AT: States cp – California da

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AT: States CP – California DA

AT: States CP – California DA 1

2AC Shell 2

2ac Shell 3

XT: CA Econ ↓ 4



XT: CA Econ  World Econ 7




***NEG ANSWERS*** 11

CA Econ ≠ World Econ 12



Basic Explanation: This is to be used against the State CP during the 2AC. It’s essentially a DA to the CP. It says that passing the social services burden onto the states (in this scenario, California), will cause some impact that wouldn’t happen if the federal government did the plan.
The 2AC Shell says that right now California is in the crapper, and the link card specifically says the way the government is trying to get out of their crisis is by cutting social services. Hmmm, how would passing the plan in California affect this?.....

This causes California’s economy to collapse which is key to the global economy. Just cross-apply their Mead 09 card or use one that you had in the 1AC for the terminal impact.

When you are aff you should also add in “Perm – do the plan & by all states but California”

2AC Shell

Counterplan tanks California’s Economy

Thompson, 7 – 16 – 09, Staff Editor for Atlantic Business Channel (writer for BusinessWeek & Slate)

[Derek Thompson,, “California’s Strategy: Be More Like Texas]

From the Times:

Details emerging from the talks suggested that the deal would require extraordinarily deep cuts to school systems and local governments, and, while far smaller than the governor threatened a month ago, substantial cuts to health care and other social services.

Gov. Schwarzenegger and the state assembly are within millions, not billions, of dollars of reaching a deal, according to the article. The result will likely include a lot of social services cuts -- a waiting list for children's health care, Medicaid payments will be cut to their legal bare bones, some family welfare benefits could be scrapped, and so on -- and exactly zero tax increases. I don't know that California has a choice here. Not only is raising taxes political suicide in the state, but it's also practically stupid to do in the midst of a recession. So if you're not going to cut incoming revenue, you have to limit outgoing spending -- to the tune of billions of dollars, and to the detriment of education and social services. The California model is, indeed, fading, and the Lone Star state's philosophy is getting some company.

Key to the Globe

Kernaghan, 7 – 8 – 09, Financial Specialist for Austin Wealth Resources

[Todd R. Kernaghan,, “California Fiscal Crisis Has Worldwide Implications, According To Financial Advisor Todd Kernaghan”]

Think General Motors, Chrysler and the banks were tough for President Obama? California's looming financial meltdown may make that look like a walk in the park, Kernaghan writes on his financial services blog, The effect of the imminent financial collapse of the state - which is the seventh or eighth-largest economy in the world - will have global implications. What are some of the potential ramifications? "Seriously, can you imagine the economic impact should California default on their municipal bonds? How many millions of people hold California bonds either directly or indirectly? The number of workers at GM pales in comparison," Kernaghan writes.

And if California runs out of money and literally can't staff essential government positions, such as law enforcement and fire personnel, the results could be devastating. "Think third world anarchy," writes Kernaghan. Because of its size, the collapse of California's economy would not only affect the United States but would be felt worldwide. So what's the solution? There are no easy answers. Unlike the federal government, the state of California can not print its own money. It can't raise its already high taxes any higher, Kernaghan writes.


2ac Shell

global nuclear wars

Mead 09 - Senior Fellow in US Foreign Policy Studies @ Council on Foreign Relations

Walter Russell, Only Makes You Stronger, The New Republic, 2-4-09,

The greatest danger both to U.S.-China relations and to American power itself is probably not that China will rise too far, too fast; it is that the current crisis might end China's growth miracle. In the worst-case scenario, the turmoil in the international economy will plunge China into a major economic downturn. The Chinese financial system will implode as loans to both state and private enterprises go bad. Millions or even tens of millions of Chinese will be unemployed in a country without an effective social safety net. The collapse of asset bubbles in the stock and property markets will wipe out the savings of a generation of the Chinese middle class. The political consequences could include dangerous unrest--and a bitter climate of anti-foreign feeling that blames others for China's woes. (Think of Weimar Germany, when both Nazi and communist politicians blamed the West for Germany's economic travails.) Worse, instability could lead to a vicious cycle, as nervous investors moved their money out of the country, further slowing growth and, in turn, fomenting ever-greater bitterness. Thanks to a generation of rapid economic growth, China has so far been able to manage the stresses and conflicts of modernization and change; nobody knows what will happen if the growth stops.

