Da Budget

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Budget Disad
Budget Disad......................................................... ......................................1
................................................................................... ...............................3
Strat Sheet................................................................ ..................................4
Inflation 1NC................................................................................ ................5
Inflation 1NC................................................................................ ................6
*Economy Uniqueness*................................................... ..............................8
Uniqueness – US Econ on Brink.......................................................... ............9
Uniqueness – US Econ on Brink................................................ ....................10
Uniqueness – Global Econ on Brink........................................................... ....11
......................................................................... .......................................11
Uniqueness – Growth Now................................................... ........................13
Uniqueness – Growth Now................................................... ........................15
Uniqueness – Interest Rates Static......................................................... ......17
Uniqueness – Stimulus Will Pass........................................ ..........................18
Uniqueness – Energy Incentives Low Now.............................................. .......20
Uniqueness – Dems Committed to Pay Go..................................... ................21
Uniqueness – Investor Confidence High........................................ ................22
*Links*........................................................................................ ...............23
......................................................................... .......................................23
Links – Subsidies Come From Tax (Duh)..................................... ...................24
Links – Tax Cuts............................................................... ...........................25
Links – Renewable Energy............................................. ..............................26
Links – Cap and Trade....................................... ..........................................27
Links – Nuclear Power....................................................... ..........................28
Links – Solar Power......................................................................... ............29
Links – SPS.................................................................................... .............30
Links – Wind Power.................................................................... .................32
Links – RPS.......................................................................................... .......33
Links – Hydroelectric Power..................................................................... ....35
Links – Nuclear Navy................................................................. ..................36
2NC – Link Magnifier (Not Offsets).................................... ...........................37
Northwestern University Debate Society
National Debate Tournament Champions
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2NC – Rising Rates Scenario....................................... .................................39
2NC – Stimulus Trade Off Scenario................................. ..............................40
2NC – Exports Scenario (Subsidy Specific).............................. ......................42
2NC – Inflation Link + Turns Case................................................... ..............44
2NC – Business Confidence Scenario............................ ................................45
*Internals*.......................................................... .......................................46
Internals – US Econ  Global Econ............................... ................................47
Internals – US Econ  Global Econ............................... ................................48
Internals – FD  Stable Econ.............................................. .........................49
Internals – FD  Stable Econ.............................................. .........................51
Internals – FD  Stable Interest............................ ......................................52
Internals – FD  Budget Control........................................ ..........................53
Internals – High Interest  Econ Collapse.................................................. ...54
Internals – Low Interest  Global Collapse...................... .............................56
Internals – Deficit  Economic Collapse.......................................................57
Internals – Deficit  Inflation.................................... ..................................59
Internals – Deficit  High Interest............................. ..................................60
Internals – Inflation  Econ Collapse......................................................... ...61
Internals – Pay Go  FD......................................... .....................................62
Internals – Stimulus  Econ Growth............................................... ..............63
Internals – Subsidies Fail ............................................................. ...............65
*Impacts*.................................................................................. .................66
Impacts – Lopez......................................................................... .................67
Impacts – Bearden & Mead............................................... ...........................68
Impacts – Hege......................................................................... ..................69
Impacts – Proliferation........................................................... .....................70
Impacts – Terrorism........................................ ............................................72
Impacts – Famine........................................................................ ................73
Impacts – China.......................................................... ................................74
Impacts – China Internal....................................................................... .......75
Impacts – Magnitude Outweighs.................................. ................................76

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*AFF*.................................................................................... .....................77
Uniqueness – Economy Bad................................... ......................................78
......................................................................... .......................................79
Uniqueness – Economy Bad................................... ......................................80
Uniqueness – Econ Resilient.................................... ....................................81
Uniqueness – Inflation High..................................................... ....................82
Internals – No US Econ Spillover............................. .....................................83
Internals – Inflation Inevitable................................................... ..................84
Internals – Stimulus Won’t Be Offset............................................ ................85
Turn – Employment................................................ .....................................86
Turn – Tax Incentives are Sweet............................................. ......................87
Turn – Stimulus Bad.................................................. ..................................88
Turn – Stimulus Bad.................................................. ..................................90

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Strat Sheet

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Inflation 1NC
A. Unique internal link – We are currently avoiding recession due to rebate checks and
a resilient export sector, but inflation is the biggest risk
WSJ 7/20/08
[ The Economy: How Bad Can It Get? http://online.wsj.com/article/SB121650292735067955.html?mod=googlenews_wsj]
A full year into the miserable journey of the credit crisis, the economy and financial markets have
come to a crossroads, beyond which lay several possible destinations, not all of them pleasant.
So far, despite bank losses of some $400 billion, a crumbling housing market and oil prices at $130 a barrel, the economy has
managed to avoid a deep recession -- at least according to the common definition, which is two
quarters of negative gross domestic product growth. But federal tax-rebate checks have
supported consumer spending, which drives 70% of the U.S. economy. That jolt will soon fade,
potentially leading to a hangover. A resilient export sector -- driven by a weak dollar that makes U.S.
goods cheaper and more competitive overseas -- has also kept the economy going and lifted the
profits of many multinational corporations. But several big overseas economies are starting to feel
the bite of inflation and the troubles in the U.S., and their appetite for American goods might
wane. Meanwhile, major U.S. stock indexes remained near bear-market territory despite a big drop in oil prices that sparked an impressive three-
day rally. The Dow Jones Industrial Average rose 396 points, ending the week up 3.6%. The Nasdaq and S&P 500 also rallied last week. As heartening
as last week's turnabout in oil prices was, however, the economy is still a long way from healthy. And there could be a lot more stock-market pain to
come. Where do we go from here? Here are the main scenarios most economists and analysts are considering.
Stagflation Remember "That '70s Show"? We could be in for a rerun. Oil and other commodity prices rise relentlessly, spurring runaway inflation not seen since the
1970s. All the while, growth stays weak, a double dose of misery that crushes corporate profits and stock-market returns. There's a word for this: stagflation. Fortunately, the
Inflation readings are nowhere near as high as they were in the
odds of this history repeating itself are slim. 19 70s and
early 1980s, when the year-over-year percent change in the consumer price index soared as high as 14.8% at one point; it was up 5% in June. And a key driver of that era's
hyperinflation is missing: In those days, strong labor unions were able to wrest wage increases at every tremor of the inflation rate. Companies passed their higher labor and
energy costs to consumers in the form of higher prices, which encouraged still more wage increases, in a grim dance economists call a "wage-price spiral." Today workers have
One wild card: If
much less bargaining power, and wages haven't kept up with inflation. That hurts consumers and the economy, but it will at least keep inflation in check.
the U.S. dollar continues to weaken, then that could keep inflation going despite the lack of a
wage-price spiral. "This would be checkmate for the U.S. economy, turning a relatively mild
recession into a severe one," Paul Kasriel, chief economist at Northern Trust, told clients recently. Odds: 20 to 1 against.
'Lost Decade' One word -- Japan. If stagflation is the world ending in fire, then this scenario is Apocalypse
by ice. Some observers worry the U.S. is following a path Japan blazed in the 1980s and 1990s. Like the
U.S., Japan had stock and real-estate bubbles fueled by easy credit. The aftermath for Japan was a "lost decade"
for its economy and stock market, an especially terrifying time for policy makers because there
seemed to be little they could do to fix it.
B. Links – The affirmative’s incentive creates massive deficits and makes the
alternative energy industry artificially reliant on the tax code
Friedman and Greenstein 04 – Center on budget and policy priorities

[Joel and Robert, “Side-by-Side Comparison of the HBC and the Expired Statutory Pay-As-You-Go Rule,”
http://www.cbpp.org/3-17-04bud.htm]
By exempting tax cuts from the pay-as-you-go requirement, the proposal would allow for
continued enactment of unlimited, costly tax cuts without any offsets. That would worsen the
deficit outlook. Moreover, even the goal of ensuring that the cost of entitlement expansions is offset could be thwarted in cases
where a desired entitlement expansion can be converted into a targeted tax break. The tax code is packed with dozens
of tax breaks favoring particular activities, from home ownership to energy production. These tax breaks are
referred to as “tax expenditures” by the Joint Committee on Taxation and the Office of Management and Budget,
because they essentially represent spending accomplished through the tax code. Indeed, Federal
Reserve Chairman Alan Greenspan has referred to these tax breaks as “tax entitlements.”[4] These measures are costly. OMB
estimates that tax expenditures cost many hundreds of billions of dollars a year.[5] Is the Return of Deficits Primarily

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Due to Spending Increases? Some have argued that the return of large deficits over the past few years has been largely a function of action by Congress to increase spending.
Analysis by the Congressional Budget Office demonstrates otherwise. * According to CBO estimates, legislation enacted since the start of 2001 is costing about $500 billion in
2004, which is about the size of the deficit this year. The CBO estimates show that tax cuts account for 58 percent of this cost — or well over half of it. * Increases in defense and
homeland security spending account for another 30 percent of the cost in 2004 of legislation enacted since January 2001. * By contrast, entitlement increases enacted since the
start of 2001 account for only 9 percent of this cost. The cost of the tax cuts this year thus is six times the cost of the entitlement expansions enacted since 2001. * A similar
result holds if one examines the cost of legislation over a ten-year period. Assuming the tax cuts are extended as the Bush Administration proposes, the cost of the tax cuts from
2002 through 2011 will be about four times the cost over this period of the entitlement expansions enacted since 2001, including the prescription drug benefit. (This calculation
also assumes, as virtually all observers expect, that relief from the Alternative Minimum Tax will be continued to prevent the AMT from canceling out part or all of the tax cuts for
The tax cuts thus have played a substantially larger role in the recent swing
millions of middle-class taxpayers.)
to deficits from surpluses than entitlement expansions have.As these data illustrate, there is at least as much reason
to be concerned about the impact of tax cuts on the budget as about the impact of entitlement expansions.
Both types of measures have the potential to swell the deficit. Proposals that would impose the pay-as-you-go
rules only on the entitlement side of the budget fail to address these realities and leave the door open to budget-
busting measures that are delivered through the tax code. If pay-as-you-go requirements are imposed only on spending
entitlements and not on “tax entitlements,” there is little doubt that tax lawyers and lobbyists will be able to redesign various proposed entitlement expansions so they can be
delivered through the tax code. Such tax breaks would increase the deficit just as increasing an entitlement on the spending side of the budget would. Moreover, this
artificial reliance on the tax code — used as a means to circumvent the pay-as-you-go rules —
often would represent a more costly and less efficient approach to achieving the intended policy
goals than doing so directly on the expenditure side of the budget.
Inflation 1NC
[ ] This deficit spending wrecks the entire economy, especially during today’s
economic crisis – inflationary pressure and economic downturn are guaranteed
Saville 7/8/08 – Market Analyst and creator of TSI (The speculative investor) an informational website that performs statistical
analysis to aid investors
[Steve, “Government Spending and Inflation,” http://www.greenfaucet.com/economy/government-spending-and-inflation]
There is almost universal agreement that as the economy continues to deteriorate the government should "do something" to help,
with "something" being increase its own borrowing/spending to make up for the reduction in the borrowing/spending of the private
sector. Even analysts and commentators who claim to understand the problems wrought by inflation
and who consider themselves to be pro-free-market are, in some cases, advocating increased government spending
on the basis that things are getting so bad that there is no longer any viable alternative. It is
clear that these people haven't thought things through in sufficient detail and/or are unaware of
the dismal history of government attempts to mitigate economic downturns via deficit spending.
The government is like a giant parasite that attaches itself to the economy and grows by sucking
the economy's blood (wealth). During times when the host (the economy) becomes weak it would appear to be prudent for
the parasite to suck blood at a reduced rate, yet whenever the economy weakens the call goes out for the
government to borrow and spend at a FASTER pace. The popular line of thinking therefore seems to be that the
host will get healthier if only the parasite is allowed to become even bigger and to suck even more blood. The "sucking blood"
analogy is apt because the government does not produce any wealth. Rather, it re-distributes
wealth and, in the process, takes a cut in order to pay its own large and ever-increasing
expenses. The total cost of government will therefore be the cut that it takes to fund its own existence plus the impossible-to-
measure effect of using scarce resources far less efficiently than a free market would use them. The government funds
itself in three ways: by direct taxation, by borrowing, and by inflation (creating money out of thin air),
although at a time of economic distress the only politically acceptable funding options will be
borrowing and inflation. But regardless of whether the government funds its operations by directly taking money from one
segment of the population or by increasing the supply of money and thus taking a bite out of all existing currency units, the end
result of increased government spending MUST be reduced wealth within the economy due to the
direct cost of the bigger government and the more-difficult-to-quantify costs of resource misallocation and less freedom. Therefore,
those who claim that an increase in government spending is needed are, in effect, claiming that
the economy will benefit from a reduction in wealth. Logic aside, the historical record clearly shows the inadvisability of ramping up
government spending in response to an economic slowdown. For example, when the great US credit expansion of the 1920s inevitably went bust, the Republican Hoover
Administration responded with a substantial increase in government spending. However, things continued to get worse. The presidential nominee of the Democratic party at the
time, F.D.Roosevelt, was vehemently critical of the Hoover Administration's excessive spending and labeled Hoover a "spendthrift", but the budget deficit racked up during just the
first three months of the subsequent FDR presidency turned out to be greater than the deficit racked up by Hoover over the preceding two years. And still, FDR's unprecedented
government spending binge failed to catalyse a sustained recovery. Instead, depression-like economic conditions prevailed for more than a decade. Rather than helping to
alleviate the economic distress it is readily apparent that the increase in government spending during the 1930s helped to prolong it. 1990s Japan is another good example of

