Spending DA - Brovero

Gonzaga Debate Institute 2008 1
Brovero/Lundeen/Moczulski Spending DA
Spending DA
Spending DA ..................................................................................................................................................................1
1NC – 1/2........................................................................................................................................................................2
1NC – 2/2........................................................................................................................................................................3
Uniqueness: Fiscal Discipline High Now.......................................................................................................................4
Uniqueness: Economy Stable Now.................................................................................................................................7
Link: Government Spending...........................................................................................................................................8
Link: Research and Development...................................................................................................................................9
Link: Low Priority Programs........................................................................................................................................10
Link: Solar Space Power...............................................................................................................................................11
Link: Ethanol Development..........................................................................................................................................12
Link: Ethanol Development..........................................................................................................................................13
Link: Coal to Liquid......................................................................................................................................................14
Link: Coal to Liquid......................................................................................................................................................15
Link: Cap and Trade......................................................................................................................................................16
Link: Nuclear Power.....................................................................................................................................................17
Internal Link: Deficit Spending ...................................................................................................................................18
Internal Link: Deficit Spending/Fiscal .........................................................................................................................19
Internal Link: Fiscal Discipline K/ Econ......................................................................................................................20
Internal Link: US Econ K/ Global................................................................................................................................21
Internal Link: Inflation..................................................................................................................................................22
Internal Link: Oil Prices K/ Econ.................................................................................................................................23
Internal Link: Oil Prices K/ Econ.................................................................................................................................24
Internal Link: Electricity Prices K/ Econ......................................................................................................................25
Impacts: Nuclear War....................................................................................................................................................26
Impacts: Nuclear War....................................................................................................................................................27
Impacts: Disease...........................................................................................................................................................28
Impacts: China War ......................................................................................................................................................29
AFF: Link Turn – Cap and Trade..................................................................................................................................30
AFF: Link Turn – Nuclear Power.................................................................................................................................31
AFF: Link Turn – Ethanol ............................................................................................................................................32
AFF: Link Turn – R&D................................................................................................................................................33
AFF: Link Turn – Alternative Energy...........................................................................................................................34
AFF: Non – U Econ Growth Low.................................................................................................................................36
AFF: Non – U Recession Now.....................................................................................................................................37
AFF: Non – U No Fiscal Now......................................................................................................................................38
AFF: US Not K/ Global Econ.......................................................................................................................................39
AFF: US Not K/ Global Econ.......................................................................................................................................40
1NC – 1/2
A. The economy is low now but recovery is on the horizon.
Robb 6/17/2008 (Greg, Staff Writer, “Oh, by the way, the Fed will pause next week” Market
Watch Online, http://www.marketwatch.com/news/story/way-fed-hold-next-
week/story.aspx?guid=%7BEFF3F4F9-11BE-43E9-834C-
E39070F1827D%7D&print=true&dist=printMidSection)
At the moment, the Fed forecasts that the economy will begin to recover in the second half of this year
and strengthen further in 2009. The Fed also expects inflation to moderate in coming quarters as
energy prices level out. Top Fed officials have expressed comfort with rates where they are. "For now,
policy seems well positioned to promote moderate growth and price stability over time," Fed chief Ben
Bernanke said early this month.
B. Alternative energy development is incredibly expensive.

Alternative Energy Online 2007 (“Disadvantages of Alternative Energy” October 17th 2007)
http://www.yourenergyalternitives.com/2007/10/17/disadvantages-of-alternative-energy/
Alternative energy is being studied to power our vehicles along with our homes. Hybrid cars have been in
market for a while. They don’t need to be plugged in to recharge otherwise they use the same idea as an
electric car. They have all of the power of a gasoline engine as they use their braking system to regenerate
power. Newer fuel cell technologies vehicle are currently being designed so as to work along with a hydro-
powered hybrid which uses hydrogen. Alternative energy is expensive to incorporate into the already set
up infrastructure. Most of the alternative energy resources will require an altogether different type of
wiring system than what people have. This would delay the conversion to alternative energy sources
until we have made adequate arrangements by which time the fossil fuels found on our Earth today
will be long depleted.
1NC – 2/2
C. New government spending leads to inflation
Saville 7/8/2008 (Steve, Editor of the Speculative Investor, “Government Spending and
Inflation” Safe Haven Online http://www.safehaven.com/article-10688.htm)
That being said, the seeds are being sown for the next round of monetary expansion. Those seeds are the
frenetic calls for increased government spending and other "stimulus packages" to address the economic
downturn, and the virtual certainty that politicians of all stripes will heed these calls. The bonds issued by
the government to finance the additional deficit-spending will lead to more inflation because they will
be purchased by the central bank or private banks with newly-created money. As noted above, an
increase in government spending cannot possibly help. Its likely effect will be to PROLONG the
downturn, but the longer it takes for a sustained recovery to begin the greater the opportunity for the
government to 'fight' the downturn via even more inflation-financed spending.
D. High inflation leads to economic stagnation and recession.

Sailor, Author of India Daily, 07
(Tania, India Daily: “Higher Inflation, lower short-term rates can push gold to $1500 an ounce – but what the long
term prospect of yellow metal?”, June 24, http://www.indiadaily.com/editorial/17296.asp, Date Accessed: July 7,
2008)
The gold bugs are getting happier every day. The economy is facing stagflation. Stagflation is great for
the gold investor. The stagnating economy puts political pressure on the Fed to lower short-term rates.
But inflation in the economy just pushes gold fundamentally higher. The stagnating economy will also
create far higher budget deficit, which will lower the dollar and raise the price of gold. So gold is a total
winner isn’t it? Well before thinking about the gold homerun, let us analyze a few things. What happens after
stagflation? The inflation actually puts more pressure on the economy. The economy stagnates further
and finally plunges into recession. With such high budget and trade deficit, if the long-term bond yields
cross the 10% level, it will plunge the economy into depression. Now what happens if economy stays
depressed for more than a quarter? Deflation starts. The inflation changes very fast into deflation. So, if
stagflation continues and get deeper, it will transform into depression accompanied by deflation. It happened
in Japan. The Japanese economy, since the late eighties, stagnated and collapsed into deflation under heavy
debt. That shows depression is not needed for deflation to take over the economy. If the world economies
start experiencing deflation, the gold will eventually collapse. Gold for now is bullish and may rise very high.
But eventually as deflation takes over the economy gold will be trading far below it is trading today. There is
one catch though. That wild card is dollar. If dollar collapse like pesos, gold will higher. If dollar holds under
deflation, gold will collapse below $300 an ounce.
E. Economic collapse causes extinction

Bearden, Director of the Distinguished American Scientists (ADAS), 2000 (Thomas, Fellow Emeritus, Alpha
Foundation’s Institute for Advanced Study (AIAS) Pg. http://www.cheniere.org/techpapers/)
History bears out that desperate nations take desperate actions. Prior to the final economic collapse, the
stress on nations will have increased the intensity and number of their conflicts, to the point where the
arsenals of weapons of mass destruction (WMD) now possessed by some 25 nations, are almost certain
to be released. As an example, suppose a starving North Korea {i} launches nuclear weapons upon Japan and
South Korea, including U.S. forces there, in a spasmodic suicidal response. Or suppose a desperate China —
whose long range nuclear missiles can reach the United States — attacks Taiwan. In addition to immediate
responses, the mutual treaties involved in such scenarios will quickly draw other nations into the conflict,
escalating it significantly. As the studies showed, rapid escalation to full WMD exchange occurs, with a
great percent of the WMD arsenals being unleashed. The resulting great Armageddon will destroy
civilization as we know it, and perhaps most of the biosphere, at least for many decades
Uniqueness: Fiscal Discipline High Now

Bush plans to decrease funding to Medicare and Medicaid showing fiscal discipline.
Trapp, writer for the AMNews, 2008
(Doug, Amednews.com, “Bush budget cuts hospital funding but silent on Medicare doctor pay”, http://www.ama-
assn.org/amednews/2008/02/18/gvl10218.htm, 2/18/08, accessed 7/7/08)
Washington -- President Bush's fiscal 2009 health budget, with steep Medicare spending cuts as a main
highlight, sets the stage for a tough fight with Congress in the months ahead.
The proposal, part of a wider $3.1 trillion plan, is just the first step in this year's health care budget debate.
Health care organizations and congressional Democrats have found a lot not to like. Bush proposes
reducing Medicare and Medicaid spending anticipated under current law by $196 billion over five
years, with hospitals as the main target. The plan would do nothing to prevent Medicare physician
payment cuts.
Proposed budget cuts and money management creates fiscal discipline in the USFG
The Missourian, 2008
( Columbiamissourian.com, “Missouri Drug program may suffer under Bush budget cuts”, 2/18/2008,
http://www.columbiamissourian.com/stories/2008/02/18/missouri-drug-program-may-suffer-under-bush-budget/,
accessed 7/7/08)
KANSAS CITY (AP) — One of the first major disagreements over President Bush’s budget proposal could
hurt Missouri’s efforts to fight methamphetamine. Missouri, which has had more meth lab seizures than any
other state in the country for more than a decade, depends on money from the Edward Byrne Memorial
Justice Assistance Grant Program to fund its drug-fighting efforts. Currently, the state gets almost $9
million from the program, with $6.3 million going to state law enforcement and $2.7 million to city and
county police departments. Last year, the president tried to kill the program. Under his current budget
proposal, the program would get an extra $30 million for 2009, with a total budget of $200 million. Since
2002, the program’s funding has been cut from $900 million. This year’s suggested funding is one-third
the amount sought by Missouri Republican Sen. Kit Bond and Iowa Democratic Sen. Tom Harkin.
Bond told The Kansas City Star that the Byrne program is “vital” and he criticized the budget because it
“does not invest enough money to support our state and local law enforcement in their efforts to protect our
communities from gangs, drugs and violent offenders.”