India's future is also a question. Support for global integration is a fairly recent development in India, and many serious Indians remain skeptical of it. While India's 60-year-old democratic system has resisted many shocks, a deep economic recession in a country where mass poverty and even hunger are still major concerns could undermine political order, long-term growth, and India's attitude toward the United States and global economic integration. The violent Naxalite insurrection plaguing a significant swath of the country could get worse; religious extremism among both Hindus and Muslims could further polarize Indian politics; and India's economic miracle could be nipped in the bud.

If current market turmoil seriously damaged the performance and prospects of India and China, the current crisis could join the Great Depression in the list of economic events that changed history, even if the recessions in the West are relatively short and mild. The United States should stand ready to assist Chinese and Indian financial authorities on an emergency basis--and work very hard to help both countries escape or at least weather any economic downturn. It may test the political will of the Obama administration, but the United States must avoid a protectionist response to the economic slowdown. U.S. moves to limit market access for Chinese and Indian producers could poison relations for years. For billions of people in nuclear-armed countries to emerge from this crisis believing either that the United States was indifferent to their well-being or that it had profited from their distress could damage U.S. foreign policy far more severely than any mistake made by George W. Bush.

It's not just the great powers whose trajectories have been affected by the crash. Lesser powers like Saudi Arabia and Iran also face new constraints. The crisis has strengthened the U.S. position in the Middle East as falling oil prices reduce Iranian influence and increase the dependence of the oil sheikdoms on U.S. protection. Success in Iraq--however late, however undeserved, however limited--had already improved the Obama administration's prospects for addressing regional crises. Now, the collapse in oil prices has put the Iranian regime on the defensive. The annual inflation rate rose above 29 percent last September, up from about 17 percent in 2007, according to Iran's Bank Markazi. Economists forecast that Iran's real GDP growth will drop markedly in the coming months as stagnating oil revenues and the continued global economic downturn force the government to rein in its expansionary fiscal policy.

All this has weakened Ahmadinejad at home and Iran abroad. Iranian officials must balance the relative merits of support for allies like Hamas, Hezbollah, and Syria against domestic needs, while international sanctions and other diplomatic sticks have been made more painful and Western carrots (like trade opportunities) have become more attractive. Meanwhile, Saudi Arabia and other oil states have become more dependent on the United States for protection against Iran, and they have fewer resources to fund religious extremism as they use diminished oil revenues to support basic domestic spending and development goals. None of this makes the Middle East an easy target for U.S. diplomacy, but thanks in part to the economic crisis, the incoming administration has the chance to try some new ideas and to enter negotiations with Iran (and Syria) from a position of enhanced strength. Every crisis is different, but there seem to be reasons why, over time, financial crises on balance reinforce rather than undermine the world position of the leading capitalist countries. Since capitalism first emerged in early modern Europe, the ability to exploit the advantages of rapid economic development has been a key factor in international competition. Countries that can encourage--or at least allow and sustain--the change, dislocation, upheaval, and pain that capitalism often involves, while providing their tumultuous market societies with appropriate regulatory and legal frameworks, grow swiftly. They produce cutting-edge technologies that translate into military and economic power. They are able to invest in education, making their workforces ever more productive. They typically develop liberal political institutions and cultural norms that value, or at least tolerate, dissent and that allow people of different political and religious viewpoints to collaborate on a vast social project of modernization--and to maintain political stability in the face of accelerating social and economic change. The vast productive capacity of leading capitalist powers gives them the ability to project influence around the world and, to some degree, to remake the world to suit their own interests and preferences. This is what the United Kingdom and the United States have done in past centuries, and what other capitalist powers like France, Germany, and Japan have done to a lesser extent. In these countries, the social forces that support the idea of a competitive market economy within an appropriately liberal legal and political framework are relatively strong. But, in many other countries where capitalism rubs people the wrong way, this is not the case. On either side of the Atlantic, for example, the Latin world is often drawn to anti-capitalist movements and rulers on both the right and the left. Russia, too, has never really taken to capitalism and liberal society--whether during the time of the czars, the commissars, or the post-cold war leaders who so signally failed to build a stable, open system of liberal democratic capitalism even as many former Warsaw Pact nations were making rapid transitions. Partly as a result of these internal cultural pressures, and partly because, in much of the world, capitalism has appeared as an unwelcome interloper, imposed by foreign forces and shaped to fit foreign rather than domestic interests and preferences, many countries are only half-heartedly capitalist. When crisis strikes, they are quick to decide that capitalism is a failure and look for alternatives.