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how increased government spending will tend to prolong, rather than mitigate, an economic downturn.
The debt of the Japanese Government ballooned during the 1990s as it poured massive amounts of money into public works projects
in an effort to stimulate a moribund economy, but the strategy proved to be an abject failure. But hey, even though
increased government deficit-spending has never worked in the past and logically can only make
things worse, let's give it another go anyway. More inflation to come If you want to develop a better
understanding of what inflation is and how it operates within the economy then we suggest that you read THIS short article. As we've noted in previous
commentaries, when measured properly the rate of US inflation (money-supply growth) has been fairly slow over the past couple of years, particularly
The prices of many things are now rising swiftly, but this is an
relative to the rampant inflation of the first half of this decade.
the
effect of what happened to the money supply years ago rather than an effect of what is currently happening to the money supply. That being said,
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.
C. Impact – And economic collapse leads to nuclear war and totalitarian regimes
Cook 6/14/07 - Writer, Consultant, and Retired Federal Analyst – U.S. Treasury Department
[Richard C., "It's Official: The Crash of the U.S. Economy has begun," Global Research,
http://www.globalresearch.ca/index.php?context=va&aid=5964]
Times of economic crisis produce international tension and politicians tend to go to

war rather than face the economic music. The classic example is the worldwide
depression of the 1930s leading to World War II. Conditions in the coming years could
be as bad as they were then. We could have a really big war if the U.S. decides once
and for all to haul off and let China, or whomever, have it in the chops. If they don’t
want our dollars or our debt any more, how about a few nukes? Maybe we’ll finally have a
revolution either from the right or the center involving martial law, suspension of the Bill of
Rights, etc., combined with some kind of military or forced-labor dictatorship. We’re
halfway there anyway. Forget about a revolution from the left. They wouldn’t want to make
anyone mad at them for being too radical.

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*Economy Uniqueness*

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Uniqueness – US Econ on Brink
[ ] Though the economy is at risk – higher consumer spending and growth are
predicted which will moderate stagflationary pressure
Reuters 7/16/08
[“US Price, Retail data paint stagflationary picture,” http://www.stuff.co.nz/stuff/4620290a6026.html]
Weak US retail sales and a rise in producer prices to their highest annual rate in 27 years provided further evidence of "stagflation" in
the world's largest economy. Federal Reserve Chairman Ben Bernanke reinforced the troubled outlook, saying
the economy faced significant downside risks, even though the Fed – the US central bank – raised its
forecast for growth as well as for inflation this year. For details see. US retail sales rose a less-than-expected 0.1
percent in June, as auto sales posted their biggest drop in more than two years, government data showed, leading investors to lower
bets that the Fed would raise benchmark interest rates this year. Also on Tuesday, General Motors Corp said it would cut labour
costs, sell assets and borrow at least US$2 (NZ$2.62) billion to bolster finances in the face of plummeting sales.. The US
Labour Department said producer prices over the last 12 months jumped 9.2 percent, the biggest
increase since a 10.4 percent gain in June 1981 when the United States was last mired in a
stagflationary period of low growth and high inflation. "The PPI number is just outrageous," said TJ Marta, fixed-
income strategist at RBC Capital Markets in New York. On Wall Street, US stocks fell on persistent worries about the health of the
financial system, while oil prices dropped on concerns about the US economy. The US dollar fell against a broad
basket of currencies but managed to recover from a record low against the euro seen overnight.
US government bonds , which generally benefit in times of economic weakness, rose as investors
pared their bets on the possibility of Fed interest rate hikes this year. The Fed's rosier growth projection gave cold
comfort to investors hit by the recent downturn in the stock market and consumers facing
soaring energy prices and higher joblessness. Economists shrugged off the Fed's forecast and
focused on Bernanke's assessment of the economy, which is struggling with a deep housing downturn,
financial markets turmoil and a high degree of uncertainty over inflation and growth. In remarks to the US
Senate Banking Committee, Bernanke focused on stress in financial markets. He also said the possibility of higher energy prices,
tighter credit and a deeper contraction in housing markets were "significant downside risks" to the growth outlook. He also said
the risks of higher inflation had intensified on the back of rising prices of energy and other
commodities, but analysts zeroed in on the weak growth prospects. "There seems to be more emphasis on
the concerns for the economy rather than on inflation," said Kevin Flanagan, fixed income strategist for global wealth management
with Morgan Stanley in Purchase, New York. "These are all signs the Fed has no room to raise rates any time over the near term."
The Fed raised its projection for growth in 2008 to a range of 1.0 to 1.6 percent from a 0.3 to 1.2
percent range seen in April, on expectations for stronger consumer spending.

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Uniqueness – US Econ on Brink
[ ] Stable interest rates, consumer tax rebates and liquidity influx have stabilized
the economy, but recession is still at risk
CSM 7/16/08
[“Woes Deepen for US economy,” http://www.csmonitor.com/2008/0716/p01s05-usec.html]
Expectations that the current US economic downturn will be shallow are diminishing. A severe
recession in the United States still isn't the mainstream forecast, but economists say it's a real
possibility, especially as problems at American banks deepen amid a continuing shakeout of the housing crisis. What makes
forecasts challenging these days is that the economy's problems involve the linkage of many moving parts. Crucially, a healthy
banking system is vital to the economy, and now an economic slowdown and a plunge in bank stocks have
raised the prospect of more bank failures and the need for federal intervention. The rising uncertainty and risk were
visible Tuesday, from auto manufacturing to the value of the dollar. General Motors canceled dividends for shareholders, something it
hasn't done since 1922. The dollar fell to a new low against the euro. Stocks fell worldwide. Everyone from CEOs to
policymakers to ordinary investors and depositors are grappling with the question: How bad is
this crisis? How bad could it get? It's a sign of the times that Federal Reserve Chairman Ben Bernanke, the closest thing
to a spokesman for the economy, talked a lot about unknowns even as he sought to reassure lawmakers Tuesday at a congressional
hearing. One major question, he said, is how long housing-market declines will persist. "It's that uncertainty, I think, that is
generating a lot of the stress … that we're seeing," he said in response to questioning. As of June, the Fed's policymaking
committee gauged the economy's path looking forward as "below its trend rate" – not necessarily
in recession but well below normal growth of 3 percent or so, Mr. Bernanke said. However, the central bank
believes any surprises are more likely to be on the side of weakness, not strength, he said. While citing an
"unusually uncertain" outlook for whether inflation will come back under control, the Fed
chairman laid down a marker on another top concern. "Helping the financial markets to return to
more normal functioning will continue to be a top priority of the Federal Reserve," he said in his prepared statement. In fact,
the Fed was created in 1913 with the goal of preventing and mitigating banking crises. "The lifeblood of a modern economy is credit," says Ken Goldstein, an economist at the
Conference Board, a business research group in New York. "Inability of [mortgage firms] Fannie Mae and Freddie Mac to raise capital could potentially bring them down…. It's
exactly why [Treasury Secretary Henry] Paulson and Bernanke have been and are so willing to take extraordinary steps." For his part, Mr. Goldstein predicts that the economy
will escape a steep downturn as it has done over the past year of turmoil, thanks in part to US policy moves. But those moves are becoming, to use his word, extraordinary.
Fannie and Freddie are corporations that, by buying or guaranteeing home loans, play a central role in the mortgage market. With loan defaults on the rise, they now face a deep
erosion of their stock-market value at a time when they may need to raise more capital to cover losses. To stem concern that Fannie and Freddie might become insolvent,
Secretary Paulson is urging Congress to allow the US Treasury to buy an equity stake in the enterprises, if needed, or to enlarge a credit line to them. Paulson and President Bush
spoke Tuesday on behalf of this plan, and lawmakers have pledged to give it quick consideration. "If you're a depositor, you're protected by the federal government," up to
$100,000, Mr. Bush said during a news conference. He called the banking system "basically sound." Bernanke struck a similar note, saying the good news is that banks headed
into this crisis well capitalized and with high profits. Still, mortgage losses are now being joined by rising delinquencies for other types of loans – cars and credit-card debt, for
example – because of a cooling economy. Availability of adequate capital is vital – and is at risk now. The higher loan losses rise, the more they eat into banks' reserves and the
more new capital they need to raise. When share prices of financial firms fall, it becomes more expensive to get investors to put up money. "If you are in a systematic
downward cycle in your stock price, who's going to invest in you?" says Brian Bethune, an economist at Global Insight, a forecasting firm in Lexington, Mass. "If you had issued
1,000 Fannie Mae shares a year ago, you would have gotten $50,000" in capital, he says. Now, by his rough calculation based on Fannie's share price, you'd get $10,000. "That
just is a crippling blow," Mr. Bethune says. Few analysts talk of imminent bankruptcy at the largest institutions. But a number of those companies have taken a big hit – losing
two-thirds or more of their market value in the past year. "The financial system in general needs to raise capital," Bethune says. Some private entities that were putting up
money a few months ago have been less willing to do so lately. By some measures, banks' troubles haven't led to a major credit crunch so far. A recent survey of small-business
owners, by the National Federation of Independent Businesses, found businesses more concerned with inflation than with access to credit from banks. By some estimates,
mortgage and other losses to financial firms in the current cycle could be $1 trillion. But that depends on what happens in the housing market and the economy, where the jobless
One promising sign, to many analysts, is policymakers' willingness to act.
rate will affect the performance of loans.
Tax-rebate checks are helping consumers. Congress is working on legislation to help reduce
home foreclosures. The Fed is trying to provide short-term liquidity through loans to financial
markets. The latest turmoil makes it less likely the Fed will raise interest rates this fall. That would
combat inflation, but Bethune says the possibility of a rate hike is one more thing rattling financial
markets.

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Uniqueness – Global Econ on Brink
[ ] The global economy is at risk mainly because of the current US economic
downfall, we are on the brink of global recession
The World Today 7/18/08

[“IMF warns on inflation threat,” http://www.abc.net.au/worldtoday/content/2008/s2307691.htm]
EMMA ALBERICI: As concerns about the health of the US economy deepen, the International Monetary
Fund has issued a fresh warning about the country's rising inflation. While the IMF is slightly more
optimistic about global economic growth, it's lifted inflation forecasts in both advanced and emerging
economies because of spiralling food and crude oil prices. The IMF is also worried about the impact of
America's housing slump internationally but says the subprime mortgage contagion is moving at a than first thought. Here's our
that world
business editor, Peter Ryan. PETER RYAN: Back in April, the IMF slower pace warned there was a 25 per cent chance
growth would stagnate because of an increasingly fragile US economy. Today in an update to its
world economic outlook, the IMF said a global recession led by the American economic demise
remained a possibility. SIMON JOHNSON: After a remarkable five year span of strong growth and lower inflation, the
global economy is facing its most difficult set of circumstances in many years. PETER RYAN:
The IMF's chief economist Simon Johnson pointed the current pressure on the mortgage
companies Fannie Mae and Freddie Mac, which with 50 million customers guarantees six trillion
dollars of American home mortgages. Mr Johnson underlined declarations in recent days that the US is now
facing its biggest economic shock since the Great Depression. SIMON JOHNSON: In the recent past the
global economy has managed to take large shocks in stride, but we think its capacity to absorb them is being increasingly challenged.
The latest problems with US mortgage giants Fannie Mae and Freddie Mac are emblematic of deeper problems facing the housing
sector and mortgage markets in the US where things have not yet stabilised. Banks are gradually repairing their balance sheets but
face protracted adjustment and additional losses from weaker credit performance in a context of slower growth. PETER RYAN: But
the IMF has another global storm on its radar in the form of rapidly rising inflation. The Fund
has now lifted its 2008 forecast to 3.4 per cent for advanced economies and nine per cent for
emerging economies. That puts central banks around the world on renewed alert as they use
interest rates to either fight off a recession or to stamp out inflation. SIMON JOHNSON: Despite the
slowing global economy, inflationary pressures have continued to mount owing to the sharp rise in oil prices above previous record
highs, while food prices have been pushed up by adverse weather on top of continued strong growth and demand. Thus inflation
projections have been raised for both advanced and emerging economies as commodity prices are generally expected to remain
elevated. The new oil price baseline is 30 per cent higher than in the April 2008 World Economic Outlook. PETER RYAN: But there
were some positive signs today. Oil has now fallen below $US 130 a barrel for the first time in six weeks. That’s because of trimmed
demand, some of it from a less than busy summer driving season for US motorists. And oil traders like Phil Flynn of Alaron Trading
says crude might be on its way down as long as the shocks stopping coming. PHIL FLYNN: If nothing bad happens over
the next few weeks, we could see oil prices go back below $100 and that would be a big boost to the US
economy. PETER RYAN: And Wall Street has been on a rally after small pieces of good news.
Yesterday the investment bank, Wells Fargo, which has been so far untouched by the subprime
crisis, reported a much better than expected profit result. And today, investors took heart from a less worse
than expected result from JPMorgan Chase, even though its profit is down two billion dollars on this time last year. Those albeit
small signs of optimism add to the IMF's view that the subprime contagion is not spreading as fast as first thought, a view shared by
Australia's Treasurer Wayne Swan. WAYNE SWAN: Well it is a somewhat more optimistic report from the IMF
than the one that we had I think in April this year.