PAYGO rules will bolster commitment to fiscal restraint now – breaking them
Auerbach et al., University of California-Berkeley economics and law professor, 8
(Alan J. Auerbach, Jason Furman and William G. Gale, "Facing the Music: The Fiscal Outlook at the End of
the Bush Administration", 5-8-8,
http://www.brookings.edu/~/media/Files/rc/papers/2008/0508_tax_gale/0508_tax_gale.pdf, accessed, 7-14-8)
Several caveats are worth exploring. First, the budget outlook depends critically on the choices of policy-
makers. Congress has recently passed pay-as-you-go rules as part of its respective budget resolution. If
those rules are maintained without significant loopholes or exceptions, the optimistic outcomes in the
baseline projection for the unified budget become more plausible because policymakers would be forced to
find offsets to pay for any tax cuts they chose to extend or for any AMT reform. As a result, the short-term
unified budget would be in significantly better shape and the long-run deficit would be reduced.

The 2008 Budget shows fiscal discipline with government money through budget reforms.
Whitehouse.gov, 2007 (Whitehouse.gov, “http://www.whitehouse.gov/infocus/budget/2008/,
“The President’s 2008 Budget; Reducing Deficits Each Year and Balancing the Budget by 2012”,
7/12/207, accessed 7/7/2008)
The President’s FY2008 Budget reduces the deficit each year and reaches a balanced budget within five
years. A strong economy and better spending restraint will help us achieve this goal, while continuing
to invest in the Nation’s prosperity and security. Keeping the Economy Strong * The Budget makes
tax relief permanent to ensure our strong economic growth continues. * Since the President’s tax
relief took effect, increased innovation and investment has created more than 7 million new jobs, and
helped boost wages. * Pro-growth polices that focus on providing quality education, affordable health
care, energy security, and making Americans more competitive will sustain economic growth and prosperity
for future generations of all Americans. Spending Taxpayers Dollars Wisely * The Budget holds the
growth in non-security discretionary spending to one percent, well below the rate of inflation. *
Budget reforms, including comprehensive earmark reform and a legislative line-item veto, will help
eliminate wasteful and unnecessary spending. * Sensible reforms are needed to slow the
unsustainable growth of entitlement spending. Combating Terrorism and Protecting the Homeland *
The Budget supports our troops fighting terrorism, strengthens our military for the future, supports our efforts
on the diplomatic front and protects our homeland from attack. * This Budget improves the timeliness and
specificity of the information provided to Congress and the American public about the cost of the war. * It
shows the full cost of the war through the rest of the President’s term –and also provides detailed
justifications.
Uniqueness: Economy Stable Now

Despite market distortions the US economy is on the upswing, but massive new funding will
push it over the edge.
Kalestky 7/14/2008 (Anatole, is a journalist and economist based in the United Kingdom.
He is Principal Economic Commentator and Associate Editor of The Times of London “We
have financial, not economic, problems” The Times Online)
http://business.timesonline.co.uk/tol/business/columnists/article4327589.ece
While Wall Street has gone into meltdown since the beginning of June, conditions in the real economy
have been unambiguously improving. The latest employment figures, published two weeks ago, confirmed
that economic conditions had stabilised after their sharp deterioration in the winter, while purchasing
managers' surveys, the most reliable indicator of very recent economic trends, suggested a continuation of the
modest but clear improvement that began in April. Sales figures from leading retailers were much
stronger than expected, showing that tax rebates designed to provide a shot of financial adrenaline to all but
the richest US households were doing exactly what the doctor ordered - offsetting the depressing effect on
consumption of the credit crunch and the housing slump. As a result, consumer confidence, although an
unreliable and lagging indicator, showed its first improvement for six months. Even the figures on home
sales have now been near-stable for four consecutive months, after almost a year of vertiginous falls. Most
important of all, the monthly trade figures, published on Friday in the midst of the Wall Street meltdown,
proved that the remarkably adaptable US economy was responding to the credit crunch exactly as the
optimists had hoped - by undertaking an immense structural shift from consumer and housing-led growth to
growth powered by exports. The narrowing of the US trade deficit, despite the biggest monthly increase
on record in the cost of oil imports, almost guarantees that the second-quarter GDP figures, due to be
published two weeks from now, will show the US economy accelerating from the stagnant conditions of
the past two quarters to a near-normal rate of 2.5 or even 3 per cent growth
Link: Government Spending

Government spending spikes inflation rates
McGraw Hill Companies, Global Publishing Company, ‘08
(McGraw Hill Companies, EconExplorer Chapter 11: What Causes Inflation?,
http://www.dushkin.com/connectext/econ/ch11/inflation.mhtml, Date Accessed: July 8, 2008)
The most common cause of inflation is too much money chasing too few goods. If everybody had 5 times
as much money but the amount of goods and services produced remained the same, prices would naturally
rise by a factor of 5. So the answer to avoiding inflation is simply to avoid printing too much money. Easier
said than done.
Government leaders like to spend a lot of money on military equipment, roads, subsidies, building
projects, etc., because this keeps them popular with their constituents. But getting money to pay for these
things is often difficult. Raising taxes is as unpopular as government spending is popular. One alternative is
to borrow the money, but sooner or later you have to pay it back. Probably the easiest way to pay for those
popular government spending programs is to "print" some more money.
As we saw in chapter 10, in most countries the money supplied is controlled by a central bank. In the United
States, Japan, Switzerland, and Europe the central banks are independent of government control, and the
government cannot force the banks to create more money to pay for its reckless spending. In many
Latin American and other developing countries, the government controls the central bank and can force it to
cough up new money so it can pay for whatever it wants. The result? In the past these countries have had
inflation rates of a hundred to over a thousand percent a year!
Every couple of years, someone in the Congress or the Senate introduces a bill to take the control of the
nation's money supply away from the Fed and put it under the control of elected representatives. The
argument is that elected officials are accountable to the public, and the public should have some say in
something as important as the money supply.
Link: Research and Development

Research and Development is expensive.
Science and Engineering Indicators 2008 Tuesday, July 08, 2008
http://www.nsf.gov/statistics/seind08/c4/c4h.htm#c4h4
In the president's 2008 budget submission, the federal government is slated to set aside $138 billion for
R&D, amounting to 12.8% of its discretionary budget. Federal agencies are expected to obligate $113
billion for R&D support in FY 2008. The seven largest R&Dfunding agencies (each with expected R&D
obligations of more than $1 billion) account for 96% of total federal R&D. Defense-related R&D dominates
the federal R&D portfolio. The largest R&D activity in the FY 2008 budget is defense, with a proposed
budget authority of more than $82 billion (mostly on development), or about 60% of the entire federal
R&D budget ($138 billion). In FY 2008, the Department of Defense (DOD) requested a research,
development, testing, and evaluation budget of $78 billion. Health accounts for the largest share of
nondefense R&D support; 52% of the proposed FY 2008 nondefense R&D budget was for health-related
programs
The House denies energy research and development projects due to risk of unnecessary
spending.
Executive Office Of The President Office Of Management And Budget June 13, 2007
http://www.whitehouse.gov/omb/legislative/sap/110-1/hr2641sap-h.pdf Date Accessed: July 8, 2008
The Administration strongly opposes H.R. 2641 because, in combination with the other FY 2008
appropriations bills, it includes an irresponsible and excessive level of spending and includes other
objectionable provisions. The President has proposed a responsible plan for a balanced budget by 2012
through spending restraint and without raising taxes. To achieve this important goal, the Administration
supports a responsible discretionary spending total of not more than $933 billion in FY 2008, which is a
$60 billion increase over the FY 2007 enacted level. The Democratic Budget Resolution and subsequent
spending allocations adopted by the House Appropriations Committee exceed the President’s
discretionary spending topline by $22 billion, causing a 9 percent increase in FY 2008 discretionary
spending and a nearly 10 percent increase in the projected deficit for FY 2008. In addition, the
Administration opposes the House Appropriations Committee’s plan to shift $3.5 billion from the Defense
appropriations bill to non-defense spending, which is inconsistent with the Democrats’ Budget Resolution
and risks diminishing America’s war fighting capacity. In combination with other spending bills, H.R. 2641
would lead to spending and tax increases that put economic growth and a balanced budget at risk.
[NOTE: H.R. 2641= ENERGY AND WATER DEVELOPMENT AND RELATED AGENCIES
APPROPRIATIONS ACT, 2008]
[NOTE: THE ADMINISTRATION = HOUSE]
http://www.whitehouse.gov/omb/legislative/sap/110-1/hr2641sap-h.pdf
Link: Low Priority Programs

( ) Cutting low priority programs is necessary to offset the economic effects of other
projects.
DRG/C51 Ronald D. Utt, Ph. D. Herbert and Joyce Morgan Senior Research Fellow, Heritage Foundation,
CONGRESS FACES PRESSURE TO SURRENDER PORK FOR FLOOD RELIEF, September 15, 2005, p.
http://www.heritage.org/Research/Budget/wm841.cfm accessed 5/19/06.
Shortly after Hurricane Katrina struck, it became apparent that the vast scope of devastation would require
a costly federal relief effort to supplement the hundreds of millions of dollars already raised
voluntarily from ordinary citizens. Heritage Foundation analysts suggested that some or all of the
funding should come from offsets in lower-priority federal spending programs that could be eliminated
or postponed. In particular, we recommended that the $25 billion of pork-barrel spending recently approved
in the highway reauthorization bill (H.R. 3) be redirected to reconstruct damaged infrastructure in the hard-
hit Gulf Coast communities.
( ) Spending on low priority projects hurts the economy.

DRG/C52 Veronique de Rugy, Research Fellow, American Enterprise Institute, HURRICANE RELIEF
SPENDING, September 12, 2005, p. http://www.aei.org/publications/filter.all,pubID.23186/pub_detail.asp accessed
5/19/06.
Like millions of Americans who have made personal sacrifices to help the survivors of Katrina's
devastations, the President and Congress should make a sacrifice of their own. They must cut low priority
spending and wasteful programs to offset the new hurricane relief spending increase. Failing to do so
would impose excessive costs on the American economy. Being compassionate should not prevent
lawmakers from being responsible leaders.
Cutting low priorities offsets economic burdens.