So far, such half-hearted experiments not only have failed to work; they have left the societies that have tried them in a progressively worse position, farther behind the front-runners as time goes by. Argentina has lost ground to Chile; Russian development has fallen farther behind that of the Baltic states and Central Europe. Frequently, the crisis has weakened the power of the merchants, industrialists, financiers, and professionals who want to develop a liberal capitalist society integrated into the world. Crisis can also strengthen the hand of religious extremists, populist radicals, or authoritarian traditionalists who are determined to resist liberal capitalist society for a variety of reasons. Meanwhile, the companies and banks based in these societies are often less established and more vulnerable to the consequences of a financial crisis than more established firms in wealthier societies.

As a result, developing countries and countries where capitalism has relatively recent and shallow roots tend to suffer greater economic and political damage when crisis strikes--as, inevitably, it does. And, consequently, financial crises often reinforce rather than challenge the global distribution of power and wealth. This may be happening yet again.

None of which means that we can just sit back and enjoy the recession. History may suggest that financial crises actually help capitalist great powers maintain their leads--but it has other, less reassuring messages as well. If financial crises have been a normal part of life during the 300-year rise of the liberal capitalist system under the Anglophone powers, so has war. The wars of the League of Augsburg and the Spanish Succession; the Seven Years War; the American Revolution; the Napoleonic Wars; the two World Wars; the cold war: The list of wars is almost as long as the list of financial crises.

Bad economic times can breed wars. Europe was a pretty peaceful place in 1928, but the Depression poisoned German public opinion and helped bring Adolf Hitler to power. If the current crisis turns into a depression, what rough beasts might start slouching toward Moscow, Karachi, Beijing, or New Delhi to be born?

The United States may not, yet, decline, but, if we can't get the world economy back on track, we may still have to fight.

XT: CA Econ

California’s economy is facing a massive deficit and it’s in the 11th hour - close to a collapse

Reuters, 7 – 15 – 09, “California’s needy may bear brunt of budget crisis”

[Written by Steve Gorman,]

From drug addicts facing longer waiting lists for rehab -- or jail terms if they fail to get in -- to recession-battered families newly dependent on low-cost health insurance for their children, California's budget turmoil is about to hit home for hundreds of thousands of its most vulnerable residents.

The scope and duration of impending cuts remain uncertain as state lawmakers and Governor Arnold Schwarzenegger tussle over a balanced-budget plan. Advocates of the poor say reductions under consideration would be devastating to the needy and impede the state's economic recovery.

The situation seems especially troubling for California, which has the largest population and economy of the 50 U.S. states. It is also one of the most socially progressive. California's fiscal crisis is especially desperate. Schwarzenegger and legislators are wrestling to close a $26.3 billion budget deficit created in large part by plunging revenues, the result of a deepening recession, rising unemployment and a prolonged housing slump. County agencies administering the state's social welfare programs already are feeling the pinch from local funding cuts just as demands for their services are soaring."You have this big hole to fill in the budget, and at the 11th hour it's all about how you cut back on the poor," said Bill Taylor, director of intergovernmental relations for the Los Angeles County Department Public Social Services.

