s city hall bears an inscription: “Let that which the fathers have builded inspire their sons to civic patriotism.” Inside, the mayor’s office is full of photos of what the city fathers have built in the past decade: a baseball stadium, an arena (where Neil Diamond played to a half-empty auditorium for a million-dollar fee), a swanky hotel – all around a redeveloped waterfront. They’re the kind of job-free cultural makeover projects that middle-aged officials threw up all over the west in the noughties. In Stockton, estimates Jeffrey Michael at the local University of the Pacific, they were largely paid for by $100m in bonds issued over three years. For Ann Johnston, who only took over as mayor after the building spree: “Paying for these things is why we’re now bust.”

Well, yes and no; Stockton’s problems go much deeper. Spend even a little time here and you notice something missing: middle-income employment. To the south are low-wage warehouses and food-processing plants, but the local public sector is the only home for anyone who wants a middle-class job without having to drive two hours. The city’s regeneration and its encouragement of new housing estates was an attempt to bring in middle class people while skirting over the lack of decent private-sector employment. “They wanted a white-tablecloth kind of town,” says former planning official Denise Jefferson.

The most grotesque example of that was a restaurant. Paragary’s does a roaring business in the state capital of Sacramento, selling hand-cut rosemary noodles with seared chicken to people with large expense accounts. The city paid $2.7m in redevelopment funds to build a branch of Paragary’s: its valet parking and expensive menu drew more resentment than custom, and it closed down within months.

In some ways, the entire debacle was no different from what much of Britain tried under New Labour. Except that, since Californian cities depend on property and retail taxes, Stockton council had a vested interest in inflating its bubble – only then could it keep paying for services and infrastructure to the new housing estates. As former city manager Dwayne Milnes says, “The entire system was a Ponzi scheme.”

The result is a glut of houses and a glut of debt, both of which will take a long time to sort out. It’s hard to imagine a time when the builders’ cranes will start up again. The downtown developer Dan Cort tells me about a rival who recently pulled plans to build new houses on land by the motorway. “He’s made it a walnut orchard instead.” En route to the airport, the University of California sociologist Jesus Hernandez and I stop off and there they are: instead of rows of suburban homes, lines of walnut trees. Far away is the belch of Central Valley traffic; close up is the hiss of sprinklers.

As we set off, I mumble something sentimental about Stockton’s retreat from postmodern financial engineering back to its agricultural roots. Jesus corrects me: “He’s probably passing it off as farmland and getting a great tax break.”

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Biden promises to offer gun control recommendations by Tuesday

Powered by Guardian.co.ukThis article titled “Biden promises to offer gun control recommendations by Tuesday” was written by Adam Gabbatt in New York, for guardian.co.uk on Thursday 10th January 2013 19.22 UTC

The US vice-president, Joe Biden, said he expects to report his gun control recommendations to Barack Obama as early as Tuesday, declaring that the public had been reviled by images of children “riddled with bullets”.

Biden, speaking before a meeting with representatives of the National Rifle Association, said he would make his recommendations well before Obama’s stated deadline of the end of January.

Earlier this week, the Biden met gun-safety groups and families of victims of mass shootings. He said suggestions made to his gun control taskforce had included consistent support for “universal background checks” on gun ownership and an agreement on the “need to do something about high-capacity magazines”.

Biden said in a Washington news briefing that he would deliver his findings early because of the “tight window” the government had in which to act.

The vice-president has already pledged that the president “is going to act” on gun control, and he invoked the tragic events of Newtown on Thursday.

“There is nothing that has pricked the consciousness of the American people,” he said. “There is nothing that has gone to the heart of the matter more than the visual image people have of little six-year-old kids riddled – not shot with a stray bullet – riddled, riddled, with bullet holes in their classroom.”

As Biden was speaking, reports emerged of a shooting at Taft High School in Kern County, California. A spokesman for the sheriff’s office told the Associated Press that one student had been shot at the school. The suspect had been taken into custody.

Biden said the suggestions he had heard so far involved more than “just closing the gunshow loophole”. A common theme from the meetings, which have included one-on-ones with families of the Virginia Tech and Aurora shootings, had been “support for total universal background checks, including private sales”, Biden said. Critics of America’s gun laws argue that the current legislation on private sales enables anyone to purchase firearms without the background checks required in gun stores.

Another much-discussed issue was the possibility of regulating high capacity-magazines Biden said. The “need to do something” about the magazines, which can allow a shooter to fire as many as 100 rounds without the need to reload, was something that the vice-president’s taskforce had “heard spontaneously from every group we’ve met so far”, he said.

“The last area is the whole subject of the ability of any federal agency to do research on gun violence,” he added. The NRA has long lobbied against federal funds being spent on research into gun laws and ownership, while Obama’s healthcare legislation includes a provision that prevents the government and health insurers from asking about gun ownership, prohibiting the ability for the government to collect data.

Biden compared the current regulations on the government collecting data on firearms with 1970s restrictions on federal research into the cause of traffic fatalities. He said there was a need to find out “what kind of weapons are used most to kill people” and “what kind of weapons are trafficked weapons”.

On Wednesday Biden had promised that “the president is going to act” on gun control during meetings with victims’ groups and gun-safety organisations. Two survivors of the 2007 Virginia Tech shooting, where 32 people died, were present, as well as the stepfather of an Aurora, Colorado, massacre victim.

Biden will meet with representatives from six gun groups on Thursday, including the NRA and the Independent Firearms Owners Association, which are both publicly opposed to stricter gun-control laws. The vice-president will also meet with Walmart, the biggest US gun seller.

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