De Rugy, Research Fellow, and Bate, Resident Fellow, 2005 (Veronique, and Roger, American Enterprise
Institute, HURRICANE RELIEF SPENDING, December 2, 2005,
http://www.aei.org/publications/pubID.23517,filter.economic/pub_detail.asp accesed 5/19/06.)
Following the devastating hurricane and flooding in the Gulf region, President Bush sent Congress two
separate requests in hurricane relief, which the House and the Senate passed without delay. They raise
Katrina's cost to federal taxpayers to $62.3 billion so far. This of course is on top to the billions of dollars
private citizens have donated to come to the rescue of the victims of the hurricane. Now, members of
Congress must make a sacrifice of their own and cut low priority spending and wasteful programs--
such as broken international aid programs--to offset the new financial burden our nation faces.
Link: Solar Space Power

High costs and lack of compatible large-scale systems make space solar power unprofitable
Smith, the President, Long Island Space Society, 03
(Arthur, Space Daily: Your Portal to Space, “The Case For Space Based Solar Power Development” Aug 11, 2003,
http://www.spacedaily.com/news/ssp-03b.html, Date Accessed: 7-6-08)
Worldwide over a trillion dollars a year goes to the energy industry, and utilities routinely construct multi-
billion-dollar power plants. The energy industry has a bigger wallet than the entire US federal discretionary
budget. Money is not directly the problem here; profitability is. The two essential factors in the cost
equation are the cost per delivered Watt of the solar power components, and the cost per delivered Watt of
getting those components to their final destination in space. Current costs put the capital investment needed
for a space solar power system well above the $2/Watt of competitive terrestrial options such as fission plants
and wind turbines. R&D work is needed to bring these costs to where the vast energy resources of space
are within reach of a large utility project. The cost of components is the first problem here. Current
prices for solar electric power systems are about $2.50 per peak Watt, a price that has been declining about
7% per year for the last few decades. The day/night cycle, non-ideal sun angles, weathering, and cloud cover
reduce power output enough to make the final cost per average Watt $10 or more. Terrestrial solar power is
still too expensive for wholesale utility use, but it is now competitive for home owner installation in many
areas. In space you can get peak power almost all the time. The $2.50/Watt homeowner systems are not
space-rated, but the space market is still small; with a larger market suitable photovoltaic elements could
be produced at comparable cost. Transmitting power from space will have somewhat higher losses than
transmitting from a terrestrial power plant.
[NOTE: R&D = Research and Development]
High transportation costs discourage investment in Space Solar Power projects

Zwaniecki, Bureau of International Information Programs writer, 07
(Andrzej, America.gov, “Space Solar Energy Has Future, U.S. Researchers Say
Small Demonstration Project Could Help Justify Further Research” August 20, 2007,
http://www.america.gov/st/washfile-english/2007/August/20070820153255saikceinawz0.864773.html, Date
Accessed: 7-6-08)
Martin Hoffert, former chair of the Department of Applied Sciences at New York University, told members of
the Capitol Hill Club in August that space solar power research and development can proceed with existing
technologies. But the potential costs remain high, discouraging entrepreneurs and the government from
investing in it. The major expense -- transporting equipment and materials into orbit aboard a space
shuttle -- is $20,000 per kilogram of payload, or the carrying capacity of a space vehicle. Proponents of
space solar power believe the project would become viable economically if the payload cost could be
reduced to below $200 per kilogram, and the total expense of delivery and robotic assembly on orbit
could be brought below $3,500 per kilogram. That is not likely to happen any time soon and a reusable
launch vehicle, needed to reduce costs drastically, eventually would require government investment,
Mankins said. He said, however, that a small-scale demonstration project of the space solar power concept
could help convince skeptics and provide a strong political justification for such an investment.
Link: Ethanol Development

( ) Most facts about ethanol are fallacies - ethanol is extremely expensive to manufacture.
Taylor, CATO Senior Fellow, and Van Doren, CATO Senior Fellow, 2007.
(Jerry and Peter, CATO Institute, "Ethanol Makes Gasoline Costlier, Dirtier", January 27, 2007,
http://www.cato.org/pub_display.php?pub_id=7308, Date Accessed: July 6, 2008)
In his State of the Union address, President Bush spoke a lot about energy independence and
alternative energy sources such as ethanol. According to the president, ethanol is the magical elixir
that will solve virtually every economic, environmental, and foreign policy problem on the horizon. In
reality, it's enormously expensive and wasteful. Untruths and misconceptions about ethanol include:
Ethanol will lead to energy independence. If all the corn produced in America last year were dedicated to ethanol
production (14.3 percent of it was), U.S. gasoline consumption would drop by 12 percent. For corn ethanol to
completely displace gasoline consumption in this country, we would need to appropriate all U.S. cropland,
turn it completely over to corn-ethanol production, and then find 20 percent more land for cultivation on top
of that. The U.S. Energy Information Administration believes that the practical limit for domestic ethanol
production is about 700,000 barrels per day, a figure they don't think is realistic until 2030. That translates to
about 6 percent of the U.S. transportation fuels market in 2030. Ethanol is economically competitive now.
According to a 2005 report issued by the Agriculture Department, corn ethanol costs an
average of $2.53 to produce, or several times what it costs to produce a gallon of gasoline.
Without the subsidies, costs would be higher still. A study last fall from the International
Institute for Sustainable Development found that ethanol subsidies amount to $1.05-$1.38 per
gallon, or 42 percent to 55 percent of ethanol's wholesale market price.
( ) Ethanol has many hidden costs that just doesn't make it worth the expenses
Greenberg, MarketWatch Senior Columnist, 2008.
(Herb, MarketWatch, "Corn Field Folly for Pacific Ethanol", March 18, 2008,
http://blogs.marketwatch.com/greenberg/2008/03/corn-field-folly-at-pacific-ethanol/, Date Accessed: July 6, 2008)
Turns out, according to an NT-10-K SEC filing: There was an “unauthorized deviation” of $3.9
million was taken from the company’s credit line “for the purpose of optimizing our cash
position.” (In other words, they robbed Peter to pay Paul.) Unfortunately, by doing that, the company
created an automatic violation of “a number” of loan covenants. Meanwhile, another $3.4
million earmarked for a debt service account related to the construction of two plants never
arrived at their designated destination, resulting in an automatic “default of the credit
agreement.” Oh, and according to that credit agreement, the company can only have seven Eurodollar loans
outstanding. It has eight. Oops. The company says it’s hoping to get a waiver from its lenders. If it can’t, it
says its auditors will have to formally question the company’s status as a going concern. But wait, there’s
more: Thanks to loopy ethanol economics, the company says it expects to report that revenue last quarter
rose 62% to $130.4 million. However (and this is where it gets to be a real bummer), its gross profit
margin slumped to 1.3% from 14.6% a year earlier as its loss ballooned to $14.7 million from
$3.1 million. Oh, and almost forgot: The company said the loss includes a non-cash expense of
about $4.4 million “from interest rate derivatives related to future periods and approximately
$2 million from write-downs of deferred financing fees associated with the company’s
suspension of construction” of a plant in California.
Link: Ethanol Development

( ) More ethanol plans will push us off the brink -- recent skyrocketing prices of corn and
foreign markets have been caused because of conversion to ethanol
Miller, Hoover Institution Research Fellow and Physician, and Carter, UC Davis
Agricultural and Resource Economics Professor, 2007.
(Henry and Colin, Los Angeles Times: "Why Ethanol Backfires", May 17, 2008,
http://articles.latimes.com/2007/may/17/opinion/oe-miller17, Date Accessed: July 6, 2008)
President Bush has set a target of replacing 15% of domestic gasoline use with biofuels (ethanol
and biodiesel) over the next 10 years, which would require almost a fivefold increase
in mandatory biofuel use, to about 35 billion gallons. With current technology, almost all of this
biofuel would have to come from corn because there is no feasible alternative. However, achieving the
15% goal would require the entire current U.S. corn crop, which represents a whopping 40%
of the world’s corn supply. This would do more than create mere market distortions; the
irresistible pressure to divert corn from food to fuel would create unprecedented turmoil.
Thus, it is no surprise that the price of corn has doubled in the last year – from $2 to $4 a
bushel. We are already seeing upward pressure on food prices as the demand for ethanol
boosts the demand for corn. Until the recent ethanol boom, more than 60% of the annual U.S.
corn harvest was fed domestically to cattle, hogs and chickens or used in food or beverages.
Thousands of food items contain corn or corn byproducts. In Mexico, where corn is a staple
food, the price of tortillas has skyrocketed because U.S. corn has been diverted to
ethanol production.
( ) US corn is 60% more costly than some areas of the world -- adapting to ethanol would take a
chunk out of our economy
Luhnow, Wall Street Journal, Latin America Deputy Bureau Chief, 2006.
(David, The Wall Street Journal, “As Brazil Fills Up on Ethanol, It Weans Off Energy Imports”, January 16,
2008, http://yaleglobal.yale.edu/display.article?id=6817, Date Accessed: July 6, 2008)
The most recent U.S. energy bill, signed into law in August, calls for more than doubling ethanol
use by 2012. But U.S. ethanol, which is made from corn, costs at least 30% more than Brazil's
product, in part because the starch in corn must be first turned into sugar before being
distilled into alcohol. It may take the U.S. a few more decades to bring the cost of ethanol
down to 80 cents a gallon -- equivalent to Brazil's most efficient producers -- according to the U.S.
Department of Energy. U.S. trade barriers make Brazilian ethanol and its sugar expensive to
buy.
Link: Coal to Liquid