California’s economy has tanked – its sending out IOUs

Bloomberg, 7 – 6 – 09, “California Credit Rating Cut Close to Junk After IOUs”


California’s credit rating was cut for the second time in as many weeks by Fitch Ratings after a stalemate over how to close a $26 billion budget deficit forced the most-populous U.S. state to pay some bills with IOUs.

Fitch lowered its rating of California’s general obligation bonds by two steps to BBB from A-, placing the debt two ranks above so-called high-yield, high-risk junk ratings, and said the state may be cut further. The credit-rating company last lowered its assessment of California on June 25.
California, the largest issuer of municipal bonds, last week began issuing IOUs for the second time since the Great Depression as Governor Arnold Schwarzenegger and lawmakers remained deadlocked over the budget cuts needed to make up for revenue lost because of the recession. California Controller John Chiang said the step was needed to conserve cash.

The downgrade to ‘BBB’ is based on the state’s continued inability to achieve timely agreement on budgetary and cash flow solutions to its severe fiscal crisis,” Fitch said in a statement.

California, with the world’s eighth-largest economy, was already the lowest-rated U.S. state. Standard & Poor’s gives the state it’s A grade, the sixth-highest of 10 investment levels. The firm reaffirmed that assessment on July 1. Moody’s Investors Service rates the debt A2 and placed it on watch on June 19.

“I don’t think the governor wants to close,” Bass told reporters after leaving Schwarzenegger’s office. “What we need to do now is deal with the deficit.”

California’s economy IS down – unemployment, home prices falling, budget deficit, horrible credit rating

Weiss, June ’09, PhD. from Columbia University (Economic Expert)

[Martin D. Weiss, “Is California Collapsing?”

California is America’s most populous state with 38 million people. Its GDP of $1.8 trillion is the largest in the U.S. Its economy is bigger than those of Russia, Brazil, Canada, or India. And it’s collapsing. California’s inventory of foreclosed homes is skyrocketing. Home prices are plunging. And the impact of surging unemployment is just beginning to show up in the data. The state’s unemployment rate has surged to 11.5 percent, the worst since World War II. Last month, California lost 68,900 jobs. And since July 2007, it has lost 859,000 jobs, including 739,500 just in the past 12 months.

The state faces a stunning $24.3 billion budget deficit, even assuming no significant deterioration in the economy from this point onward. And the state has lost virtually all hope of President Obama declaring, “California is too big to fail.” California’s credit rating is already the lowest among all U.S. states.


State budgets are under overwhelming pressure, they are being bogged down by current social service provisions and it’s destroying their economic growth

Lav and McNichol, 09 – *senior advisor to the Center on Budget and Policy Priorities AND ** Senior Fellow at the Center on Budget and Policy Priorities

[Iris and Elizabeth, “State Budget Troubles Worsen,” 5/18,]

States are facing a great fiscal crisis.  At least 47 states faced or are facing shortfalls in their budgets for this and/or the next year or twoCombined budget gaps for the remainder of this fiscal year and state fiscal years 2010 and 2011 are estimated to total more than $350 billion. This figure, however, does not account for recent state actions to close their 2009 budget gaps or their projected gaps for 2010 or 2011, or for the $140 billion in fiscal relief that Congress provided for states in the American Recovery and Reinvestment Act.

States are currently at the mid-point of fiscal year 2009 — which started July 1 in most states — and are in the process of preparing their budgets for the next year. Over half the states had already cut spending, used reserves, or raised revenues in order to adopt a balanced budget for the current fiscal year — which started July 1 in most states. Now, their budgets have fallen out of balance again. New gaps of $59 billion (some 9 percent of state budgets) have opened up in the budgets of at least 42 states plus the District of Columbia. These budget gaps are in addition to the $48 billion shortfalls that these and other states faced as they adopted their budgets for the current fiscal year, bringing total gaps for the year to 16 percent of budgets.

The states’ fiscal problems are continuing into the next two years. At least 46 states have looked ahead and anticipate deficits for fiscal year 2010 and beyond. These gaps total $133 billion — 19 percent of budgets — for the 45 states that have estimated the size of these gaps and are likely to grow as gaps are re-estimated in the next few months.