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Uniqueness – Growth Now
[ ] The US economy is growing – recessionary fears are inaccurate
Business Journal 7/18/08

[http://www.bizjournals.com/sanantonio/stories/2008/07/21/editorial3.html]
The headlines are full of bad economic news ranging from high gasoline and food prices to housing market woes.
Pundits debate the best way to fix problems and deal with uncertainty. You might think we are in for a deep, dark
recession. However, the U.S. economy is actually growing, albeit at a pace a bit anemic when compared to
years past. The future is not nearly as bleak as some prognosticators suggest and, if you consider
expectations for the long term, the picture is one of continued health with moderate prosperity. I
have just finished my annual long-term economic outlook for the United States, Texas, and the state’s major metropolitan areas and
regions. It covers projections for the years from 2007 to 2030 with particular focus on vital economic generators as well as industrial
sectors. By virtually every measure, the Lone Star State is forecast to achieve compound annual growth rates (CAGR) that exceed
those of the U.S. overall. With regard to real gross product (RGP), commonly referred to as output or the
final value of all goods and services produced in an economy during a given period of time, the
U.S. is likely to experience a per annum growth rate of 3.27 percent for the long term. Texas RGP is
anticipated to expand at a 3.77 percent annual pace. This expectation follows the general historic pattern that has seen the Texas
economy growing faster than the nation as a whole.
[ ] The economy is growing, news reporters are just fear mongering
Saunders 7/10/08 – Director San Fran Chronicle and renowned columnist

[Debra J., “The Bad News Economy,”
http://www.townhall.com/Columnists/DebraJSaunders/2008/07/10/the_bad_news_economy]
America's sky is falling. A Los Angeles Times/Bloomberg poll conducted last month found that 78 percent of Americans think that the
country is heading in the wrong direction. Of course, almost 4 in 5 Americans think the country is heading to heck in a handbasket.
The news media are stuck in one gear when it comes to reporting economic news - Armageddon.
As Hillary Rodham Clinton supporters so aptly noted, many journalists are besotted with Barack Obama. That makes them open to
any bad news that can be tacked onto Republican George W. Bush. But it's more than liberal bias. Journalists are convinced
that the American economy is collapsing and going down the tube, because our industry is
collapsing and going down the tube. So if you say the economy is "slowing," as Republican presidential
candidate John McCain has said, you're insensitive. If you are in touch, you are supposed to ignore the 0.6-
percent GDP growth in the fourth-quarter of 2007 and 1 percent growth in the first-quarter of
2008, because that belies the belief that the U.S. economy is in recession. Remember the "misery index"
- the combined rate of unemployment and inflation that peaked at 22 percent under President Jimmy Carter? Forget it. Not
enough misery. In 2004, Democratic presidential candidate John Kerry had to throw in extra statistics to inflate the Bush misery
index, because the combined unemployment and inflation rate was about 8 percent. Lately, news stories report on
American fears about inflation, without reporting the rate of inflation. It's about 4.2 percent. With
the unemployment rate at 5.5 percent, the "misery index" is just under 10 percent. Yes, gasoline prices are
up. Granted, higher prices at the pump are forcing some Americans to cut back and have had a ripple effect throughout the economy. After years of arguing that greener energy
policies don't hurt the economy, but instead create jobs, Democrats and talking heads should be cooing about the new economic horizons unfolding. The housing bubble burst. A
lot of people - including this writer - have seen the value of their homes drop, and those who have to sell quickly won't get the price they expected two years ago. Is there anyone
who did not think that eventually housing prices would deflate? Is there a new law of economics that says: What goes up cannot come down? The boost in the foreclosure rate to
close to 2.5 percent shows the raw side of a market correction made worse by shabby lending practices that lured some people to buy homes they could not afford. Some families
will experience the heartbreak of losing those homes, but also some families, who had been priced out of the market, now can reach for that dream. Thanks to improved federal
regulations, they stand a better chance of holding onto it. Yes, there is bad news. The stock market is down and the housing market probably won't begin to bounce back this
year. The federal deficit is expected to hit $400 billion this year. Worse yet, Washington has promised Social Security and Medicare benefits without paying for them. As a result,
according to former Comptroller General David Walker, every American owns a $175,000 share of Uncle Sam's unfunded liabilities. Health care costs have soared - and that has
made it more expensive for businesses to operate and governments to provide services. It doesn't matter that people with cancer and other serious illnesses stand a better
chance of beating the disease, and enjoy a higher quality of life. Americans expect health care costs to rise more slowly, even if they are getting considerably more effective care.
Do I worry about
And it doesn't help when some adults have to work two part-time jobs to make ends meet, but don't qualify for health care insurance at either.
where this country is headed? Who doesn't? But what concerns me is that Americans keep
expecting more goodies from their government - with someone else always paying for it. The
other thing that worries me: We have no idea how good we have it.

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Uniqueness – Growth Now
[ ] Though we have reached a state of panic, growth is already on the rise
Stelzer 7/20/08 - business adviser and director of economic policy studies at the Hudson
Institute
[Irwin, Don’t panic: the economy is still growing,
http://business.timesonline.co.uk/tol/business/columnists/article4363043.ece]
Fed chairman Ben Bernanke pulled no punches when he gave his semi-annual report to Congress.
“Sizeable losses at financial institutions . . . financial headwinds . . . inflation has remained elevated . . . declining house prices, a
softening labour market . . . deteriorating performance of sub-prime mortgages . . . turbulence . . . Decline in the . . . value of the
dollar.” There’s more, but you get the idea — a Fed chairman who has deployed every weapon at his command and manufactured
new ones in his fight to right the economy, and is not certain he has succeeded. It just might be that Bernanke, with assistance
from Treasury secretary Hank Paulson, has been more successful than he dares dream, and that the panic
has been contained. Not that we will soon see the boom times that investors remember so fondly, or that homeowners can
soon look forward to double-digit annual increases in the value of their homes. But it is possible that the woes that have beset
the housing and financial sectors, and the damage inflicted on consumers by rising petrol prices,
are about to be contained and mitigated. Start with housing. Falling prices, inventories of unsold homes, slowing
construction and rising repossessions have combined to shake mortgage institutions to their foundations. But sales of existing homes
seem to have stabilised this year at an annual rate of close to 5m units, with gains in the northeast and Midwest offsetting declines in
the south and west. Inventories of new single-family homes are down 21% from their 2006 peak. Nationwide, average house prices
continue to decline, but whereas in March only two of the 18 markets covered by the much-watched Case-Shiller Index recorded
increases, in April prices rose in six regions. And, as Barron’s magazine points out in an article under the title “Home prices are about
to bottom”, price figures are biased downward by the overweighting of sales of homes with sub-prime mortgages. Chip Case — the Case of
the Case-Shiller Index — believes that homes are now more affordable and that, barring a recession, prices “may well stabilise” and begin to recover by the year end. Barron’s
Jonathan Laing concludes that “the scary dive in home prices soon will be over”. Improvements in housing would, of course, translate into improvements in the banking sector.
The immediate intervention of the Federal Deposit Insurance Corporation (FDIC), protecting up to $100,000 per depositor, prevented panic after the Indy Mac failure, the third
largest in American history. Meanwhile, Merrill Lynch announced that it is raising $4.5 billion by selling its stake in Bloomberg and increasing its excess-liquidity pool to record
levels; several investment houses reported earnings that, although off from last year, beat the market’s expectations; and shares in Fannie Mae and Freddie Mac began to recover
some of the ground lost the previous week. Freddie Mac (a client of mine) and Fannie Mae are government-sponsored enterprises that finance about half the mortgages in
America. Despite the slump in their share prices, these enterprises continued doing what the government wants them to do — they kept mortgage money flowing. True, to
offset some of the panic caused by declines in their share prices, Paulson and Bernanke decided to make explicit what investors in
Freddie and Fannie bonds always knew — these enterprises are too big to be allowed to fail. So this month
both were able to borrow money at attractive rates, and to continue business as usual, writing billions in new mortgages. It is too
early to say that all is calm in the financial sector. More bad loans will be written off, several banks are in less than robust health, and the
FDIC has already committed 10% of all its funds to Indy Mac depositors, meaning it might have to call on taxpayers for funds if failures become
widespread. Many banks still need to raise equity capital. Finally, there is oil. Students of the impact of oil prices know that the rapidity of an upward
movement has as much effect on the economy as the level of prices. We cannot predict the course of prices with any certainty, since this market is
cartel-ridden, affected by “resource nationalism” that inhibits new investment, and has other features that can’t be understood by thumbing through a
copy of The Wealth of Nations. But it does seem that higher prices are destroying demand at a more rapid rate than economists anticipated, which
might, just might, hold back further price increases, or sustain last week’s downturn in crude prices. Perhaps most important, the flexible
American economy so far — and the “so far” is important — seems to be doing better than the troubled housing
and financial sectors. “The economy has continued to expand, though at a subdued pace . . .
Personal consumption expenditures have advanced at a modest pace . . . generally holding up
somewhat better than might have been expected . . . Growth is expected to pick up gradually
over the next two years,” said Bernanke. Imports are adding perhaps a full point to GDP,
offsetting all or most of the housing-related decline. And financial markets are being restructured.
Paine wisely noted that “panics, in some cases . . . produce as much good as hurt. They bring things and men to light, which
otherwise have lain forever undiscovered”. So inept chief executives have found. There is, then, light at the end of the
tunnel. Let’s hope that Larry Lindsey, former economic adviser to President George W Bush, is wrong when he says the light comes
from an onrushing train.
[ ] Though the economy is at risk, there is an upward trend in growth
Bloomberg 7/18/08
[“Boehner Says Economy Surprisingly Strong, Rejects Stimulus Plan,”
July 18 (Bloomberg) -- House Minority Leader John Boehner said the U.S. economy is surprisingly strong and
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dismissed calls by House Speaker Nancy Pelosi for a second stimulus package of tax rebate checks.
Pelosi said yesterday she favors another stimulus plan of about $50 billion to ease the economic pain for more than 100 million
households. The benefits from the first round of rebate checks have been eroded by rising energy costs, she said, adding the new
plan may be considered later this year. ``That just happens to be on the eve of an election,'' Boehner said in an interview to be
aired this weekend on Bloomberg Television's ``Political Capital with Al Hunt.'' `Ìt looks highly political to me.'' Boehner, an Ohio
Republican, said it is too soon for a new economic package because ``the checks are still going out'' from the first plan and ``we're
still seeing the effects of it.'' Congress approved a bipartisan $168 billion plan earlier this year that included rebate checks of as much
as $600 per individual. ``While the economy is slow, we're still seeing growth,'' Boehner said. `Ànd frankly,
Given the high oil prices, gas prices, food prices and the high cost of
I've got to tell you, I'm shocked.
health care, I'm surprised that the economy is growing. It really goes to show you how resilient
our economy is.'' Energy Legislation Boehner, 58, also criticized Pelosi, a California Democrat, for not allowing votes on
legislation to expand domestic energy production. The chances of getting a vote this year are `àbout zero'' because Pelosi and her
allies ``worship at the altar of radical environmentalism,'' he said.