It will take an $800 million project to establish just one coal to liquid plant
Roberts, Grist (Environmental News & Commentary) Staff Writer, 2007
(David, “Coal-to-liquid fuels: Not 'clean coal', not economically viable, and just not cool” Grist: Environmental
News & Commentary, March 5, 2007, http://gristmill.grist.org/story/2007/3/5/155252/7171, Date Accessed: July 6,
2008)
"By the time this first fleet of CTL plants is constructed, that technology will be there and we'll be using it,"
[Coal-to-Liquids Coalition spokesflack Corey] Henry says. Such a promise was called into question in a
DOE environmental impact filing in December, which reported that a leading CTL development had no near-
term plan to capture any of the 2.3 million tons of CO2 it would produce annually. The $800 million project,
which would make 5,000 barrels of CTL fuel a day in Gilberton, Pa., is part of an industry push where
CO2 capture costs are frequently not factored into the bottom line of the business plan, Wall Street
analysts say. Here's the take-home message. When it comes to CTL, we have two choices: CTL + carbon
sequestration: This will be grotesquely expensive, and will only happen with massive government
subsidies. The net result will be a liquid fuel that is just as bad for the atmosphere as current liquid
fuels. CTL without carbon sequestration: This might be economically viable without subsidies, but it would
be an utter disaster in terms of global warming. Here's a third choice: URGE2. Coal is the enemy of the
human race. The coal industry is desperately trying to keep itself alive with boondoggles like CTL. There's
absolutely no reason we should help it along with huge taxpayer subsidies. Just let coal die.
Billions of dollars are needed to establish coal to liquid plants

Malloy, Post-Gazette Reporter, 2008
(Daniel, Post-Gazette Now Business, “Coal May Hold Solution to Gas Prices” June 23, 2008, http://www.post-
gazette.com/pg/08175/891993-28.stm, Date Accessed: July 6, 2008)
Still, coal-to-liquid plants would cost several billion dollars to build, and if the whims of OPEC were to
drive down oil prices, there would be little market for a more expensive domestic product. That's why
the coal industry has taken its case to Washington. Luke Popovich, spokesman for the National Mining
Association, said the industry would push for government backing, as Wall Street has been timid to provide
capital. Coal companies, such as Bethel Park-based Consol Energy, are seeking startup capital and
government bailouts for investors if oil prices drop too far. But a bigger hurdle than funding is the
environmental lobby, which is vigorously attacking the technology for its greenhouse gas production. From
the time it's hauled out of the mine until it leaves the tailpipe, coal-to-liquid produces about twice as much
carbon dioxide as petroleum. "It's just not an intelligent way to use coal," said Joseph Minot, director of
the Philadelphia-based Clean Air Council. "It's environmentally a disaster, economically a disaster. It
doesn't make any sense."
Link: Coal to Liquid

The coal industry needs more than a $10 billion subsidy to establish coal to liquid plants
Montague, Environmental Research Foundation director, 2007
(Peter, Rachel’s Democracy & Health News, “The Coal Industry is Deep in Trouble”, September 20, 2007,
http://www.rachel.org/lib/07/prn_coal_news.070920.htm Date Accessed: July 6, 2008)
Last week Alan Greenspan, the nation's financial elder statesman, acknowledged that the Iraq war "is largely
about oil." Big Coal is hoping instability in the Middle East will spook Congress into a $10 billion subsidy
for 10 or more coal-to-liquid (CTL) plants, to make diesel fuel from coal instead of from oil. Coal-to-
liquid (CTL) is Big Coal's best hope for remaining viable, but the chances of success grow dimmer each
passing day.
The $211 billion investment needed to replace 10% of current gasoline makes Wall Street
investors nervous and unwilling to invest in the production of coal to liquid plants
Montague, Environmental Research Foundation director, 2007
(Peter, Rachel’s Democracy & Health News, “The Coal Industry is Deep in Trouble”, September 20, 2008,
http://www.rachel.org/lib/07/prn_coal_news.070920.htm Date Accessed: July 6, 2008)
CTL plants are expensive. The industry estimates that building an 80,000-barrel-per-day coal-to-
liquids refinery would cost $7 to $9 billion, compared with less than $2 billion to build a similar-size
petroleum refinery. Despite endless lip service to "free markets," Wall Street investors are not going to
gamble such large sums without a substantial return guaranteed by the government. Long-term contracts to
sell expensive fuel to the Air Force is what the CTL industry has in mind. Presently the Air Force is
prohibited from making contracts longer than 5 years -- so Congress would have to extend that to at least 20
years (and then come up with additional subsidies, loan guarantees, and price supports) to kick-start the CTL
industry. In Congress, it is Democrats who are most keen to subsidize the CTL industry, the New York Times
reports. A massive study of the coal-to-liquids, released by a team at M.I.T. last March [7 Mbytes PDF]
estimated that it would take an investment of at least $70 billion to build enough plants to replace 10
percent of American gasoline consumption. And the M.I.T. team pointed out that past cost estimates of CTL
plants have been "wildly optimistic." All this makes Wall Street investors nervous. They don't want more
blather about free markets. They want substantial gains guaranteed by government. Virginia is a coal
state, but a June 5 editorial in the Roanoke Times, titled, "Billion-Dollar Boondoggle" said, "The National
Coal Council, an industry-laden advisory board, painted an even bleaker picture. It estimated that a $211
billion investment would be needed over the next 20 years to replace 10 percent of current gasoline
usage.
[CTL = coal to liquid]

Link: Cap and Trade

The new taxes from a cap and trade system could cripple the nation’s economy.
Fordney, Energy Daily Correspondent, 8
(Jason, Global Power Report, “Cap-and-Trade System for Carbon is a Tantamount to Tax: MidAmerican Chairman”,
February 21, 2008, http://construction.ecnext.com/coms2/summary_0249-273257_ITM_platts, Date Accessed: July
6, 2008)
Implementing a national carbon cap-and-trade system without new technology to implement it is

nothing more than a tax that could cripple the nation's economy if not done wisely, MidAmerican
Holdings Chairman and CEO David Sokol said February 19. "Early implementation of a cap-and-trade
system needs to be called what it is: It's a tax," Sokol told attendees at the National Association of
Regulatory Utility Commissioners meeting in Washington, adding that cap and trade, "without
providing for a technology period, would be a mistake." Sokol helped steer the company from an
owner/operator of one geothermal plant in 1991 into a company with 17,000 employees and annual revenues
of $12.4 billion. It was acquired by a partnership controlled by Berkshire Hathaway in 2000. This week
Sokol warned of the effects of the bill proposed by Senator Joseph Lieberman, an Independent Democrat
from Connecticut, and Senator John Warner, a Virginia Republican, saying that without new technology the
bill's goals are unrealistic.
[NOTE: David Sokol – MidAmerican Holdings Chairman and CEO]
Cap-and-trade exacerbates current economic problems, we won’t see immediate warming

solvency
Carroll, Foundry Editor, 2008
(Conn, The Heritage Foundation Online, “Morning Bell: Economics 101”, 5-13-08,
http://blog.heritage.org/2008/05/13/morning-bell-economics-101/, Date Accessed: 7-6-08)
Trillions in new taxes, trillions lost in GDP and a huge global trade war. These are the costs of a
Lieberman-Warner cap-and-trade style approach to global warming. And for what? Even if the U.S.
meets Kyoto’s ambitious goals, the Earth’s surface temperature would be reduced by an imperceptible
0.14°F per 50 years. You don’t need an economist to tell you this is a bad deal for the United States.
Link: Nuclear Power

Building just one nuclear power plant costs ten billion dollars.
Hughes, Citizen Power executive director, 99.
(David, Post-Gazette News [Pittsburgh Post-Gazette], “Nuclear Power- Unsafe, Dirty, and Expensive”, March 28,
1999, http://www.post-gazette.com/forum/19990328edhughes7.asp, Date Accessed: 7/5/08)
You may remember when we were told that nuclear power would be "too cheap to meter." Well, it is not. In
fact, nuclear is one of the most expensive ways to produce electricity. When nuclear proponents provide
their figure of what nuclear cost to produce electricity they often leave out the cost of building the plant.
Indeed, it was the high cost ($10 billion) to build the Perry 1 and Beaver Valley 2 nuclear plants that now
cause Duquesne Light customers to have to pay some of the highest rates in the country. And, it is the high
cost of nuclear plants that accounts for most of the "transition" charge on your new electric bill, no matter
who supplies your generation. A gas-fired plant can be built for $350 per kilowatt (kW); wind turbines are
being installed at less than $1,000/kw. A nuclear plant costs $3,000 to $4,000 per kw to build. Nuclear fuel
is relatively cheap compared to other fuels, but only if you ignore spent fuel permanent storage costs. When
these and plant decommissioning costs are included, nuclear power is prohibitively more expensive, on a
total cost basis, than other energy sources. Even nuclear power advocates are frightened by the prospect
that these costs will be astronomical.
An influx of nuclear energy projects will cost billions more than previously expected.
Loder, St. Petersburg Times Staff Writer, 7.
(Asjylyn, “Nuclear Power Costs Surge”, St. Petersburg Times, December 12, 2007,
http://www.sptimes.com/2007/12/12/State/Nuclear_power_costs_s.shtml, Date Accessed: 7/5/08)
Nuclear energy - billed as the cheap, carbon-free energy source of the future - isn't sounding so cheap
anymore. In fact, the price for a new nuclear plant has soared as the rush to construct nearly 30 facilities
across the country over the next 15 years has pushed up the cost of labor, raw materials and possibly even the
plants themselves. New industry estimates double and even triple prices quoted a year ago by utilities
throughout the Southeast, including those for Progress Energy Florida's planned nuclear plant in Levy
County. Based on cost estimates for other nuke plants and analyst reports, Progress Energy's costs could
balloon to more than $10-billion, far more than early estimates of $4-billion to $6-billion.
Internal Link: Deficit Spending
A perception of large, sustained budget deficits threatens the economy