The deficit figures for FY2010 and FY2009 show the impact the economic downturn has had on state budgets. These figures are the total size of the shortfall identified by each state listed. In some cases all or part of this shortfall has already been closed through a combination of spending cuts,

Figure 2 shows the size and duration of the deficits in the recession that occurred in the first part of this decade, and estimates of the likely deficits this time. This recession is more severe — deeper and longer — than the last recession, and thus state fiscal problems are likely to be worse.

Unemployment, which peaked after the last recession at 6.3 percent, has already hit 8.9 percent, and many economists expect it to rise higher, which will reduce state income taxes and increase demand for Medicaid and other services. With consumers’ reduced access to home equity loans and other sources of credit, sales taxes are also likely to fall more steeply than they did in the last recession. These factors suggest that state budget gaps will be significantly larger than in the last recession. All but a handful of states face shortfalls in fiscal year 2010. Based on past experience and the depth of this recession these deficits will end up totaling about $145 billion. If, as is widely expected, the economy does not begin to significantly recover until the end of calendar year 2009, state deficits are likely to be even larger in state fiscal year 2011 (which begins in July 2010 in most states).[1] The deficits over the next two-and-a half years are likely to be in the $350 billion to $370 billion range.

It may be particularly difficult for states to recover from the current fiscal situation. Housing markets may be slow to fully recover; the decline in housing markets has already depressed consumption and sales taxes as people refrain from buying furniture, appliances, construction materials, and the like. Property tax revenues are also affected, and local governments will be looking to states to help address the squeeze on local and education budgets. And as the employment situation continues to deteriorate, income tax revenues will weaken further and there will be further downward pressure on sales tax revenues as consumers are reluctant or unable to spend.

The vast majority of states cannot run a deficit or borrow to cover their operating expenditures. As a result, states have three primary actions they can take during a fiscal crisis: they can draw down available reserves, they can cut expenditures, or they can raise taxes. States already have begun drawing down reserves; the remaining reserves are not sufficient to allow states to weather a significant downturn or recession. The other alternatives — spending cuts and tax increases — can further slow a state’s economy during a downturn and contribute to the further slowing of the national economy, as well.

Some states have not been affected by the economic downturn but the number is dwindling. There are a number of reasons why. Some mineral-rich states — such as New Mexico, Alaska, and Montana — saw revenue growth as a result of high oil prices. However, the recent decline in oil prices has begun to affect revenues in some of these states. The economies of a handful of other states have so far been less affected by the national economic problems.

In states facing budget gaps, the consequences sometimes are severe — for residents as well as the economy. Unlike the federal government, states cannot run deficits when the economy turns down; they must cut expenditures, raise taxes, or draw down reserve funds to balance their budgets. As the current fiscal year ends and states plan for next year, budget difficulties have led some 36 states to reduce services to their residents, including some of their most vulnerable families and individuals. [2]

For example, at least 19 states have implemented cuts that will affect low-income children’s or families’ eligibility for health insurance or reduce their access to health care services. Programs for the elderly and disabled are also being cut. At least 21 states and the District of Columbia are cutting medical, rehabilitative, home care, or other services needed by low-income people who are elderly or have disabilities, or significantly increasing the cost of these services.

At least 22 states are cutting or proposing to cut K-12 and early education; several of them are also reducing access to child care and early education, and at least 30 states have implemented cuts to public colleges and universities.

In addition, at least 39 states and the District of Columbia have made cuts affecting their state workforce. Workforce cuts often result in reduced access to services residents need. They also add to states’ woes by contracting the state economy.

If revenue declines persist as expected in many states, additional budget cuts are likely. Budget cuts often are more severe in the second year of a state fiscal crisis, after reserves have been largely depleted and thus are no longer an option for closing deficits. The experience of the last recession is instructive as to what kinds of actions states may take. Between 2002 and 2004 states reduced services significantly. For example, in the last recession, some 34 states cut eligibility for public health programs, causing well over 1 million people to lose health coverage, and at least 23 states cut eligibility for child care subsidies or otherwise limited access to child care. In addition, 34 states cut real per-pupil aid to school districts for K-12 education between 2002 and 2004, resulting in higher fees for textbooks and courses, shorter school days, fewer personnel, and reduced transportation.