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Uniqueness – Interest Rates Static
[ ] Interest rates are static – Bernanke’s recent testimony proves
Reuters 7/15/08
[“US Fed Chief warns on growth,” http://africa.reuters.com/world/news/usnN15305285.html]
Bernanke, in his semi-annual testimony on economic conditions to lawmakers on Tuesday, acknowledged that financial
markets had grown increasingly anxious in recent weeks, particularly over the financial condition of mortgage finance
companies Fannie Mae and Freddie Mac. He stressed that the outlook for economic growth and inflation was
unusually uncertain. Investors took that as a signal that the Fed would keep interest rates
unchanged at least through August, and perhaps through the end of the year. "The possibility of higher energy
prices, tighter credit conditions, and a still-deeper contraction in housing markets all represent significant downside risks to the
outlook for growth. At the same time, upside risks to the inflation outlook have intensified lately," he said. Bernanke said the
slumping housing market was "the most critical and central issue that we face," because it held the key to consumer spending as well
as banks' financial health. "The testimony represents a significant retreat and does imply that the Fed
will not be moving to hike (interest) rates anytime soon," said Joseph Brusuelas, chief economist
with Merk Investments.
[ ] The Fed won’t cut rates now for fear of an inflationary spiral
The Times 7/16/08

[“It’s worse than we feared and there’s more pain to come, but it will pass,”
http://www.timesonline.co.uk/tol/comment/columnists/gerard_baker/article4340443.ece]
As Mr Bernanke, with characteristic understatement, told the Senate yesterday: “Although these policy actions have had positive
effects, the economy continues to face numerous difficulties, including ongoing strains in financial
markets, declining house prices, a softening labour market and rising prices of oil, food and some other commodities.” The
immediate reasons for the continuing problems are obvious. The world is in a pincer-like grip from two concurrent
shocks. The first is the credit crisis. In the US, house prices have fallen by at least 15 per cent from their peak of late
2006. At the same time the prices of shares on the stock market have fallen by more than 20 per cent. In short, US household
wealth has declined by almost a fifth. Since so much economic activity was funded by credit that was secured on that wealth, it is not
hard to understand why that credit has dried up. Worse, of course, as the prices of assets continue to fall, it is
almost impossible for financial institutions to gauge just how large their losses will eventually be
and so they cut their lending even further for fear that there may be more losses ahead. At the
same time, and significantly complicating the ability of the authorities to resolve the credit crisis, inflation is accelerating
rapidly, for the first time in 20 years. Rising oil and food prices are crimping consumers’ spending power
and limiting the ability of central banks to cut interest rates, for fear of igniting an inflationary
spiral.

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Uniqueness – Stimulus Will Pass
[ ] Stimulus will pass – enough support in the house and the senate
CFNews 7/19/08
[More Economic Stimulus Checks Could Be On Tap,
http://www.cfnews13.com/News/Local/2008/7/19/more_economic_stimulus_checks_could_be_on_tap.html]
WASHINGTON -- Another round of rebate checks could be coming for Americans. Speaker of the House Nancy
Pelosi said she is pushing for about $50 billion in a second election-year economic stimulus package
being shaped by Democrats in Congress. In January and February, congress and the White House worked to enact a
$152 billion plan consisting mostly of tax rebates, to stimulate the economy by trying to boost consumer spending. Leaders in
the House and Senate are discussing another emergency spending bill with key committee
chairmen that would again aim to spur the economy and help those hurt by the economic
slowdown. Pelosi said she believes there are enough votes in the House and Senate to pass a
new stimulus package.
[ ] A new stimulus package will pass and is key to revamping the economy –
politicians will support the stimulus to ensure voter support
The Chicago Tribune 7/16/08

[William Neikirk, econ expert, “More economic stimulus please,”
http://www.swamppolitics.com/news/politics/blog/2008/07/more_economic_stimulus_please.html]
President Bush said at his press conference Tuesday that he was withholding judgment on a new economic stimulus package until the
results of the last one are clear. Then the Labor Department reported today that, as a result of soaring inflation at the consumer
level, the average inflation-adjusted wage in June was down 0.9 percent, the biggest drop in nearly two years. That sounds like an
answer, doesn't it, Mr. President? In "real" terms, the average American's standard of living is falling. Since economic
growth is so heavily dependent on consumer spending, a good jolt of government stimulus could
well be in order once again. Because the economic news is so grim these days, Democrats in
Congress are preparing for another stimulus measure, which could include more tax cuts or some
"targeted" spending to help the least fortunate. They are talking about a $50 billion package.
Those concerned about the budget deficit are not so hot on another tax cut that would require the U.S. to borrow from financial
markets (including China and Japan) to pay for it. But one could also argue that doing nothing could raise the deficit,
too, if the economy sinks into a deep downturn, causing a plunge in government revenue.
Another stimulus package could well be a safety net against a deep recession. At this time, it appears
the U.S. economy is being driven by two main sources--exports (because of the cheaper dollar) and government
spending, which includes those stimulus checks. As the economies in other countries slow down (as they have in
recent months), it isn't clear how much longer the strength in exports can hold up. So that leaves the govrnment as the
main source of economic dynamism these days, until the jobs picture improves. Federal Reserve
Chairman Ben Bernanke also sounded the same kind of caution that Bush did, even as he presented a fairly gloomy picture of the U.S.
economy to Congress. Bush said he isn't an economist, but still felt it best to wait. Those people on Capitol Hill aren't
economic experts, either, but they do have to face the voters this year, which is more than you can say for
either Bush or Bernanke. That suggests that passage of another stimulus bill has a really good chance.
And it may be exactly what we need.
[ ] New stimulus package is being considered now
CQ TODAY 7/15/08
[“Democrats Plan Stimulus Bill By Late September,” http://www.cqpolitics.com/wmspage.cfm?parm1=5&docID=cqmidday-
000002917534]

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Hoyer said Tuesday he expects a second economic stimulus package to be
Majority Leader Steny H.
considered in the House before Congress leaves in late September. While Republican leaders so far have
said it is premature to consider another stimulus for the ailing economy, Hoyer, D-Md., said he hoped the Bush administration would
see the need, as it did early this year, and work with Democrats to move a second package. “I hope for administration cooperation,”
he said, to pass legislation by Sept. 26, the date Hoyer has set for the 110th Congress to adjourn. “The need seems to be
apparent,” Hoyer told reporters after joining Speaker Nancy Pelosi , D-Calif., and other Democratic House leaders in a two-hour
meeting with private-sector economists. “All the economists we talked to today indicated that additional
action is needed,” he added. Hoyer said the package would include elements already widely discussed
— more infrastructure funding, heating assistance for low-income Americans, more money for food stamps and for state Medicaid
programs. Pelosi said the proposal also could include another round of rebates for taxpayers, but she made
no commitments.

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Uniqueness – Energy Incentives Low Now
[ ] Energy tax incentives are low now, more targeted tax incentives risks opening
a pandora’s box of tax cuts
Edwards 5/24/08 – Director of tax policy studies at Cato

[“Chris, Energy Efficiency: Can Tax Incentives Reduce Consumption?” http://www.cato.org/testimony/ct-
ce05242007.html]
Current federal tax incentives for energy and conservation are not large. Total income tax
expenditures for these items are valued at just $7 billion in 2007.9 That represents just 0.3 percent of total
federal revenues. Thus, the discussion about tax incentives for energy and conservation is not a discussion about how high
federal taxes ought to be. Instead, the important issue for policymakers is to consider the sort of tax code
that America ought to have. Should we have a tax code that treats families and businesses as
equally as possible? Or should we have a tax code full of special provisions that treat people differently as Congress
micromanages family and business decisions? I favor the former. After all, equality under the law is a bedrock
American principle. Proponents of tax incentives no doubt think that their favored activities
deserve special attention. Many energy and environmental analysts argue that federal tax
policies should be used to fix "externalities" in energy markets.10 But such an approach risks
opening a Pandora's box of widespread social engineering through the code.

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Uniqueness – Dems Committed to Pay Go
[ ] Democrats are committed to pay go specifically in the context of alternative
energy incentives
Inside Energy with Federal Lands 4/14/08

[“Tax credits for renewable energy pass Senate, but fight with House looms,” Lexis]
The House and Senate have taken two very different stands on how to extend renewable energy tax credits that are set to expire this
year, and negotiators must now reconcile them. The Senate may instead consider another measure that would provide longer
extensions with cuts in funding somewhere else. In February, the House passed a bill that would extend a
variety of credits for wind, solar, efficiency and other technologies that are set to expire by the
end of 2008. The measure (H.R. 5351) would authorize $18 billion for the credits, and pay for them
with rollbacks to oil and natural gas tax breaks. Similar packages have failed twice in the Senate, because pro-
fossil fuels Republicans have used Senate rules to block them. Last week, the Senate voted 88-8 for a
renewable tax credit extension bill sponsored by Senators Maria Cantwell, Enhanced Coverage Linking Maria Cantwell,
-Search using: * Biographies Plus News * News, Most Recent 60 Days a Washington Democrat, and John Ensign, Enhanced
Coverage Linking John Ensign, -Search using: * Biographies Plus News * News, Most Recent 60 Days a Nevada Republican.
It was added to a housing bill (H.R. 3221), which later passed by a vote of 84-12. Concerns have been raised that the renewable
energy incentives could stall in a legislative conference with the House because there are no provisions to pay for the tax breaks in
the Senate bill. House Speaker Nancy Pelosi has said repeatedly that she does not favor passing the credit extensions without
offsets. "We are committed to pay as you go in our effort to restore our nation's fiscal responsibility
and strongly support the House-passed legislation," said Drew Hammill, a spokesman for the California Democrat.
Hammill said passing the renewable energy provisions this year is a top priority for Pelosi and other
House Democratic leaders.

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Uniqueness – Investor Confidence High
[ ] Confidence is high
DMNews 3/17/08
[“Business confidence strong” (http://findarticles.com/p/articles/mi_qa5278/is_20080317/ai_n25137057]
A "Business Climate Study" conducted by The Business Council of Westchester of its members during the third
quarter of 2007 projected confident business growth for 2008. The study, comprised of nearly 300 small,
medium and large companies located in Westchester County, sought information on key indicators to build a
picture of local economic health. The survey was conducted by Westchester-based DataKey Consulting L.L.C. The study
was the first such one conducted by the council, and it will be done periodically in the future to chart the business community's
attitude on the economy, said Marhsa Gordon, council president and CEO. "I think that what stood out (in the survey)
is that there is confidence in business growth and that 96 percent of Westchester companies project
growth in 2008," she said. When asked how the third-quarter data might be reflected in the
current climate, Gordon expressed confidence that the businesses surveyed would still have the
same outlook for growth. "I think (the businesses surveyed) understand it is an asset to be in Westchester," she said. "It has
a good location, quality of life, and access to a highly skilled workforce." The companies predicting the highest
revenue growth were 66 percent more likely to rate themselves as "very innovative. For these
companies, proximity to New York City was key, said Gordon. Another trend in the survey was the strong
correlation between the fastest-growing companies and the amount of outsourcing of services,
she said. Eighty percent of the fastest-growing outfits in Westchester outsource to one or more
companies. "There's a strong correlation between the fastest-growing companies and the outsourcing of services," Gordon said.
"This allows these companies to stick to their core competencies." The biggest challenge facing
many companies, according to the survey, is planning and achieving growth, said Paul Vitale,
vice president for government and community relations for The Business Council. "The cost of
doing business is very high in the state, and energy and health care costs are also a concern" he said In
fact, the two most pressing legislative issues facing companies who were surveyed are health care and the cost of
doing business - including concerns about taxes and work force housing, said Vitale.

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*Links*

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Links – Subsidies Come From Tax (Duh)
[ ] Subsidies come from the tax funds
Encyclopedia of Earth 07
[http://www.eoearth.org/article/Subsidies_and_market_interventions]
Subsidies matter for two basic reasons. First, they divert resources to favored activities,
industries, or people based on political objectives. These objectives may have to do with political
power, needs to "buy-off" particular groups, or unrealistic assessments of available technologies,
rather than from any desire to achieve social goals such as welfare or education. Second, subsidies mask the relative price of
different goods and services. In energy, for example, heavily subsidized electrical transmission can mean that the much higher price
of electricity in rural areas is obscured. As a result, important entry points for alternative energy sources—such as
where off-grid renewables cost less than the combined cost of conventional power generation plus distribution—are lost. In most
countries, there are hundreds or thousands of subsidy policies that have been implemented incrementally over decades. In
combination, these policies make it extremely difficult to see the true underlying market dynamics
associated with alternative products or services. All too often, the existing subsidies also work counter to the goals
of other parts of the government, such as protecting the environment. How big are subsidies? Since government subsidies
technically result from any transfer of public tax funds to narrower private interests, one metric of
gross subsidization is the government share of gross domestic product, which ranges as high as 40 or 50 percent of gross domestic
product (GDP) in some countries. This measure is not particularly helpful for two reasons. First, public spending in a particular year
represents only a small portion of the influence governments have over private economic conditions. Subsidized credit and insurance
programs, as well as regulatory loopholes, mean that the distortionary impact of subsidization can be many times higher than the
government share of GDP. Working in the opposite direction, however, is the fact that not all subsidization causes social problems.
Subsidies that harm human health or the environment are often classified as "perverse subsidies." This definition would include
policies that subsidize environmentally-intensive or destructive sectors such as energy, mining, farming, fishing, timber, transport,
and construction. There are no systematic measures of how big perverse subsidies are globally, but rough estimates suggest they
easily run into the hundreds of billions of dollars per year.