Gale, Senior Fellow of Economic Studies at Brookings, 04
(William, The U.S. Budget Deficit: An Unsustainable Path, December,
http://www.brookings.edu/views/articles/20041201orszaggale.pdf, Date Accessed: July 7, 2008)
The negative consequences of sustained large deficits may be larger and occur more suddenly than this type
of traditional analysis suggests, however. Chronic, substantial deficits can cause a fundamental shift in
market expectations and a related loss of confidence both at home and abroad. The scale of the long-
term fiscal gap is so large that, if left uncorrected, the nation faces a real risk of a fiscal crisis.
Deficits slow down the economy with lowered family incomes and loss of productivity
Rivlin, Senior Fellow in Economic Studies program at Brookings, 04
(Alice, director of Greater Washington Research Program & founding director of the Congressional Budget Office,
Growing Deficits and Why they Matter, 2004,
http://www.brookings.edu/es/research/projects/budget/fiscalsanity/chapter1.pdf, Date Accessed: July 7, 2008)
Our colleague Charles Schultze once likened deficits not to the wolf at the door, but to termites in the
woodwork. By this he meant that deficits gradually weaken the ability of workers to produce goods and
services, thereby constraining wage increases and the growth of family incomes. Wage increases
depend on how fast worker productivity grows. A major key to productivity growth, in turn, is
investment in expanded business facilities and know-how—everything from robotics on the factory
floor to a computer on every desk. But when governments run deficits, they must compete with
businesses for scarce financial capital, driving up its cost or reducing its availability to the private sector.8
Just how much damage currently projected deficits will do depends on several assumptions, such as how
much money we are able to borrow from abroad. But a conservative estimate is that a $5.3 trillion
accumulation of additional debt over the next ten years would reduce national income by $212 billion
annually at the end of the period. This translates into about $1,800 less annual income for the average
household than they otherwise would have earned.9
Internal Link: Deficit Spending/Fiscal

Fiscal Discipline Key to Econ—Deficit spending
Fraser 06 (“The real worry about U.S. budget policy? Spending” Alison Acosta Fraser Director of the Thomas A.
Roe Institute for Economic Policy Studies. August 19, 2006, accessed 07/03/07
http://www.heritage.org/Press/Commentary/ed081906a.cfm)
But what about spending? This is where the single-minded focus on the deficit becomes a problem. The good
news is unexpected revenue growth overshadowed the bad news of persistent spending growth.
Federal spending has grown 45 percent since 2001, 8 percent this year alone. Not just for defense, but for
things like the Rock and Roll Hall of Fame and Museum, an indoor tropical rain forest in Iowa, and huge
subsidies to farmers to not grow crops.
When George W. Bush took office, spending was 18.4 percent of GDP. By the end of this year it will reach
20.3 percent. While his strong tax policy has helped the economy, his spending policies have not. If
policymakers had reined in spending to grow at the same rate as the economy, they would have
virtually eliminated the deficit by now.
The real worry about Washington's budget policy is spending. As baby boomers start to retire, the
budget will spiral out of sight, fueled by Social Security, Medicare and Medicaid. That comes on top of
recent spending growth. By reasonable accounts, the budget could reach 50 percent of GDP by 2050 - and
continue to grow after that. The deficits and spending levels of today don't foretell the harm this will
bring. However, the stagnant economies of Europe, complete with high tax-and-spend welfare policies and
soaring unemployment, do.
To be sure, pro-growth tax policies are working. As a pleasant distraction, they are also driving down the
deficit, masking the effect of high spending. But don't be fooled by all this crowing about reducing the
deficit. Washington shouldn't rest on its deficit-reduction laurels.
Deficits Bad- Recession

Colburn 06(“Why Deficits Matter” Melanie Colburn, Economics Commentator June 5, 2006 Mother Jones
Magazine http://motherjones.com/commentary/columns/2006/06/deficit_worries.html?welcome=true)
In general, deficits can hamper future economic growth by ensuring that a bulk of future wealth will be
dedicated to paying back loans. Sustained deficits can also drive up interest rates and divert funds away
from private investment.
In theory, Americans care about the national deficit, but most consumers are seeing benefits from all this
borrowing now, and they won't see the downsides until long in the future. Asian governments continue to
borrow billions of dollars from the federal government in order to keep the dollar artificially high, flooding
the United States with cheap imports that benefit consumers. That buying spree has also kept interest rates
artificially low, helping to fuel the current economic boom. At present, the people who benefit from this
system have very little incentive to change it, and every reason to push the associated problems onto future
generations.
At some point the debt will become unsustainable, but it's tough to pin down exactly where that point of
no return is. If foreign central banks started worrying about the United States' ability to repay its
obligations, and began to sell or even buy fewer dollar-denominated assets, it could lead to a run on the
dollar, which would force up interest rates and potentially put the U.S. economy into a recession. Among
economists, a debate continues to rage over how painful the correction to the current account deficit may be,
but a rare consensus is emerging that the fiscal and current account deficits are unsettling and demand some
sort of response.
Internal Link: Fiscal Discipline K/ Econ

Fiscal Discipline Key to Economy
Levy 06( “Fed Rate Hikes, Protectionism, Weaker Dollar Pose Threats To Economy, Bank of America Economist
Say”s Mickey Levy, chief economist at Bank of America Jul 6, 2006
http://www.wral.com/business/local_tech_wire/opinion/story/1168396/)
The high U.S. budget deficits are a primary source of low national saving, and fiscal policy reform
would play a crucial role in reducing the current account deficit. I am mostly concerned with the huge
long-run budget imbalances that reflect the unfunded liabilities for Social Security, Medicare and
Medicaid, which in terms of magnitude overwhelm near-term budget deficits. It is imperative to adjust
future benefit structures for social security and retirement programs to make them affordable for future
generations and fair for the elderly. Reform of Medicare and Medicaid necessarily will involve the
introduction of incentives that influence the supply of and demand for medical services.
It is important to emphasize that the primary objective of such fiscal reform efforts should be to fix U.S.
government finances to make them conducive to maximum sustainable economic growth.
Efforts to reduce the current account deficit without regard to how changes in the structure of the
underlying tax and spending programs would affect economic performance are unwise and could generate
unintended economic side effects.
Internal Link: US Econ K/ Global

A U.S. economic collapse will destroy the global economy
Mead, Senior Fellow at the Council on Foreign Relations, 04 (Walter Russell, Foreign Policy,
April 1, pg. Lexis)
Similarly, in the last 60 years, as foreigners have acquired a greater value in the United States--government and
private bonds, direct and portfolio private investments--more and more of them have acquired an interest in
maintaining the strength of the U.S.-led system. A collapse of the U.S. economy and the ruin of the dollar would
do more than dent the prosperity of the United States. Without their best customer, countries including China
and Japan would fall into depressions. The financial strength of every country would be severely shaken
should the United States collapse. Under those circumstances, debt becomes a strength, not a weakness, and other
countries fear to break with the United States because they need its market and own its securities. Of course, pressed
too far, a large national debt can turn from a source of strength to a crippling liability, and the United States must
continue to justify other countries' faith by maintaining its long-term record of meeting its financial obligations. But,
like Samson in the temple of the Philistines, a collapsing U.S. economy would inflict enormous, unacceptable
damage on the rest of the world. That is sticky power with a vengeance.
THE SUM OF ALL POWERS?
The United States' global economic might is therefore not simply, to use Nye's formulations, hard power that
compels others or soft power that attracts the rest of the world. Certainly, the U.S. economic system provides the
United States with the prosperity needed to underwrite its security strategy, but it also encourages other countries to
accept U.S. leadership. U.S. economic might is sticky power.
Internal Link: Inflation

High inflation threatens a global recession
China Daily ‘08
(China Daily, Inflation to Cause Global Recession, June 13, http://www.chinadaily.com.cn/world/2008-
06/13/content_6757411.htm, Date Accessed: July 8, 2008)
NEW YORK -- Slower growth is spreading around the world with inflation being main threat to
causing global recession, U.S. Conference Board said here on Thursday.
Vice President and Chief Economist of U.S. Conference Board Bart van Ark told a press briefing that with
U.S. consumer confidence hitting the lowest level since 1992, and employment trends index showing no
relief in short term, U.S. economy is in a solid slow growth mode, with little perspective to move much in
rest of 2008.
Meanwhile, Europe and emerging economies in Asia are also showing significant slowdown in economy
growth, he said.
Van Ark pointed out that the main downward risk comes from global inflation. While U.S. and European
inflation trends may come down as demand eases, the global trend, in particular for emerging
economies remains worrying, he said.
"Even after speculative bubbles burst, inflation rate may not come down to level before the increase," van
Ark said. "Demand- supply mismatches will not be easily relaxed, and protectionist backlashes may distort
global growth."
Established in 1916, the U.S. Conference Board is the world's preeminent business membership and research
organization, best known for its monthly U.S. Consumer Confidence Index and the Leading Economic
Indicators.
Internal Link: Oil Prices K/ Econ

Oil prices affect the world economy – it has been empirically proven
International Energy Agency, 2004
(Analysis of the Impact of High Oil Prices on the Global Economy, May,
www.iea.org/Textbase/Papers/2004/High_Oil_Prices.pdf, accessed 7/7/08)
Oil prices still matter to the health of the world economy. Higher oil prices since 1999 – partly the result of OPEC
supply-management policies – contributed to the global economic downturn in 2000-2001 and are dampening the
current cyclical upturn: world GDP growth may have been at least half a percentage point higher in the last two or
three years had prices remained at mid-2001 levels. Fears of OPEC supply cuts, political tensions in Venezuela and
tight stocks have driven up international crude oil and product prices even further in recent weeks. By March 2004,
crude prices were well over $10 per barrel higher than three years before. Current market conditions are more
unstable than normal, in part because of geopolitical uncertainties and because tight product markets – notably for
gasoline in the United States – are reinforcing upward pressures on crude prices. Higher prices are contributing to
stubbornly high levels of unemployment and exacerbating budget-deficit problems in many OECD and other oil-
importing countries.
[Note: OECD means Organization for Economic Cooperation and Development]
A change in oil prices changes the global economy and causes inflation with increased
unemployment.
The vulnerability of oil-importing countries to higher oil prices varies markedly depending on the degree to which
they are net importers and the oil intensity of their economies. According to the results of a quantitative exercise
carried out by the IEA in collaboration with the OECD Economics Department and with the assistance of the
International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35
would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. Inflation
would rise by half a percentage point and unemployment would also increase. The OECD imported more than half
its oil needs in 2003 at a cost of over $260 billion – 20% more than in 2001. Euro-zone countries, which are highly
dependent on oil imports, would suffer most in the short term, their GDP dropping by 0.5% and inflation rising by
0.5% in 2004. The United States would suffer the least, with GDP falling by 0.3%, largely because indigenous
production meets a bigger share of its oil needs Japan’s GDP would fall 0.4%, with its relatively low oil intensity
compensating to some extent for its almost total dependence on imported oil. In all OECD regions, these losses start
to diminish in the following three years as global trade in non-oil goods and services recovers. This analysis assumes
constant exchange rates.
[Note: OECD means Organization for Economic Cooperation and Development]
[Note: IEA means International Energy Agency]
Internal Link: Oil Prices K/ Econ