California is specifically cutting social services to save money – and the state

TRZCINSKI, 7 – 20 – 09, PhD in British Literature and LA Attorney

[Diane Trzcinski, “Cuts That Will Cost California More in the Long Run”,]

The governor has proposed eliminating CalWorks, the state's welfare program, and Healthy Families, which insures low-income children. Welfare, which costs $219 a month per person, is cheaper than foster care, where advocates say some children will wind up if their families lose public assistance. The monthly foster care bill is $1,981. The governor's budget plan would also shut down the state's poison control service, a $5.9-million program used by 330,000 people per year. Poison control experts say the elimination of a hotline would lead to as many as 164,000 extra emergency room visits.

Those visits would cost the healthcare system somewhere in the range of $70 million per year, according to Stuart Heard, executive director of California Poison Control System. ...Another element of Schwarzenegger's plan would end an adult day care program that provides medical and therapeutic services to the frail elderly. The cut is intended to save the state $170 million.

XT: CA Econ  World Econ

California is key to the world economy – it is sixth in the world, and accounts for 13% of US GDP

LAO, 2004, (Legislative Analyst’s Office, California’s Nonpartisan Fiscal and Policy Advisor)

[“CAL Facts 2004: California’s Economy and Budget in Perspective”,]

California Is the World's Sixth Largest Economy California’s gross state product is nearly $1.5 trillion, making it one of the world's largest economies. California accounts for over 13 percent of the nation's output, and trails only Japan, Germany, the United Kingdom, and France. Foreign Trade—An Important Source Of California Economic Activity (California Exports, 2003) Exports of goods made in California totaled $94 billion 2003. Based on partial-year data, it appears that exports will increase by over 20 percent in 2004. California-made exports directly account for about 8 percent of gross state product. In addition to creating major markets for products of California companies, foreign trade results in numerous jobs related to port-related activity, wholesale trade, warehousing, and transportation.

California’s GDP ranks as number 8 if it were its own country

CCSCE, July 2007, (Center for Continuing Study of the California Economy)

[“Where Does California Rank – 2006 Update”,]

California was the world’s eighth-largest economy again in 2006. According to U.S. Department of Commerce estimates, California’s GDP (gross domestic product) was slightly more than $1.7 trillion. GDP is the value of all goods and services produced in California. It is equivalent to the gross domestic product estimates prepared for the nation and other countries. In terms of size, the California economy currently ranks just behind Italy and ahead of Canada and Spain. The next five countries are Brazil ($1.1 trillion), Russia ($1 trillion), India ($906 billion), South Korea ($888 billion), and Mexico ($839 billion).

State economies are key to the national economy

Patterson, 08 – Governor of New York (David, CQ Congressional Testimony, 10/29, Lexis)

When states are hurting, our national economy suffers. State governments are engines of both economic and social progress. They are a key source of job creation in this country, through aid for small businesses, incentives for economic investment, and workforce development programs. Likewise, investments at the state level both expand our national tax base and lower entitlement pressures on the federal budget. For example, the innovative Federal State Health Reform Partnership (F-SHRP) program provides federal assistance to reform our health care industry and to deliver more cost effective services, which saves money for both levels of government. An investment in state governments is an investment in the health of both our overall economy and the federal budget. And, while I acknowledge that the federal government is facing fiscal difficulties of its own right now, I submit that avoiding the long-term adverse consequences of failing to aid state governments greatly outweighs any short-term financial costs.


Despite world attempts to stem the recession, the world economy could still turn worse

Xinhua, 7 – 6 – 09, (Xinhua is a Chinese business news network)


The world economy is still in danger despite recent positive signs, World Bank President Robert Zoellick said Monday.
"The actions you and other leaders have taken over the last few months have broken the fall in the global economy by stabilizing financial markets and boosting demand," Zoellick said in a letter to the Group of Eight summit scheduled to held later this week.