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Links – Tax Cuts
[ ] Tax cuts cause losses in revenue and create poor long term economic
performance
Center on Budget and Policy Priorities 7/18/08

[EVIDENCE SHOWS THAT TAX CUTS LOSE REVENUE , http://www.cbpp.org/7-18-08tax.htm]
The claim that tax cuts “pay for themselves” — i.e., cause so much economic growth that revenues rise faster than they would have
without the tax cut — has been made repeatedly in recent years and is one of the many tax policy issues that is likely to receive
renewed attention in light of the upcoming election. As explained briefly below, this claim is false. The evidence shows clearly that
tax cuts lose revenue.[1] The 2001 and 2003 tax cuts have not paid for themselves. There is no
evidence that the tax cuts caused any increase in economic growth, let alone growth sufficient to
offset their cost. In fact, the 2001-2007 economic expansion was among the weakest since World War II with regard to overall
economic growth. [2] Moreover, revenue growth was very poor during 2001-2007. Real per-capita revenues fell deeply in 2001,
2002, and 2003 and have since risen to barely 2 percent above their 2001 level. Over the course of other postwar economic
expansions, they grew by an average of 12 percent.[3] Previous tax cuts didn’t pay for themselves either. In 1981, when Congress
substantially lowered marginal income tax rates on the well-off, supporters claimed the cuts would boost economic growth. In 1990
and 1993, when Congress raised marginal income tax rates on the well-off, opponents claimed the increases would harm the
economy. In fact, the economy grew at about the same rate in the 1990s, following tax increases, as in the 1980s, following a large
tax cut.[4] And revenues grew twice as fast in the in the 1990s (3.5 percent in real per-capita terms) as in the 1980s (1.5 percent).[5]
Capital gains rate cuts, like other tax cuts, lower revenue in the long run. Especially when a capital gains cut is temporary, like the
2003 cut, investors have a strong incentive to realize their capital gains before the old, higher rate returns. This can cause a short-
term increase in revenues, as happened after 2003. (Capital gains realizations also went up after 2003 because of the increase in the
U.S. stock market. The capital gains tax cut cannot take credit for the stock market recovery, though, since European stocks
performed just as well as U.S. stocks during this period.[6]) Over the long run, however, there is virtually no evidence that cutting
capital gains taxes spurs nearly enough economic growth to pay for itself. As the Congressional Budget Office recently stated, the
“best estimates of taxpayers’ response to changes in the capital gains tax rates do not suggest a large revenue increase from
additional realizations of capital gains — and certainly not an increase large enough to offset the losses from lower rates.”[7]
Deficit-financed tax cuts carry significant costs that are likely to outweigh any short-term boost in
economic growth. Deficit-financed tax cuts can stimulate an economy in recession and temporarily improve growth. In the
long run, however, the resulting deficits lower national savings and are a drag on the economy.
Brookings Institution economist William Gale and now-CBO director Peter Orszag concluded that the 2001 and 2003 tax cuts are
“likely to reduce, not increase, national income in the long term” because of their effect in swelling the deficit.[8] Given the
evidence, economists across the political spectrum reject the notion that tax cuts pay for themselves. They include Edward Lazear,
current chairman of President Bush’s Council of Economic Advisers (who told Congress, “I certainly would not claim that tax cuts pay
for themselves”) and N. Gregory Mankiw, the CEA chair earlier in President Bush’s administration (who once compared an economist
who says that tax cuts pay for themselves to a “snake oil salesman trying to sell a miracle cure”).[9] In addition, the Bush Treasury
Department’s own “dynamic” analysis of the cost of the 2001 and 2003 tax cuts estimated that they would generate only enough
economic growth to cover less than 10 percent of their long-term cost.[10] Furthermore, that estimate was based on a best-case
scenario; it depended on the assumption that the cost of the tax cuts would be fully offset by spending cuts. In sum, the idea
that tax cuts pay for themselves sounds too good to be true because it is too good to be true.
Tax cuts lose revenue, and when they are deficit financed, they can also contribute to poorer
economic performance over the long term.

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Links – Renewable Energy
[ ] Renewable energy costs substantially more than non-renewable sources
CNN 7/2/08
[“Va. utility proposal hinges on renewable energy”,
http://money.cnn.com/news/newsfeeds/articles/apwire/22d88fcc09197d9c5a7b212ccd6a3fe1.htm]
Utility Appalachian Power wants to give its Virginia customers the option of choosing renewable
sources for their energy needs. The subsidiary of American Electric Power Co. Inc. asked the Virginia State
Corporation Commission on Tuesday to approve a billing option that would charge customers to select
renewable energy sources. Customers who select a renewable energy source will pay an
additional $1.50 over their usual power costs for each 100 kilowatt hours of that energy source.
[ ] Renewables are expensive
Rapier 07 – Renewable expert and Engineering Director for Accsys Technologies at A&M university
[Robert, “Renewable Energy: “Expensive and Impractical,” http://i-r-squared.blogspot.com/2007/10/renewable-energy-
expensive-and.html]
Ministers are planning a U-turn on Britain's pledges to combat climate change that "effectively abolishes" its targets to rapidly expand
the use of renewable energy sources such as wind and solar power. Leaked documents seen by the Guardian show that Gordon Brown
will be advised today that the target Tony Blair signed up to this year for 20% of all European energy to come from
renewable sources by 2020 is expensive and faces "severe practical difficulties". According to the papers,
John Hutton, the secretary of state for business, will tell Mr. Brown that Britain should work with Poland and other governments
sceptical about climate change to "help persuade" German chancellor Angela Merkel and others to set lower renewable targets,
before binding commitments are framed in December. Of course it is expensive. Not many energy sources can
compete with fossil fuels on a purely economic basis. But we can’t go on like this forever. Either we manage to
make the difficult (and probably expensive) decisions required to move away from fossil fuels, or we will simply find ourselves at the
mercy of events outside our control. My preference is for a planned transition, even if it is difficult.

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Links – Cap and Trade
[ ] Cap and trade kills the economy through reduced GDP and higher
unemployment
Thorning 06 - Senior Vice President and Chief Economist before the Senate Committee on Energy and Natural Resources
Climate Conference
[Margo, “Cost Effective Strategies for Reducing Greenhouse Gas Emissions” http://www.accf.org/pdf/MTTestimony4-4-06.pdf]
Reducing GHGs: Alternative Approaches “Upstream” and “downstream” regulatory approaches: Trying to reduce US
emissions through a cap and trade system applied at either “upstream” or “downstream” is likely to have
serious consequences for the US economy, including reduced GDP and increased unemployment
rates. For example, various economic models show that the imposition of the Kyoto Protocol would
reduce US GDP levels by 1 to 4.2% annually by 2010. While the upstream approach is perhaps easier to monitor and
enforce because far fewer emitters would be in the system, it suffers from the fact that final consumers won’t see much
of a direct impact of the energy tax (or permit price) on their energy and fuel bills because those
also include the cost of delivering the energy to consumers.. On the other hand, if a business owner (say a
paint manufacturer) who owns equipment that emits CO2 has to submit an emission allowance for each ton emitted, he will be able
to make a careful cost-benefit analysis of when it makes economic sense to replace his capital equipment or make other production
related decisions. An obvious question is, if a “downstream” system for reducing CO2 emissions is impractical
(because of millions of small emitting sources, according to the White Paper), and an “upstream” system results in
only attenuated decision making on emissions, how efficient would a cap and trade system be in providing emission decision makers
with a realistic incentive to efficiently and significantly reduce emissions?

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Links – Nuclear Power
[ ] Nuclear is both an expensive and uneconomical resource – its like throwing
money down a black hole
Green Scissors Report 02 – Compiled by Friends of the Earth Taxpayers for Common Sense U.S. Public Interest
Research Group Education Fund
[“Running on empty,” runningonempty.pdf]
Overview Since the first splitting of the atom during World War II, the development of commercial nuclear power has fed off of
American taxpayers. Without federal research subsidies and government- backed nuclear disaster
insurance, nuclear power would not exist today. Originally touted as being “too cheap to
meter,” nuclear power plants have been a costly investment for the American public. Nuclear
power also benefits from unprecedented insurance protections in the event of a nuclear
accident. The federally legislated Price-Anderson Act caps the liability of the nuclear power
industry at under $10 billion. Studies conducted by the government’s Sandia National Laboratory projected worst
case scenarios that cost more than $300 billion—more than 30 times greater than the liability limits under the
Price-Anderson Act. After nearly 50 years, nuclear power is still an uneconomical energy source. No
nuclear power plants have been ordered since 1978, and more than 100 reactors have been
canceled, including all ordered after 1973. The grim economic and safety realities were forcing the nuclear power industry to
go the way of the dinosaurs. However, the Bush Administration, led by Vice President Cheney and the NEPD Group, has advocated
for the rebirth of nuclear power. At the rollout of the administration’s energy report Vice President Cheney maintained, “America
should also expand a clean and unlimited source of energy, nuclear power.” Unfortunately, nuclear power is neither
cheap nor clean. Environmentally, the use of nuclear power has created a legacy of radioactive
waste. Since the 1940’s, the commercial nuclear power industry has created more than 41,000 metric
tons of highly irradi- ated nuclear waste. Currently, there is no safe disposal option for this deadly waste.
[ ] Nuclear energy is uneconomical and dangerous
ABC News 2/20/08

[“Nuclear energy expensive: Kennedy,” http://www.abc.net.au/news/stories/2008/02/20/2168170.htm]
Nuclear power has been described as 'an absurdly expensive' form of energy. (Reuters: Michael Dalder)
The American environmental campaigner Robert F. Kennedy Junior has cautioned against adopting nuclear
power as a source of renewable energy in Australia. He gave a speech today at the Solar Cities Congress being held in
Adelaide. Mr Kennedy described nuclear energy as the most absurdly expensive form of energy
ever devised and that no effective solution has been found for dealing with the waste it
generates. "I love the idea of nuclear energy if we can ever figure out a way to make it," he said. " It's the most
catastrophically expensive way to boil a pot of water that has ever been devised, and if we can figure
out a way to make it economical and safe I'm all for it."

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Links – Solar Power
[ ] Solar power requires heavy subsidies and its extremely expensive
The Arizona Republic, 6/16/08

[“Going green won't be cheap”, http://www.tucsoncitizen.com/ss/byauthor/88224
Well, unsubsidized solar generation is five times more expensive than conventional sources. The
only way to make it even marginally thinkable at present is through heavy subsidization. The solar
concentrating plant APS is considering is only feasible if federal taxpayers pick up 30 percent of
its construction cost. ASU recently got a bunch of great publicity for committing to put solar panels on many of its rooftops. In
reality, it's cost-effective for ASU only because of tax breaks and a subsidy from a surcharge the
Corporation Commission has imposed on electricity to underwrite the renewable mandate. Last
year, ratepayers paid over $12 million in such surcharges, and the renewable mandate was just
1.5 percent. Hold onto your wallet as it rises to 15 percent. So the rest of us get to pay more in taxes and
electric bills so ASU can preen about its environmental conscience. Not such a good deal. The only way to really reduce carbon
emissions, as Napolitano wants to do, is to decommission existing coal-producing plants. And that just increases the amount of highly
expensive alternative generation that needs to be produced. Technology breakthroughs can, of course, change the economics. But
from what is known now, the breakthrough we should most hope for is in coal carbon sequestration, not solar efficiency. But clean
coal doesn't fit the renewable mandates that are the current rage. The reality check is this: Going green, particularly in a growing
state such as Arizona, is likely to be very expensive.
[ ] Solar relies on federal incentives – its way too costly
Norwich Bulletin 6/22/08

[“Our View: Focus effort on 1 form of renewable energy”,http://www.norwichbulletin.com/opinions/x1165649865/Our-View-
Focus-effort-on-1-form-of-renewable-energy]
These are two excellent examples of how alternative energy sources can be used — but are they practical?
They will provide a cheaper source of electricity only for the individual facility, but it will take years — a decade — before either
project produces any savings on their electric use. Wind-powered turbines may be effective in isolated cases such as the S&D Farm,
but not in terms of an overall energy strategy for the state. There simply isn’t enough wind in Connecticut to produce enough
electricity to make a dent in the state’s electric needs. Nor are solar powered systems practical in terms of
being a primary alternative source of renewable energy. They’re too expensive. Until major advances
are made in lowering the cost of the solar panels, they are out of the price range for most consumers. Without
the financial incentives, it is unlikely many of today’s solar-powered projects would have been
developed.
[ ] Solar thrives off of subsidies, large spending is necessary
Wall Street Journal 6/30/08

[“Shedding Light on Solar,” http://online.wsj.com/article/SB121432258309100153.html?mod=googlenews_wsj]
solar power sounds so simple. And it seems like it should be cheap compared to other
The idea of
sources of energy. After all, the sun is there, and it's free. But despite federal and some state
government subsidies that have helped push up demand, solar power still accounts for less than
1% of power generation in the U.S. That's because even with subsidies, solar power remains
expensive compared with energy based on traditional fuels like coal and natural gas.