Oil prices help determine the global economy and trade.
Oil prices remain an important determinant of global economic performance. Overall, an oil-price increase leads to a
transfer of income from importing to exporting countries through a shift in the terms of trade. The magnitude of the
direct effect of a given price increase depends on the share of the cost of oil in national income, the degree of
dependence on imported oil and the ability of end-users to reduce their consumption and switch away from oil. It
also depends on the extent to which gas prices rise in response to an oil-price increase, the gas-intensity of the
economy and the impact of higher prices on other forms of energy that compete with or, in the case of electricity, are
generated from oil and gas. Naturally, the bigger the oil-price increase and the longer higher prices are sustained, the
bigger the macroeconomic impact. For net oil-exporting countries, a price increase directly increases real national
income through higher export earnings, though part of this gain would be later offset by losses from lower demand
for exports generally due to the economic recession suffered by trading partners. Adjustment effects, which result
from real wage, price and structural rigidities in the economy, add to the direct income effect. Higher oil prices lead
to inflation, increased input costs, reduced non-oil demand and lower investment in net oil- importing countries. Tax
revenues fall and the budget deficit increases, due to rigidities in government expenditure, which drives interest rates
up. Because of resistance to real declines in wages, an oil price increase typically leads to upward pressure on
nominal wage levels. Wage pressures together with reduced demand tend to lead to higher unemployment, at least in
the short term. These effects are greater the more sudden and the more pronounced the price increase and are
magnified by the impact of higher prices on consumer and business confidence.
Oil prices are a macroeconomic variable and affect the global economy as a whole –
empirically proven
Oil prices remain an important macroeconomic variable: higher prices can still inflict substantial damage on
the economies of oil-importing countries and on the global economy as a whole. The surge in prices in 1999-
2000 contributed to the slowdown in global economic activity, international trade and investment in 2000-
2001.11 The disappointing pace of recovery since then is at least partly due to rising oil prices: according to
the modeling results, global GDP growth may have been at least half a percentage point higher in the last two
or three years had prices remained at mid-2001 levels. The results of the simulations presented in this paper
suggest that further increases in oil prices sustained over the medium term would undermine significantly the
prospects for continued global economic recovery. Oil- importing developing countries would generally
suffer the most as their economies are more oil-intensive and less able to weather the financial turmoil
wrought by higher oil-import costs
Internal Link: Electricity Prices K/ Econ

Electricity is essential to the US economy.
Edison Electric Institute, 2006
(EEI.org, “Straight Answers about Rising Electricity Prices”,
www.eei.org/.../electricity_policy/state_and_local_policies/rising_electricity_costs/Straight_Answers.pdf, July 2006,
accessed 7/7/06)
Electricity is the lifeblood of the U.S. economy. It powers our homes, offices, and industries; provides
communications, entertainment, and medical services; runs various forms of transportation; and powers an ever-
growing array of devices and technologies, including more than 175 million personal computers and a national
network of more than 200 million cellular phones. Since 1940, the percentage of U.S. energy consumed in electric
form has quadrupled! Not only is electricity the most flexible and most controllable form of energy, its versatility is
unparalleled. Today the electric industry faces a new challenge. The costs to generate and deliver electricity to
American homes, businesses, and industries are now increasing—at a time when the nation’s demand for reliable
electricity continues to grow. Electric utilities make continuous efficiency improvements and are working to contain
costs and to keep electricity prices as low as possible. In fact, for many years price of electricity declined in real
terms. However, as utilities face increasing costs, rising electricity prices are becoming inevitable throughout the
United States.
High electricity prices have a greater threat to the US economy than gasoline prices.
EnergyTechStocks.com, 2008 (“U.S. Power Agency Warns High electricity Prices Could Plague America ‘For
Years to Come’”, June 30, http://energytechstocks.com/wp/?p=1396, accessed 7/8/08)
The FERC assessment, rendered on June 19, is particularly worrisome since sky-high electric rates would appear to
represent an even greater threat to the U.S. economy than high gasoline prices. That’s because electricity is an even
more pervasive aspect of American economic life than gasoline. Indeed, after the oil shocks of the 1970s, all
American business essentially became electrified in order to improve efficiency, meet new environmental
regulations, and minimize exposure to another oil shock.
[Note: FERC means Federal Energy Regulatory Commission]
Impacts: Nuclear War

Economic collapse causes nuclear war
Lewis, environmental historian, 1998, (Chris H., University of Colorado-Boulder, THE COMING AGE
OF SCARCITY, 1998, p. 56)
Most critics would argue, probably correctly, that instead of allowing underdeveloped countries to
withdraw from the global economy and undermine the economies of the developed world, the United
States, Europe, Japan, and others will fight neocolonial wars to force these countries to remain within
this collapsing global economy. These neocolonial wars will result in mass death, suffering, and even
regional nuclear wars. If First World countries choose military confrontation and political repression to
maintain the global economy, then we may see mass death and genocide on a global scale that will make
the deaths of World War II pale in comparison. However, these neocolonial wars, fought to maintain the
developed nations' economic and political hegemony, will cause the final collapse of our global industrial
civilization. These wars will so damage the complex economic and trading networks and squander
material, biological, and energy resources that they will undermine the global economy and its ability to
support the earth's 6 to 8 billion people. This would be the worst-case scenario for the collapse of
global civilization
Economic collapse causes extinction

Bearden, Director of the Distinguished American Scientists (ADAS), 2000 (Thomas, Fellow Emeritus, Alpha
Foundation’s Institute for Advanced Study (AIAS) Pg. http://www.cheniere.org/techpapers/)
History bears out that desperate nations take desperate actions. Prior to the final economic collapse, the
stress on nations will have increased the intensity and number of their conflicts, to the point where the
arsenals of weapons of mass destruction (WMD) now possessed by some 25 nations, are almost certain
to be released. As an example, suppose a starving North Korea {ii} launches nuclear weapons upon Japan
and South Korea, including U.S. forces there, in a spasmodic suicidal response. Or suppose a desperate China
— whose long range nuclear missiles can reach the United States — attacks Taiwan. In addition to immediate
responses, the mutual treaties involved in such scenarios will quickly draw other nations into the conflict,
escalating it significantly. As the studies showed, rapid escalation to full WMD exchange occurs, with a
great percent of the WMD arsenals being unleashed. The resulting great Armageddon will destroy
civilization as we know it, and perhaps most of the biosphere, at least for many decades
Impacts: Nuclear War

Impact US economic decline risks World War III.
Mead, Council on Foreign Relations Senior Fellow, 1998 (Walter Russell, Council on Foreign Relations Senior
Fellow, August 30, 1998, THE HOUSTON CHRONICLE, p. 1)
The United States and the world are facing what could grow into the greatest threat to world peace in
60 years. Forget suicide car bombers and Afghan fanatics. It’s the financial markets, not the terrorist
training camps, that pose the biggest immediate threat to world peace. How can this be? Think about the
mother of all global meltdowns: the Great Depression that started in 1929. U.S. stocks began to collapse in
October, staged a rally, then the market headed south big time. At the bottom, the Dow Jones Industrial
Average had lost 90 percent of its value. Wages plummeted, thousands of banks and brokerages went
bankrupt, millions of people lost their jobs. There were similar horror stories worldwide. But the biggest
impact of the Depression on the United States- and on world history- wasn’t money. It was blood: World
War II, to be exact. The Depression brought Adolf Hitler to power in Germany, undermined the ability of
moderates to oppose Josef Stalin’s power in Russia, and convinced the Japanese military that the country had
no choice but to build an Asian empire, even if that meant war with the United States and Britain. That’s the
thing about depressions. They aren’t just bad for your 401(k). Let the world economy crash far enough,
and the rules change. We stop playing the Price is Right and start up a new round of Saving Private
Ryan.
Impacts: Disease
Economic collapse would lead to the spread of AIDs, famine, sickness, crime, and cause
global ethnic wars leading to the extinction of civilization.
Silk, Professor of Economics at Pace University and Senior Research Fellow, 1993 (Leonard, Professor of
Economics at Pace University and Senior Research Fellow at the Ralph Bunche Institute on the United Nations
at the Graduate Center, City University of New York. "Dangers of slow growth," Foreign Affairs, Wntr v72 n1
p167(16).)
In the absence of such shifts of human and capital resources to expanding civilian industries, there are
strong economic pressures on arms-producing nations to maintain high levels of military production
and to sell weapons, both conventional and dual-use nuclear technology, wherever buyers can be
found. Without a revival of national economies and the global economy, the production and proliferation of
weapons will continue, creating more Iraqs, Yugoslavias, Somalias and Cambodias - or worse. Like the Great
Depression, the current economic slump has fanned the fires of nationalist, ethnic and religious hatred around
the world. Economic hardship is not the only cause of these social and political pathologies, but it
aggravates all of them, and in turn they feed back on economic development. They also undermine
efforts to deal with such global problems as environmental pollution, the production and trafficking of
drugs, crime, sickness, famine, AIDS and other plagues. Growth will not solve all those problems by itself
But economic growth - and growth alone - creates the additional resources that make it possible to
achieve such fundamental goals as higher living standards, national and collective security, a healthier
environment, and more liberal and open economies and societies.
Impacts: China War