"Yet 2009 remains a dangerous year. Recent gains could be reversed easily, and the pace of recovery in 2010 far from certain. I recognize that some developed countries are now considering a policy mix that assumes the recovery is at hand.

But for the developing world, it is far too early to think of such measures
," he wrote.
Zoellick called for more help for developing countries, and said that the needs of the poorest should not be forgotten in the crisis.
He said the global economic crisis is not of the developing world's making. Yet it is suffering. The struggles may intensify as developing countries are hit by multiple waves of misfortunes. Zoellick urged the G8 leaders to focus on three priorities in the near term, including follow up the G-20's promise to restore growth and lending in their own economies.


The budget crisis is still ongoing in California

USA TODAY, 7 – 19 – 09, “California budget talks postponed”

[Written by William M. Welch, Associated Press,]

California leaders are hoping for agreement this week on how to plug a $26 billion hole in the state's budget that has prompted it to issue IOUs to cover government bills.

Gov. Arnold Schwarzenegger postponed a Sunday night bargaining session with the top four legislative leaders.

Schwarzenegger spokesman Aaron McLear said the Republican governor delayed talks until Monday because Assembly Speaker Karen Bass wasn't available until late Sunday.

Bass spokeswomyn Shannon Murphy said Bass, a Democrat, was ready for talks and blamed the delay on the governor: "The speaker feels they are close to an agreement and is eager to sit down with the governor."

The finger pointing and delay is emblematic of the budget dispute that has gripped California for months as it teeters on the brink of fiscal catastrophe.

Schwarzenegger is ruling out tax increases, so lawmakers in both parties have been coming to terms with significant cuts in state government, including spending for schools and universities. Final issues on the table include borrowing from local governments, setting aside emergency funds, and whether to guarantee that schools later will be repaid money lost to the recession-driven crisis.

McLear said before Sunday's talks collapsed that negotiators were "certainly in a position where we could close this very quickly … but we still have some issues to work out."

State DMV offices were closed Friday, one of the most visible events for taxpayers in a series of government-wide furloughs and service cutbacks. Voters this year overwhelmingly rejected tax increases as part of a budget fix worked out in an earlier agreement.

The state is running short of cash and has no budget in place, so it has begun issuing IOUs as payment for bills from thousands of state vendors. Some banks are not honoring the IOUs.

Even if a budget deal is made in California, it will not pass – it requires a 2/3 vote to pass

OMOTO, 7 – 19 – 09, Director of the California Disability Community Action Network

[Marty D. Omoto, “Will There Be A Budget Deal Today?”]

If an agreement is reached on Sunday, it will be sometime next week – possibly Tuesday or Wednesday – before it will come for a final vote before the full Assembly and State Senate. Democrats control the 80 member Assembly with 49 seats to the Republicans 29 (there is 1 seat vacant due to the resignation of Curren Price) and 1 independent (Juan Arambula). Democrats control the 40 member State Senate 25 seats to the Republicans 15.

But passing legislation to take effect immediately upon approval by the Governor – or to raise taxes – requires 2/3rds vote in both houses – or 54 votes in the Assembly and 27 votes in the State Senate. That means Democrats – assuming they get every Democrat to vote for the budget plan, would still need at least 5 Assembly Republican votes (or the 1 independent vote of Juan Atambula and 4 Assembly Republican votes) and 2 Senate Republican votes.


Economic collapse will cause nuclear war – along with wars, proliferation, elimination of manufactures, huge peaks in unemployment in industrialized nations and ending welfare programs, Turning the CP.