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Links – SPS
[ ] SPS is expensive – Launch costs and other economic barriers
Boswell 04 – Internationally renowned space analyst

[David, “Whatever happened to solar power satellites?,” http://www.thespacereview.com/article/214/1]
For places with plenty of sun and available land, satellites couldn’t compete with generating solar power locally. It would be difficult to
argue for the need of an orbital system if every place had San Diego’s weather and climate, but since this isn’t the case there would
be demand for beaming solar power to locations that couldn’t generate it otherwise. Using solar panels here on Earth though is far
easier and less expensive, so much of the focus on renewable energy solutions is not on satellite
systems. High cost of launching Another barrier is that launching anything into space costs a lot of
money. A substantial investment would be needed to get a solar power satellite into orbit; then
the launch costs would make the electricity that was produced more expensive than other
alternatives. In the long term, launch costs will need to come down before generating solar power in
space makes economic sense. But is the expense of launching enough to explain why so little progress has been made?
There were over 60 launches in 2003, so last year there was enough money spent to put something into orbit about every week on
average. Funding was found to launch science satellites to study gravity waves and to explore other planets. There are also dozens of
GPS satellites in orbit that help people find out where they are on the ground. Is there enough money available for these purposes,
but not enough to launch even one solar power satellite that would help the world develop a new source of energy? In the 2004
budget the Department of Energy has over $260 million allocated for fusion research. Obviously the government has some interest in
funding renewable energy research and they realize that private companies would not be able to fund the development of a
sustainable fusion industry on their own. From this perspective, the barrier holding back solar power satellites is not purely financial,
but rather the problem is that there is not enough political will to make the money available for further development. There is a very
interesting discussion on the economics of large space projects that makes the point that “the fundamental problem in opening any
contemporary frontier, whether geographic or technological, is not lack of imagination or will, but lack of capital to finance initial
construction which makes the subsequent and typically more profitable economic development possible. Solving this fundamental
problem involves using one or more forms of direct or indirect government intervention in the capital market.” Competing with other
options Even if a solar power system was built and launched there would still be the economic
problem of producing electricity at a cost that is comparable to other options. Government subsidies can
help get this new industry on its feet but it will need to compete in the market in order to survive. This is a challenge for all
emerging renewable energy solutions.
[ ] SPS costs billions
AdAstra 07
[“Solar Power From Space: A Better Strategy for America and the World?,”
http://www.space.com/adastra/070517_adastra_solarpowersats.html]
The catch is cost. Compared to ground based energy, SSP requires enormous up-front expense,
although after development of a largely-automated system to build solar power satellites from lunar materials SSP should be quite
inexpensive. To get there, however, will cost hundreds of billions of dollars in R&D and infrastructure
development - just what America is good at.
[ ] SPS is extremely expensive which is why it hasn’t taken off
PC 05
[http://politicalcalculations.blogspot.com/2005/06/power-from-space.html]
The answer lies in the intersection of economics and engineering. Even with today's technology, which has greatly increased the
electricity-generating capability of PV cells in recent years, the technology's lack of cost competitiveness with
other energy sources limits its pursuit. First, the cost of building such a solar power satellite must
be considered. To generate enough energy to beam back to Earth to justify the expense of
launching such a system into orbit would require constructing a very large satellite using available
technology. Rocket launches aren't cheap - and it could take several launches to support the

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construction effort. Second, the opportunity cost of the needed orbital real estate is substantial. To
consistently provide power for a given area on Earth, the satellite would have to be positioned in geosynchronous orbit, some 22,300
miles above sea level, in order to remain in the same position in the sky above a ground station at all times. The number of
geosynchronous orbit slots available for positioning a solar power satellie is limited, which means that a lot of satellites with other
uses (communications being the primary one) would have to be potentially denied the use of the orbital slot designated to support
generating power from space. Third, such a satellite would also require substantial effort to keep it in its desired orbit given its size. In
orbit, positioning thrusters on a satellite must be fired on semi-regular intervals in order to maintain the satellite's orbit. Without such
orbital positioning maintenance, satellite orbits eventually decay - for a solar power generating satellite, this would mean eventually
not being able to consistently supply power to its intended ground station as it drifts out of its desired position. And then there's the
problem of directly maintaining the satellite itself. What do you do when you need to fix the satellite? Or worse, when it's time to
replace the satellite altogether? Is it really any wonder why this technology hasn't taken off already?

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Links – Wind Power
[ ] Wind requires expensive resources and subsidies
Lodge 7/7/08 - Research Fellow at the Centre for Policy Studies

[Tony, “Wind Chill – Why wind energy will not fill the UK’s energy gap”, http://www.egovmonitor.com/node/19842]
This huge increase in renewables, particularly wind, will require a substantial increase in the amount of money taken
from consumers’ electricity bills to subsidise new wind farms through the Renewables Obligation (RO). The RO is
the Government’s principal policy instrument to encourage the development of the renewable electricity sector. It is an indirect
subsidy system drawing funds from consumer bills and passing them to the renewable electricity sector. This currently
amounts to £1 billion a year, an amount which will have to rise significantly to fund the
construction and development of thousands of new turbines.
[ ] Wind costs hundreds of millions
Statesman Journal, 7/2 /08

[“Expected Power Rates to Rise”,
http://www.statesmanjournal.com/apps/pbcs.dll/article?AID=/20080702/NEWS/807020439/1001]
Renewable power is one answer, and PGE, like other utilities, is adding wind farms to meet a new
state mandate requiring it to generate 25 percent of its electricity from renewable sources by
2025. The wind is free, but it costs hundreds of millions to build large wind farms. Moreover, the
price is escalating because of the worldwide demand for turbines, a plummeting dollar and rising
costs for everything from steel and concrete to transportation.

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Links – RPS
[ ] RPS is an expensive “green façade”
Greenwald and Gray 08 – Lead Davis Wright Tremaine’s Energy Practice group
[ BNET, “Legal & Regulatory: Why RPS programs may raise renewable energy prices,”
http://findarticles.com/p/articles/mi_qa5392/is_200805/ai_n25500358/pg_1?tag=artBody;col1]
Though more than half of U.S. states have adopted renewable portfolio standards (RPS) that require
utilities to meet specific generation targets, and investment in green projects and technology
development has increased significantly, recent data suggest that the price of green electricity
has risen and will continue to spiral upward. What happened? The economic Achilles heel of
current state RPS programs is that they carve out a portion of the larger energy market and
unbalance it by imposing legislatively determined demand. In the pre-RPS era, utilities aligned
their resource planning with demand forecasts largely irrespective of generating technology.
Procurement decisions were based primarily on need, price, and 'fit' (dispatchability and 'black start'
capability). As a result, coal, gas-fired, nuclear, hydro, and renewable energy plants competed against each other
for a piece of the utility demand pie. The overall market benefited from the increased
competition, which--to some extent--also provided a hedge against raising fuel costs. For instance, if
biomass prices rose, utilities could procure more gas-fired generation. In stark contrast, the RPS regime mandates
specific renewable procurement targets, generally a percentage of a utility's overall load.
Legislatively imposed capacity targets--and penalties for failing to meet them--often obligate market
participants to subordinate their own (and their customers') economic interests to the desires of
states. Utilities must purchase RPS-compliant power even if its price cannot otherwise be
justified. The economic consequences for utilities seeking to be RPS-compliant include higher
costs for facility sites, fuel, and generating equipment. Moreover, although in theory there is competition among different
renewable technologies, external forces (such as siting and transmission constraints) effectively limit the availability of resources that can meet a utility's needs--as well as the
benefits that competition can provide consumers. Legislative directives that artificially increase demand will also increase prices when supply cannot keep pace. The net result is
a skewed market in which power produced from renewable resources commands a price premium just for being 'green,' irrespective of the benefits of the project that generated
it. Upward price pressure on RPS-compliant power is further sustained by fast-approaching RPS compliance deadlines. In California, for example, utilities are currently scrambling
to procure significant amounts of renewable resources in order to meet the state's 20% target by 2010. In such a market, rising prices should be no surprise: Prices rise when
demand exceeds supply, regardless of the reasons for the imbalance. In economic theory, competition enables markets to respond with an 'invisible hand.' When the movements
of a market are precipitated by government fiat, they are subject to a visible and very heavy hand. Wind farms are feasible only where it's windy, and photovoltaic arrays only
where it's sunny. Access to fuel similarly limits potential sites for geothermal and biomass projects. Though these geographic realities should be evident, overly ambitious RPS
programs such as California's suggest a failure by regulators to meaningfully assess whether regional renewable energy 'reserves' are sufficient to meet RPS-imposed demand.
The shortage of viable in-state resources has prompted utilities to look to neighboring states to meet RPS requirements. But extending the search for renewable power beyond
state borders can have negative consequences for both the consuming state (higher prices resulting from increased transmission costs) and the producing state (the energy that
could be delivered locally at the lowest price is exported). The bottom line: Although governmental edicts to increase demand promise some short-term benefits, long-term gains
won't be possible unless RPS targets are based on a realistic assessment of available supply--not simply on au courant political correctness. Fostering the development and use
of green generation is good policy that should be continued for several reasons. If implemented wisely, RPS programs can significantly benefit both consumers and the
environment by reducing dependence on foreign oil, diversifying generation fuels, cutting greenhouse gas emissions, and ultimately by lowering the overall cost of power. If they
, RPS programs create artificial market demand that does not reflect real-world
are ill-conceived, however
limitations on renewable project development. The net effects could be much higher electric bills
and a likely public backlash. If policy makers do not carefully consider the possible downsides of
their fervor to make power generation less of a contributor to global warming now--whatever the
cost--history may remember RPS as yet another expensive 'green' facade.
[ ] RPS is costly and ineffective
Lieberman 08 - Senior Policy Analyst in Energy and the Environment at The Heritage
Foundation.
[Ben, “The House Energy Bill: As Anti-Energy As the Senate Version,”
http://www.heritage.org/Research/EnergyandEnvironment/wm1581.cfm]
Over the years, Washington has tried a lot of bad ideas in response to high energy prices:
subsidies for politically correct alternative energy sources, energy-efficiency regulations, tax
hikes, and regulatory restrictions on domestic energy producers. They all failed in the past, but
they're all back anyway. The House is about to vote on its latest energy bill, and like the Senate version that passed on June
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21, it offers not even one truly pro-energy provision. Instead, it repeats past mistakes and will likely lead to lower domestic energy
supplies and higher costs over the long term.A Renewable Portfolio Standard for Electricity. The House seeks a requirement that 20
percent of electricity be generated from so-called renewable sources--chiefly wind but also solar and others. In effect, the
requirement forces utilities that produce America's electricity from natural gas, coal, and nuclear
power to diversify into these alternatives. Of course, the only reason why a federally mandated
Renewable Portfolio Standard is needed in the first place is that that these alternatives are far
too expensive to compete otherwise. In effect, Washington is forcing costlier energy options on the
public. This is particularly true of certain states, especially those in the Southeast and parts of the Midwest, where the conditions
are not conducive to wind power. And since renewables are lavished with substantial tax breaks, a
national mandate will cost Americans both as taxpayers and as ratepayers. About half the states already have their own
renewable portfolio standards (such as California, New York, and Texas), and others have opted not to have them. There is no
good reason for the federal government to step in with a costly, one-size-fits-all measure.