US economic decline spreads globally, undermining US leadership and making WMD
conflict with China inevitable
Mead, Senior Fellow at the Council on Foreign Relations, 2004 (Walter Russell Mead, Foreign Policy, 4/1/04 pg.
Lexis)
Similarly, in the last 60 years, as foreigners have acquired a greater value in the United States--government
and private bonds, direct and portfolio private investments--more and more of them have acquired an interest
in maintaining the strength of the U.S.-led system. A collapse of the U.S. economy and the ruin of the
dollar would do more than dent the prosperity of the United States. Without their best customer,
countries including China and Japan would fall into depressions. The financial strength of every
country would be severely shaken should the United States collapse. Under those circumstances, debt
becomes a strength, not a weakness, and other countries fear to break with the United States because they
need its market and own its securities. Of course, pressed too far, a large national debt can turn from a source
of strength to a crippling liability, and the United States must continue to justify other countries' faith by
maintaining its long-term record of meeting its financial obligations. But, like Samson in the temple of the
Philistines, a collapsing U.S. economy would inflict enormous, unacceptable damage on the rest of the
world. That is sticky power with a vengeance. THE SUM OF ALL POWERS? The United States' global
economic might is therefore not simply, to use Nye's formulations, hard power that compels others or soft
power that attracts the rest of the world. Certainly, the U.S. economic system provides the United States
with the prosperity needed to underwrite its security strategy, but it also encourages other countries to
accept U.S. leadership. U.S. economic might is sticky power.
AFF: Link Turn – Cap and Trade

Cap-and-trade policy generates government money for the research and development of
new technology
Mufson, Washington Post Energy Reporter, 2008
(Steven, “Outlook: Fighting Warming Takes Cold Cash”, Washington Post, April 21, 2008,
http://www.washingtonpost.com/wp-dyn/content/discussion/2008/04/18/DI2008041802549.html, Date Accessed:
7/5/08)
"In recent weeks, a number of experts concerned about climate change have called into question the political
focus on a federal cap and trade system, saying that the emphasis should instead on clean energy technology
development. I am afraid these comments reveals a deep misunderstanding of the climate legislation pending
in Congress and an ignorance of the market-based and government funding philosophies which the bills
embody. The major climate bills-Lieberman-Warner and Bingaman-Specter in particular-explicitly call for
putting a price on greenhouse gas emissions to incentivize private sector clean technology development
and deployment. But the bills also generate tens of billions of dollars per year specifically for
government spending on R&D on new technology, and on other policy mechanisms-grants, tax credits,
and so-to create clean technology and deploy it. Indeed, the cap and trade systems create an "off-budget"
revenue stream for government investment in these critical areas which would like otherwise be hard
to find funding for. In short, a cap and trade approach will create a revenue stream to fund
government technology investment-just as was called for in the National Commission on Energy Policy
reports in 2004 and 2007. The larger question may be not will we invest enough in clean energy development
and deployment-but will we be able to spend this money wisely and efficiently. The recent demise of
FutureGen and the Syn-Fuels episode of the 1970s suggest this is easier said than done."
AFF: Link Turn – Nuclear Power

Federal incentives bring down the inflated cost of building nuclear reactors.
Totty, Journal Report News Editor, 8.
(Michael, The Wall Street Journal, “The Case For and Against Nuclear Power”, June 30, 2008,
http://online.wsj.com/article/SB121432182593500119.html?mod=googlenews_wsj, Date Accessed: 7/5/08)
So, what's the case against nuclear power? It boils down to two things: economics and safety. Neither holds
up to scrutiny. First, economics. Critics argue that the high cost of building and financing a new plant
makes nuclear power uneconomical when compared with other sources of power. But that's misleading
on a number of levels. One reason it's so expensive at this point is that no new plant has been started in
the U.S. since the last one to begin construction in 1977. Lenders -- uncertain how long any new plant
would take because of political and regulatory delays -- are wary of financing the first new ones. So
financing costs are unusually high. As we build more, the timing will be more predictable, and
financing costs will no doubt come down as lenders become more comfortable. Loan guarantees and
other federal incentives are needed to get us over this hump. They are not permanent subsidies for
uneconomical ventures. Instead, they're limited to the first half dozen of plants as a way to reassure investors
that regulatory delays won't needlessly hold up construction. It's important to remember that although nuclear
energy has been around a while, it's hardly a "mature" industry, as some critics say. Because of the lack of
new plants in so many years, nuclear in many ways is more like an emerging technology, and so
subsidies make sense to get it going.
AFF: Link Turn – Ethanol

( ) Despite current ethanol costs, biotech companies are investing in them to lower the cost
Heuser, Boston Globe biotech writer, 2007.
(Stephen, Boston Globe, April 30, 2007,
http://www.boston.com/business/technology/articles/2007/04/30/biotech_firms_sprint_to_cut_ethanols_cost/, Date
Accessed: July 6, 2008)
Despite the uncertainties, the field has also sparked enthusiasm of investors. Venture
capitalists invested $774 million in biofuels companies in 2006, according to a trade group
called the Cleantech Venture Network. That's a huge leap from the $111 million in 2005.
Down the line, even if the companies get the process right, other obstacles loom. Fewer than 5
percent of American cars sold today can burn ethanol as fuel, according to the National Ethanol
Vehicle Coalition , although the substance is mixed in small quantities into current gasoline. And even people
with "flex-fuel" cars, which can take both gasoline and ethanol, are limited by the paucity of stations that
pump it.
AFF: Link Turn – R&D

Research and development of alternative energy techniques are expensive.
McCool 2005 (Jim, Manager of Environmental Science, “Economic Incentives for Alternative
Energy” November 5th 2005)
http://www.coolmccool.com/WhitePapers/AlternativeEnergyIncentives.PDF
As incentives provided to energy users encourage them to switch from conventional to alternative sources of
energy, the increased demand for alternative energy will drive investment in new sources of alternative
energy. However, development of alternative energy is expensive. When congress failed to renew a tax
credit for wind energy in 2004, “new wind farm development came almost to a halt” (Tax Credits). The
relationship between tax credits and new wind farm development illustrates the important role of government
in providing additional incentive for development of new energy sources. Through the use of incentives,
the government can lower the high cost of developing and maintaining alternative energy sources,
making this kind of energy more competitive in the market. “When Congress delayed renewing the 1.8
cents per kwh credit for wind power […] the business tanked until the credit was restored” (Carey, et al).
Alternative energy production is not yet able to compete without this support
AFF: Link Turn – Alternative Energy

Alternative energy is the main way to get the US economy back on track.
The Washington Times 6/8/2008 (Newt Gingrich, speaker of the House of Representatives
from "1995 until 1998 “How to Impose Fiscal Discipline” Lexis)
Fourth, the federal government must allow greater energy production in the United States as part of a
strategy to lower energy costs. The high cost of energy directly affects the federal budget for two reasons.
First, the federal government is the largest single purchaser of energy. Lower energy prices would lower
federal spending dramatically. Second, selling energy production rights and receiving royalties from
energy production is a huge potential source of income for the federal as well as state governments.
AFF: Non – U Econ Growth Low

United States economy growth low – other projects weighing down
Agence France Presse, a global news network covering events from around the world 24/7, 2008
(“Paulson says US economy enduring 'rough period',” July 2 2008, p. Lexis,
http://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T4111190384&fo
rmat=GNBFI&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T4111190388&cisb=22_T4111190387&tree
Max=true&treeWidth=0&csi=10903&docNo=1, Date Accessed 7/7/08)
US Treasury Secretary Henry Paulson Enhanced Coverage Linking Treasury Secretary Henry Paulson
-Search using: Biographies Plus News, Most Recent 60 Days said Wednesday that the US economy was
enduring "a rough period" and warned that home foreclosures would likely remain high in the near future.
The US Treasury chief said soaring crude oil prices, a widespread credit crunch and a two-year long
housing market slump had taken some of the wind out of the sails of the US economy. "The US
economy is going through a rough period. US foreclosures will remain elevated and we should not be
surprised at continued reports of falling home prices," Paulson warned during a speech in London. Paulson's
remarks were also released by the Treasury in Washington. The Treasury chief and former banker stopped off
in London Wednesday amid a whistle-stop tour of European capitals. He said the giant economic stimulus
-- stuffed with tax rebates and backed by the administration of President George W. Bush -- had
helped shore up US growth, but that the housing downturn poses a "significant" downside risk to
economic momentum. Foreclosures have soared in recent months as home sales and property prices have
continued to tumble across many parts of the United States. The world's biggest economy posted subpar
growth of 1.0 percent during the first quarter of the year, and some analysts believe the economy is on the
brink of a recession. Paulson said the sooner house prices stabilize, the sooner the economy will bounce back
to stronger growth. He also blamed rocketing oil prices for extending economic angst. "High oil prices will in
all likelihood prolong our economic slowdown," he said, as world oil prices hit new record peaks above 144
dollars a barrel. Economic growth has been weighed down by the credit squeeze as major banks,
including Citigroup and Merrill Lynch, have announced multibillion dollar losses tied to ailing
mortgage investments. Many other banks have also suffered similar losses and reined in lending as they
seek to restore stressed balance sheets. Paulson said US regulators, including the Federal Reserve and the
Securities and Exchange Commission, are collaborating closely on developing new measures to help offset
the credit squeeze. But the authorities have to walk a fine line, he said, as officials do not want to promote
irresponsible market risk-taking by suggesting they would always ride to rescue of an imperiled bank or
finance house. "For market discipline to be effective it is imperative that market participants not have the
expectation that lending from the Fed, or any other government support, is readily available," Paulson said
during the speech at Chatham House in London which houses the Royal Institute of International Affairs. The
Fed and Treasury have been criticized for assisting in the rescue of the US investment bank Bear Stearns in
March, and for helping to broker a takeover of Bear by JPMorgan Chase. Enhanced Coverage Linking
JPMorgan Chase. -Search using: Company Dossier News, Most Recent 60 Days Company Profile Fed
chairman Ben Bernanke has said the central bank stumped up billions of dollars to support deal because a
Bear Stearns collapse could have destabilized Wall Street. US lawmakers are considering possible changes to
the regulatory environment that could help avoid a repeat of the credit crunch and the downfall of a major
financial institution like Bear Stearns. "To that end, we should create a system that gives us the best chance of
foreseeing a crisis, including a market stability regulator with the authorities to avert systemic issues it
foresees," Paulson said. "We need to create a resolution process that ensures the financial system can
withstand the failure of a large complex financial firm," the Treasury chief added.
AFF: Non – U Recession Now