EHRENFELD, ’93, M.D. from Harvard (PhD. @ Univ. of Florida & Professor of Biology @ Rutgers)

[David Ehrenfeld, “The Last Extinction” (pg. 209), Google Books]

Another change that people do not like to speak of – not as bad as nuclear war, but certainly no fun – is the change that would be brought on by global economic collapse (assuming no nuclear consequences), a collapse that would probably decrease international trade, trigger the disintegration of many multinational corporations and other overstuffed, subsidized super organizations, end the modern welfare state, bring about massive famines, greatly increase unemployment in the industrialized nations, all but eliminate luxury goods and exceedingly complex manufacturers, including many complex military weapons, increase local wars, and cause a great proliferation of regional economic systems.


CA Econ ≠ World Econ

Alt Causality: Texas is key to the World Economy

Austin Business Journal, 6 – 2 – 09, “Texas 11th for GDP Growth in ‘08”


Texas ranked No. 11 for real gross domestic product growth in 2008, according to statistics the U.S. Bureau of Economic Analysis released Tuesday. Real GDP is the total of goods and services produced, but adjusted for inflation. The real GDP in Texas was $1.2 billion in 2008, up 2 percent from 2007. The national real GDP also increased 2 percent from 2006 to 2007.


The economic collapse is receding – we’re headed toward recovery

BBC News, 7 – 14 – 09, “Geithner upbeat on world economy”


Timothy Geithner has reiterated his view that the global economy is now recovering, but that continuing government support is needed. Speaking during a visit to Saudi Arabia, the US Treasury Secretary said there were now growing signs that "the global recession is receding". He said "forceful and sustained" state support was needed until private investment could take over again. Mr Geithner also restated the US's commitment to a strong dollar. "Given the dollar's role in the international financial system and the significant impact of the US economy on global economic conditions, we fully recognise that the US has a special responsibility to play," he said.

The world recession will end this year – recovery is happening in major economies like Japan

Bloomberg News, 7 – 8 – 09, “IMF Sees World Econ Resuming Growth In Late 2009”

[Written by Tom Barkley,]

The global economy should emerge from recession by the end of the year on the back of a resurgence in major developing countries like China and India, the International Monetary Fund predicted Wednesday. But advanced economies continue to lag, facing risks from unfinished work shoring up financial sectors, as well as new concerns from the piles of debt governments are amassing from crisis measures. "The worst is behind us, and the recovery is coming," the IMF's chief economist, Olivier Blanchard, said at a press conference to discuss the fund's updated global forecasts.

G8 leaders are gathering in Italy this week to discuss progress in combating the global economic crisis, which finally appears to be losing steam. Encouraged by recent improvements in both markets and economic activity - with JPMorgan Chase & Co. (JPM) estimating that purchasing managers indexes globally had returned to pre-crisis levels last month - the leaders are expected to turn their focus more toward devising exit strategies for when a recovery takes hold. The IMF said that while it is too soon for governments to start unwinding crisis measures, clear and coordinated exit strategies should be laid out to avoid a potential new wave of turmoil in sovereign debt markets. While U.S. banks have been able to raise capital, dealing with troubled assets remains a priority, the IMF said. Japan's economy is also showing signs of stabilization, with aggressive fiscal policies and strength in regional economies expected to provide further support to growth, the fund said. The economy is expected to contract 6% this year, instead of a previous forecast of a 6.2% decline, with the 2010 growth estimate raised to 1.7% from 0.5%.


California are near a budget deal that will solve the crisis

The Sacramento Bee, 7 – 17 – 09, “California lawmakers target city, county funds to close budget gap”

[Written by Jim Sanders,]

California cities and counties will take a multibillion-dollar hit to help close the state's massive budget gap.

Schwarzenegger, in a news conference, said he is "very close" to striking a deal."There's a will there, in this building, of both parties to get it done," he said. Bolstering state coffers with local government funds would replace revenue lost by killing proposals to hike taxes on cigarettes, impose an oil extraction tax and raise vehicle registration fees to bankroll state parks. A three-pronged revenue package totaling more than $4 billion this year from cities, counties and special districts is the acknowledged choice within budget negotiations, according to multiple sources familiar with the talks. Schwarzenegger has agreed to restore the $9.5 billion from last year, but he has balked at altering state law, saying education groups should place the issue before voters.

Why do diseases love debate? … They love to spread!! 

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