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Links – Hydroelectric Power
[ ] Hydropower is uber expensive
Statesman Journal 7/2/08

[“Expected Power Rates to Rise”, http://www.statesmanjournal.com/apps/pbcs.dll/article?AID=/20080702/NEWS/807020439/1001]
the utility faces the expiration of long-term contracts for hydropower it buys from
Meanwhile,
municipally owned utilities on the mid-Columbia River. PGE buys that hydropower today for between
$10 and $24 per megawatt hour. To replace it on the open market will cost about $70 per
megawatt hour. "It's like watching an accident in slow motion," said Jason Eisdorfer, a lawyer for the
Citizens Utility Board of Oregon. "All of these different market dynamics are coming together."

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Links – Nuclear Navy
[ ] A nuclear navy is needless and costs way too much money
The Virginian-Pilot 08
[Jon W. Glass, "The future may bring more Navy shipbuilding work to Newport News". The Virginain-Port.
http://hamptonroads.com/2008/01/future-may-bring-more-navy-shipbuilding-work-newport-news]
During the late 1960s and '70s, the Newport News yard built six nuclear-powered cruisers, all now
decommissioned. Besides aircraft carriers, those cruisers, plus three built by other yards, were the Navy's only other nuclear
surface vessels. The Pentagon ended the program in the mid-1970s because the ships were too expensive,
said Norman Polmar, a naval analyst and author. A critic of reintroducing nuclear surface ships to the
fleet, Polmar called it a needless expense. Aside from higher construction costs, he said, the Navy
would pay more to crew the vessels with nuclear engineers and have to deal with extra disposal
costs when the ships are retired. "If you add up all three of those, any accountant would say,
'Hey, stay with the conventional,' " Polmar said.

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2NC – Link Magnifier (Not Offsets)
[ ] Not requiring offsets means the shit goes down – devastating economic effects
will occur from bad precedent setting
Center on budget and policy priorities 7/10/08

["TAX EXTENDERS" BILL THE LATEST TEST OF CONGRESS’S COMMITMENT TO FISCAL DISCIPLINE”http://www.cbpp.org/policy-
points6-10-08.htm]
“Taxextenders” legislation now before the Senate has become the latest battleground in the intensifying debate
over whether Congress should abide by its “pay-as-you-go” (PAYGO) rules and pay for new tax and
budget measures so they don’t expand the deficit. Opposition to abiding by PAYGO is also impeding congressional
action to extend Alternative Minimum Tax relief and to avert a scheduled cut in Medicare payments to doctors, and it will be central to
the coming debate over extending the 2001 and 2003 tax cuts. Unfortunately, key congressional Republicans are now
arguing that any extension of existing tax provisions should be deficit financed, on principle. This
claim will make it much tougher for Congress to live up to its pledge of fiscal discipline and could
ultimately lead to multi-trillion dollar increases in the national debt. Congress should pay for the
tax extenders, as its budget rules require. * On May 21, the House adopted legislation extending for one year various
tax cuts that expired at the end of 2007, including the Research and Development Tax Credit, the state and local sales tax deduction,
and the tuition deduction. The legislation does not add to deficits because it fully offsets the cost of these provisions (as well as other
tax cuts it contains [1]) with revenue-raising measures. According to news accounts, the Senate will soon take up and attempt to
pass the House bill or a similar measure. However, Senate Republican leaders and the White House are urging the Senate to instead
extend the expiring tax provisions without offsets. * Congress’s PAYGO rules, which require it to offset the cost
of new tax cuts, extensions of existing tax cuts, or expansions of entitlement programs, reflect
the simple reality that all tax cuts and program increases must eventually be paid for. As the
Administration’s own Treasury Department has found, tax cuts do not pay for themselves; nor can they be financed with higher
deficits forever. Given that the nation already faces massive fiscal challenges in coming decades, it is
irresponsible to foist the cost of new budget and tax legislation on to future taxpayers. * If enacted
without offsets, the tax cuts in the House-passed extenders bill would add $54 billion to deficits
and debt. Moreover, failure to pay for this year’s extenders bill could set a precedent for further
unpaid-for extensions of these provisions, which could add as much as $500 billion to deficits and
debt over the next decade. Arguments against applying PAYGO to the extenders bill do not withstand scrutiny. *
Congressional Republican leaders and the Administration argue that all extensions of expiring tax
provisions should be exempt from PAYGO rules. They also argue that no expiring tax cuts should
be allowed to expire. Adopting these two principles would add more than $4 trillion to deficits
over just the next ten years. * Adopting the principle that extensions of expiring tax provisions
need not be paid for would also encourage policymakers to create even more new “extenders.”
Supporters of new tax cuts would know that, if they could just enact these tax cuts for as short a
period as one year, the tax cuts could then be made permanent without any offsets. This could
lead to an even greater explosion in temporary tax provisions than has already occurred and to
even larger increases in deficits and debt.
[ ] Incentives for energy companies come from the tax pool which has little
oversight, this creates blind pay-offs and hidden subsidies
Green Scissors Report 02 – Compiled by Friends of the Earth Taxpayers for Common Sense U.S. Public Interest
Research Group Education Fund
[“Running on empty,” runningonempty.pdf]
With no surprise, the largest amount of money from the federal budget to energy companies
comes from the federal tax code. Nearly 75 percent of the proposed and existing subsidies are
written into the U.S. tax code. Unlike spending that goes through the appropriations process and
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is subject to annual congressional debate, tax breaks have very little oversight. Once they are
passed into law, they are rarely revoked or repealed, and if companies claim the tax break, the
federal government must pay it out.

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2NC – Rising Rates Scenario
[ ] Budget deficits
Leduc 04 - Senior Federal Reserve Economist

[Sylvain, “Deficit-Financed Tax Cuts and Interest Rates,”
http://72.14.205.104/search?q=cache:A3iNLp8DKdoJ:www.econ.upenn.edu/econ2/honors_deficits_rates_leduc04.pdf+interest
+and+tax+cuts&hl=en&ct=clnk&cd=2&gl=us]
Proposals to lower taxes often meet with opposition in Congress. One argument is that lowering taxes without an equivalent fall in
government spending may lead to future budget deficits, which will translate into higher long-term interest
rates and a lower level of income. In this article, Sylvain Leduc examines the theoretical arguments under which budget
deficits lead to higher interest rates. He also surveys empirical studies that used data on expected budget
deficits to document the possibility that increases in future budget deficits are associated with
higher real long-term interest rates. In 2001 and 2003, the Bush administration proposed a significant reduction in
income taxes, which was later adopted by Congress. In general, reducing income taxes could be benefi- cial for the economy, since it
raises the incentive to work and leads to a higher level of income. Yet, the proposal to lower taxes was met with opposition. One
popular argument against lowering taxes is that without an equivalent proposals to lower taxes often meet with opposition in
Congress. One argument is that lowering taxes without an equivalent fall in government spending may lead to future budget deficits,
which will translate into higher long-term interest rates and a lower level of income.
[ ] Rising interest rates lead to and economic death spiral
Newsday 07
[“U.S. must face up to dollar’s drop,” Lexis]
U.S. interest rates will have to rise to make the dollar more attractive to foreign
If such imbalances are left unaddressed,
would slow U.S. economic growth, costing Americans jobs and income. And that in turn
lenders. That
would make this country an even less appealing place for foreign investment, forcing interest
rates higher and inviting a downward death spiral.

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2NC – Stimulus Trade Off Scenario
[ ] Double bind – Any energy incentives bill would be offset specifically by
entitlement programs including stimulus. If it isn’t offset, it destroys pay go which
would create trillions in new debt
Washington Budget Report 7/15/08

[“Tax Extenders Remain Mired in Clash over Offsets,” http://www.washingtonbudgetreport.com/]
The $55 billion tax extenders and energy incentives bill--HR 6049--remains mired in a partisan disagreement
over offsets. Over 10 years, the bill would spend about $27 billion on provisions to extend dozens of expired (and expiring) tax
provisions. The bill also includes nearly $17 billion in energy tax incentives and about $10 billion in additional
tax relief. The bill passed the House 263-160 on May 21. House and Senate Democrats want to offset the costs
of the bill as required by current PAYGO rules, while Republicans strongly disagree with the
PAYGO requirement. Republicans point out that under current congressional budget rules, extension of
expiring entitlement spending programs do not require offsets (which is correct). However, Democrats
point out that the repeal of PAYGO early in the Bush Administration, and the subsequent failure to pay for the
2001 and 2003 tax cuts, has led to large deficits and trillions in new debt (which is also correct).. The
current House and Senate PAYGO rules were put in place when Democrats regained the majority in 2007. They are
based on the PAYGO law of the 1990s, which required that any new tax cuts need to be offset by revenue raisers
(or entitlement cuts).However, unlike the PAYGO statute of the 1990s (which was enforced through the threat of automatic
entitlement cuts), the current PAYGO rules lack any statutory enforcement mechanism. Consequently, it has been difficult to enforce
the current rules, which have already been waived a number of times. Most notably, last year's AMT patch was not offset. Senate
Democrats have already conceded that this year's AMT patch will not be offset, but they have joined House Democrats
in their insistence that the tax extenders bill must be offset.
[ ] And economic stimulus is key to the economy
Drum Major Institute of Public Policy 08

[“Recovery Rebates and Economic Stimulus for the American People Act of 2008,” http://themiddleclass.org/bill/recovery-
rebates-and-economic-stimulus-american-people-act-2008]
The Middle Class Supports. There is increasing evidence that the economy faces a high risk of recession
which could throw millions of middle-class Americans out of work, reduce income and health
insurance coverage, and increase poverty. A smart economic stimulus plan could prevent the
downturn or soften its effects, but not just any stimulus package will do. To be effective, an economic
stimulus package must direct money to those who will spend it quickly, boosting consumer
demand and prompting increased production and economic growth. For this reason, the household
tax rebates are likely to be effective, if the checks can be sent quickly. It is particularly significant
that the rebates are targeted to cash-strapped middle-class and aspiring middle-class Americans, who are
more likely than wealthier people to spend the money they receive immediately, rather than
saving it. It is also important that Americans relying on Social Security or disability benefits be included, both as an issue of basic
fairness and because these groups are likely to spend their rebates quickly. The increases in FHA, Freddie Mac,
and Fannie Mae mortgage limits are also helpful because they help these entities keep up with the current housing market. By buying
and insuring loans, the FHA, Freddie Mac and Fannie Mae create viable refinance options for middle-class Americans who have been
targeted by predatory loan practices and would otherwise be trapped in unaffordable adjustable rate mortgages and other abusive
loan products. The business tax cuts, a product of negotiation between the Bush Administration and Congress, are less positive
provide little simulative effect but would deprive the public of significant
for the middle class because they
revenue and increase deficits. Offering tax incentives for business investment frequently fails to
generate substantial economic growth because many businesses use the tax cuts for investments
they already planned to undertake anyway, costing the public lost revenue but creating no
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additional economic activity. Another drawback is that it takes considerable time for businesses to make
new investments and for investments to result in increased employment or purchasing. Yet to be
most effective economic stimulus should have a rapid impact on the economy. Finally, the Center
on Budget and Policy Priorities points out that business incentives harm state budgets, since
state and federal tax codes are linked. Many states are already facing a revenue crunch due to the
economic downturn and, unlike the federal government, they cannot run budget deficits. The result could be cuts in state
and local services that middle-class Americans rely on, from education to road maintenance to public safety.