US economy is heading towards recession
The Daily Telegraph, London newspaper, 2008
(“US economy not growing robustly enough, says Bush”, July 7, 2008, p. Lexis,
http://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T4111291818&f
ormat=GNBFI&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T4111291823&cisb=22_T4111291822&tr
eeMax=true&treeWidth=0&csi=8109&docNo=1, Date Accessed: 7/7/08)
US President George W Bush said yesterday that the American economy was not growing as he would
like, as further signs emerged that the US was heading towards a recession. Speaking ahead of the G8
summit of world leaders, Mr Bush said: "Our economy is not growing as robustly as we'd like. We had
positive growth in the first quarter; we'll see what happens in the second quarter.'' The US economy
grew at a 1pc annual rate in the first quarter. Last week, the Labour Department revealed that the
number of Americans unemployed for six months or more rose by more than a third to 1.6m in the
past year and that US employers cut jobs for the sixth straight month. When asked about what could be
done to improve the performance of the weak US dollar, Mr Bush said: "The United States believes in a
strong dollar policy and believes the strength of our economy will be reflected in the dollar.''
AFF: Non – U No Fiscal Now

PAYGO does not keep spending in check and federal spending will only get worse, risking
economic catastrophe.
Riedl, Fellow in Federal Budgetary Affairs at the Heritage Foundation, 2008
(Brian M., The Heritage Foundation, “The Iraq War Bill Was the Wrong Place to Create a Permanent New
Entitlement, http://www.heritage.org/Research/Budget/wm1976.cfm, 7/1/2008, WebMemo #1976, accessed
7/6/2008)
Of course, this is not the first time the Democratic Congress disregarded its budget rules and
increased the budget deficit. They recently waived PAYGO for the bloated farm bill and the tax
rebates, and employed blatant gimmicks to cover up PAYGO violations in last year's S-CHIP and
higher education bills.[3] By voting to add hundreds of billions of dollars to current and future budget
deficits, the Democratic Congress has reduced PAYGO to nothing more than empty rhetoric, a rule to
be casually discarded whenever it is not convenient to the Democrats' spending agenda. * It worsened
the federal budget. Federal spending has already leaped above $25,000 per household. Discretionary
appropriations are expanding 8 percent annually. An expensive package of tax rebates has already pushed
this year's projected budget deficit to almost $400 billion. Most perilous of all, the first of 77 million
baby boomers have begun retiring, initiating a wave of Social Security, Medicare, and Medicaid costs
that threaten to overwhelm the federal budget and risk economic catastrophe.[4]
PAYGO is ineffective – it does not restore fiscal discipline.

RPC Bulletin, 2008 (U.S. Senate Republican Policy Committee, “Democrats’ Pay-Go Did
Little to Restore Fiscal Discipline, www.treas.gov/offices/economic-policy/restraint.pdf,
4/11/2008, accessed 7/7/2008)
In 2006, campaigning Democrats rallied around a common proposal: Returning to “tough, old-
fashioned” pay-as-you-go (pay-go) rules to restore fiscal responsibility to the budget process and to
Washington. Over a year later and with a new budget on the horizon, it’s time for a
look-back at what actually occurred. In January 2007, Senate Democrats, now in the
majority, argued that their pay-go proposal would act as a tool to enforce budget discipline. However,
as was clear then, and as has become even clearer a year later, the Democrats’ pay-go did not restore
fiscal discipline. It merely served as a procedural hurdle, making extending popular tax provisions
nearly impossible and cloaking enormous spending increases in fictional offsets. All told, had
Democrats actually followed the spirit of the pay-go they enacted, they would have had to raise taxes
by $143 billion on the American people to pay for what the Senate passed in 2007, or an estimated
$1200 per household in additional taxes.
AFF: US Not K/ Global Econ

The United States is not key to the global economy – China, Japan, and Eastern Europe
prove.
ViewsWire, ’08 (ViewsWire, The Economist Intelligence Unit, June 6,
http://www.viewswire.com/index.asp?layout=VWArticleVW3&article_id=1423425527&rf=0, Date Accessed: July
7, 2008)
Emerging markets, with their fast growth and hunger for imports, are sustaining the developed economies. If
this continues, the global economy will achieve a soft landing. Yet many of these markets are showing signs
of overheating: monetary tightening, or indeed the maintenance of high global commodity prices, could
depress them and take the developed economies down too.
Reverse coupling
On the surface, the global economy has held up remarkably well in the face of the economic travails in
the US. Still the world's largest economy by a wide margin, the US is being battered by a grim
combination of its worst real-estate crash since the Great Depression and the biggest financial crash in
a generation. Yet in the first quarter of this year, growth in many developed (and emerging markets)
outperformed expectations. The eurozone, parts of which are also suffering from flagging property markets
and a sharp tightening in credit conditions, managed a perky 0.7% quarter-on-quarter real expansion in the
period, up from 0.4% in the last quarter of last year; Japan managed a blistering 0.8% quarter-on-quarter
expansion; and even the sickly US chalked up a respectable annualised rate of 0.9%.
All this might suggest that the world has finally "decoupled" from the US. But a closer look suggests
that a "reverse coupling" might be more accurate, with developed world performance to a large extent being
sustained by the continued buoyant performance of many emerging markets. Indeed, a common feature of
growth in recent quarters, particularly in the developed world, has been robust export growth and only a tepid
domestic demand performance. In most cases emerging market demand—Eastern Europe in the case of
the eurozone, China in the case of the US and Japan—has been able to offset the falloff in the US.
If emerging markets continue to outperform, the global slowdown triggered by the US downturn
should be relatively gentle. Indeed, our core forecast assumes a soft landing this year and next, with global
growth set to come in at just under 4% at purchasing power parity rates. Although rather less frothy than the
4-5% seen in 2004-07, this would still be well above the 2-2.5% seen in the last global recession—the post-
tech wreck of 2001-02. But the foundations of this "reverse coupling" are fragile, not least because emerging
markets themselves are facing twin pressures of their rapid growth bidding up domestic inflation and pushing
global commodity prices up to levels that could at worst trigger a far sharper global downturn than we
currently forecast.
AFF: US Not K/ Global Econ

The United States is no longer the key to the global economy – times have changed
The New York Times ‘07
(Daniel Gross, Writers for the ‘Money Box’ for Slate.com, “Does It Even Matter if the U.S. has a Cold?,” May 6,
nytimes.com, July 8, 2008)
FOR the last several decades, the United States has functioned as the main engine of growth in a global
economy that has been moving with synchronicity.
''We're going through the longest stretch of concerted growth in decades,'' said Lakshman Achuthan,
managing director at the Economic Cycle Research Institute in New York.
So you might think that a sharp slowdown in growth in the United States -- the domestic economy grew at a
measly 1.3 percent annual clip in the first quarter this year, less than half the 2006 rate -- would mean trouble
for the rest of the global economy. Right?
Wrong.
As the domestic growth rate has declined sharply in recent quarters, the rest of the world is growing
rapidly. India is blowing the door off its hinges. China's economy is expanding at a double-digit pace.
In the United States, the Federal Reserve has held rates steady since last June, and its next move will most
likely be a rate reduction to stimulate growth. The European Central Bank and the Bank of Japan, meanwhile,
have been raising rates -- lest their once-suffering economies overheat and spawn inflation.
''The U.S. slump in the first quarter didn't pull down growth in Europe or Asia,'' said Brad Setser,
senior economist at Roubini Global Economics.
The seemingly countervailing trends -- deceleration in America, full speed ahead abroad -- have led
some economists to wonder whether the United States and the rest of the global economy are going
their separate ways. Some even suggest -- shudder -- that changes in the global economy have made the
United States a less-central player.
''Four or five years ago, there was an important switch in the global economy,'' said Stephen King, an
economist based in London for HSBC. ''Since then, other parts of the world have really grabbed the growth
baton from the U.S.''
i
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Gonzaga Debate Institute 2008 1

B. Alternative energy development is incredibly expensive.

D. High inflation leads to economic stagnation and recession.

E. Economic collapse causes extinction

Uniqueness: Fiscal Discipline High Now

Uniqueness: Fiscal Discipline High Now

Uniqueness: Fiscal Discipline High Now

Uniqueness: Economy Stable Now

Link: Government Spending

Link: Research and Development

Link: Low Priority Programs

( ) Spending on low priority projects hurts the economy.

Cutting low priorities offsets economic burdens.

Link: Solar Space Power

High transportation costs discourage investment in Space Solar Power projects

Link: Ethanol Development

Link: Ethanol Development

Link: Coal to Liquid

Billions of dollars are needed to establish coal to liquid plants

Link: Coal to Liquid

[CTL = coal to liquid]

Link: Cap and Trade

Implementing a national carbon cap-and-trade system without new technology to implement it is

Cap-and-trade exacerbates current economic problems, we won’t see immediate warming

Link: Nuclear Power

Internal Link: Deficit Spending

A perception of large, sustained budget deficits threatens the economy

Internal Link: Deficit Spending/Fiscal

Deficits Bad- Recession

Internal Link: Fiscal Discipline K/ Econ

Internal Link: US Econ K/ Global

Internal Link: Inflation

Internal Link: Oil Prices K/ Econ

Internal Link: Oil Prices K/ Econ

Internal Link: Electricity Prices K/ Econ

Impacts: Nuclear War

Economic collapse causes extinction

Impacts: Nuclear War

Impacts: China War

AFF: Link Turn – Cap and Trade

AFF: Link Turn – Nuclear Power

AFF: Link Turn – Ethanol

AFF: Link Turn – R&D

AFF: Link Turn – Alternative Energy

AFF: Non – U Econ Growth Low

AFF: Non – U Recession Now

AFF: Non – U No Fiscal Now

PAYGO is ineffective – it does not restore fiscal discipline.

AFF: US Not K/ Global Econ

AFF: US Not K/ Global Econ

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