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2NC – Exports Scenario (Subsidy Specific)
[ ] Exports are helping the US now
The Missourian 7/20/08

[http://www.columbiamissourian.com/stories/2008/07/20/us-exports-economic-problems/]
Loory: What effect will economic problems in the U.S. have on other economies? Faucher: The
weak U.S. dollar is making exports to the U.S. more expensive, but it is boosting U.S. exports
overseas. That’s weighing on other countries while it’s helping to support the U.S. economy. The Fannie Mae and
Freddie Mac problems have led to falling stock prices elsewhere. There is concern that if the U.S. goes down, it
could take the global economy along with it.
[ ] Subsidies for alternative energy piss off trade partners who stop importing all
goods from the U.S.
The Financial Post 4/28/08

[“U.S., EU exchange threats over biodiesel subsidies; Barriers to trade; European board requests punitive duties,” Lexis]
European biodiesel producers kicked off a new transatlantic trade row yesterday when they asked
Brussels to impose punitive duties on U.S. biodiesel, and their U.S. rivals said they would hit back.
With demand for plant-based fuels starting to soar as the world seeks ways to fight climate change, the
European Biodiesel Board (EBB) said companies in the European Union were going out of business
because of unfair U.S. subsidies. "Since 2007, as a result of these measures, there has been a dramatic surge in U.S.
biodiesel exports to the EU, thus creating a severe injury to the EU biodiesel industry," the EBB said in a
statement. The EBB said it was formally requesting the EU's executive commission to hit U.S. imports
with anti-dumping and anti-subsidy duties. The EU has set itself a target of using biofuel for 10% of its transport fuel
by 2020, something that will require large amounts of imports, EU officials say. The European industry has long
complained that U.S. subsidies for "B99" biodiesel, which is blended with small amounts of mineral diesel, break World
Trade Organization rules. The U.S. exports are also eligible for EU subsidies. The head of a U.S. biodiesel group accused the EU
sector of trying to use litigation for protectionist ends and said his group would "aggressively challenge" EU trade obstacles. "It is
hypocritical for the European Biodiesel Board to cry foul while they benefit from a blatant trade barrier," said Manning Feraci, vice-
president of federal affairs at the National Biodiesel Board. He said EU biodiesel fuel specifications were discriminatory and
inconsistent with WTO rules. "Our industry will aggressively challenge existing EU trade barriers -- such as the EU's discriminatory
biodiesel fuel specification -- and other EU biofuel policies that are inconsistent with WTO rules and provide preferential treatment to
European fuel producers," Mr. Feraci said in a statement. The European producers have previously said they
would seek to hit U.S. imports with duties. Yesterday's complaint starts the clock on the EU
procedure for handling such cases. The European Commission has 45 days from receipt of a complaint to decide whether
to launch investigations. It would then have up to nine months to impose duties provisionally if it finds evidence that trade rules were
broken. Those duties may eventually be made definitive, usually lasting five years. "We will look at it very carefully," said Peter Power,
a spokesman for Peter Mandelson, the EU Trade Commissioner, referring to the European industry's complaint yesterday. "We will
not under any circumstances tolerate unfair trade."
[ ] Exports are key to the US and Global economies
News Ratings 06
[“US slowdown to impede global economic growth” http://www.newratings.com/analyst_news/article_1304298.html]
NEW YORK, June 23 (newratings.com) – Analysts at Dresdner Kleinwort Wasserstein say that the US economic
slowdown is likely to have a significant impact on the global economy. In a research note published this
morning, the analysts mention that exports continue to be the key growth driver in major economies, such as
Japan and the Eurozone. Any deceleration in the US economy would impact exports and adversely

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affect domestic demand, the analysts say. Moreover, the reversal of interest rate expectations,
triggered by a US slowdown, is likely to weaken the US dollar, maybe very substantially,
Dresdner Kleinwort Wasserstein adds. A slowdown in demand from the US, combined with a
weaker dollar, has historically exerted pressure on global economic growth, the analysts point
out.

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2NC – Inflation Link + Turns Case
[ ] Alternative energy incentives create overbuilt industries – they are a politically
driven sham that causes hyper inflation and turns case because it hinders true
technical development
Burkett 08 – Lt col. And econ analyst

[Bill, “The Sham of the Bush-Pelosi Tax Rebate Economic Stimulus-- that could cost a Trillion Dollars,”
http://www.freedom4um.com/cgi-bin/readart.cgi?ArtNum=71272]
BOTH political parties, by claiming and reinforcing the false claim that this is a consumer spending based economy are
doing nothing but building the requirement for bailing out overbuilt industries, including
consumer based service industries. It's far easier to understand - economically - that when we have too much
capacity within a single industry, the industry is overbuilt and therefore must retract. As a result
the excess capacity, by pure law of supply and demand, will be trimmed by lack of ability to
market its production and the least efficient or capitalized will be closed down purely by lack of
profit. In America, we currently have numerous such overbuilt business and service sectors that
have been artificially propped up by poor policy. Certainly, it can be argued, that allowing the free market to take these
effects will cause a deep economic recession where job loss will be prevalent. This would be far less painful, if America had not been allowed to become
so dependent on consumerism; on imports; and thus a nose-diving dollar. But the facts remain. The only thing holding up this economy has long been
false assertions and claims, and the motive for maintaining is to protect businesses at the expense of consumers, rather than vice versa. The economic
bubble must be deflated rather than allowed to collapse if this nation’s economic future will be recovered. There will be much pain, and gnashing of
teeth. Great institutions will be forced to face their own folly and many may not survive. In an uncontrolled manner, the damage will be cataclysmic.
Within a controlled process, the pain will be extreme, but manageable. Not once have I heard EITHER Bush or Pelosi talk
about the causes of this near hyper inflation (when measured in true economic terms). The critical cause is
FUEL and ENERGY. The alternative energy bill is again, a politically driven sham to provide economic
kickbacks primarily to Archer Daniels Midland - (look up the political contributions of ADM and its primary ownership Mark Andreas and associates and their history and
you understand both cause and affect). Florida Power and Light and others have also been direct recipients of these kickbacks. Under any previous American historical picture,
regulations which artificially withheld production within the US would be altered to affect policy;
and if gouging was taking place, regulatory authority would be implemented to correct it. But
deregulation has taken away any control or ability to respond. Instead corporate power and
monopolistic control have allowed the stranglehold of excessive energy costs, and limited true
alternatives to the internal combustion engine and other technological solutions to be slowed or stopped.

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2NC – Business Confidence Scenario
[ ] Regulative market tools for the energy sector destroy investor confidence
Hutton 08 - MP Secretary of State for Business, Enterprise & Regulatory Reform

[John,” Government Strategy to tackle climate change and deliver energy security in the UK”
http://www.berr.gov.uk/pressroom/Speeches/page46409.html]
But atthe heart of the low-carbon revolution must be a renewed commitment to competitive
markets. They are the key driver of climate change and energy security solutions in the UK, Europe and the rest of the world. It’s
all too tempting, however, in the face of high energy prices and the urgency with which we need
to decarbonise our economy, to look towards regulation and not markets as the main instrument
of change. The transformation of global energy systems will require an enormous amount of investment. Essential to its
generation is creating the most stable, predictable and attractive regulatory environment that
allows the market and investment community to respond to this challenge. From the UK’s perspective –
whether it’s in new nuclear, renewable energy or clean coal – we’re competing for that investment. We have no right to believe it will
come to the UK. So every action we take must be seen through the prism of whether regulation will
improve investor confidence or not.
[ ] Investment maintains the economy – its decline brings the whole economy with
it
Rajkarnicar 02 - chief of the Avenues Advertising Agency

[Bhaskar, 'Fear Of Economic Collapse Is Misplaced', www.nepalnews.com]
The collapse of economy in any country depends on beliefs and confidence of businessmen. If
businessmen have confidence in the market, the economy would not collapse. We do have huge
liquidity crunch, which shows eroding confidence. Likewise, other government policies have added to this
problem. I think this is not the time when government should be introducing stringent measures like Voluntary Disclosure of
Income Scheme and things like that. This is the time when government should be building on
businessmen's confidence, not hurting them. Such strong measures can wait. If the government does
continue with the wrong policies at this juncture, there is a possibility of big accident. However, I
still think that if the government and the private sector boost the confidence of businessmen, no
such accidents would occur.

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*Internals*

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Internals – US Econ  Global Econ
[ ] The Global economy is at risk due to U.S. economic difficulties
The World Today 7/18/08

[“IMF warns on inflation threat,” http://www.abc.net.au/worldtoday/content/2008/s2307691.htm]
EMMA ALBERICI: As concerns about the health of the US economy deepen, the International Monetary
Fund has issued a fresh warning about the country's rising inflation. While the IMF is slightly more
optimistic about global economic growth, it's lifted inflation forecasts in both advanced and emerging
economies because of spiralling food and crude oil prices. The IMF is also worried about the impact of
America's housing slump internationally but says the subprime mortgage contagion is moving at a than first thought. Here's our
that world
business editor, Peter Ryan. PETER RYAN: Back in April, the IMF slower pace warned there was a 25 per cent chance
growth would stagnate because of an increasingly fragile US economy. Today in an update to its
world economic outlook, the IMF said a global recession led by the American economic demise
remained a possibility. SIMON JOHNSON: After a remarkable five year span of strong growth and lower inflation, the
global economy is facing its most difficult set of circumstances in many years.
[ ] Global Growth is significantly affected by the U.S. economy – credit crunch

proves
The Wall Street Journal 07

[“Ontagion Effect: Markets Fear U.S. Woeswill Hit Global Growth,”
http://online.wsj.com/article/SB118730951586100397.html?mod=googlenews_wsj]
The dramatic selloff yesterday in overseas stock markets and commodities signals increasing worry among investors that the credit-
market mess in the U.S. could trigger a slowdown in global economic growth. The market
developments, tempered only by a late-day comeback in U.S. stocks, offered an example of how intertwined the
world's financial system has become. What started as a meltdown in one sector of the U.S. bond
market has led to fears of a wider credit crunch that could affect economies from South Korea to
Mexico. AROUND THE WORLD • The Situation: Overseas stock markets have been pummeled over concerns that U.S. credit-market
problems could spread and put the brakes on global economic growth. • The Background: Fast-growing economies in China and India
had been expected to pick up the slack from any slowdown in the U.S. Now, fears that U.S. imports could drop off have trickled down
to emerging markets. • What's Next: The Fed and its central bank counterparts in Europe and Japan all have interest-rate decisions on
their agendas at meetings in coming weeks. "Today is the first day that markets are asking questions as to whether global
growth is going to be significantly affected," said Jim O'Neill, head of global economic research at Goldman Sachs. "Today feels
quite scary, frankly." It was only three weeks ago that the International Monetary Fund raised its outlook for global economic growth this year and next.
While the IMF acknowledged that U.S. growth would fall short of its earlier forecasts, it predicted that fast-rising China and India, helped by a cyclical
upswing in Japan and Europe, would more than pick up the slack. The scenario that worries investors around the world starts with a U.S. slowdown set off
by lower housing prices and tougher lending standards. That would lead the U.S. to import fewer computers, cars and sneakers, hurting big exporters
such as China and South Korea. Those countries have been big buyers of commodities, driving up the prices of oil and metals. If they eased back, that
would hurt big commodity producers such as Brazil and put some large, risky commodity ventures around the world at risk. Mohamed El-Erian, head of
the company that invests Harvard University's $29 billion endowment, believes the more-optimistic picture of global growth still has merit -- as long as
the U.S. economic slowdown is gradual and doesn't result in a recession. "The next few weeks will be a test of this thesis," he said. Goldman Sachs's Mr.
O'Neill and some other economists remain confident that consumers in large emerging markets such as China will go on buying. Earlier this week, China
reported retail sales growth of 16.4% in July, the highest such figure in three years. That means Chinese consumers made roughly the same contribution
to world economic growth that month as U.S. consumers, notes Mr. O'Neill. Meanwhile, domestic demand and trade with the developing world may help
Europe's economic powers continue their recent healthy performance. The global selloff began late Wednesday in the U.S. as credit-market worries hit
Countrywide Financial Corp., one of the biggest mortgage lenders, and a fund affiliated with buyout firm Kohlberg Kravis Roberts & Co. It picked up
steam in Asia, where the Japanese market fell 2%, Hong Kong dropped 3.3% and South Korea fell 6.9%. European stocks followed, with U.K. stocks down
4.1% and Germany down 2.4%. The selling continued in the U.S., with the Dow Jones Industrial Average falling more than 300 points, before a powerful
rebound brought the U.S. market back to near where it started the day. The Dow finished down 15.69 points, or 0.12%, at 12,845.78. Central Banks' Role.
Some of the late-day recovery stemmed from anticipation that central banks in the U.S., Europe and Japan will respond to the market weakness. The
Bank of Japan's policy-making board meets next week and may hold off on an interest-rate increase that had been anticipated earlier. The European
Central Bank meets Sept. 6. The U.S. Federal Reserve meets Sept. 18. The market expects a U.S. interest-rate cut then or even earlier, although the Fed
hasn't given any clear signals to encourage that expectation. Commodities prices were sharply down, as were companies tied to commodities and global
growth. Crude-oil futures fell $2.33 to $71 a barrel on the New York Mercantile Exchange. Nickel, a key ingredient in stainless steel, fell 5% on the London
Metal Exchange and is 50% below its recent peak price, reached in May. "In the global economy, the U.S. is still the dog,
and the rest of the world is still the tail," he said.

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[ ] The US is the world economic engine, multiple reasons
Brookes 06 - Senior fellow at The Heritage Foundation

[Peter, http://www.heritage.org/Press/Commentary/ed070406a.cfm]
The United States is the world's economic engine. We not only have the largest economy, we
spend 40 percent of the world's budget on R&D, driving mind-boggling innovation in areas like
information technology, defense and medicine. We're the world's ATM, too, providing 17 percent
of the International Monetary Fund's resources for nations in fiscal crisis, and funding 13 percent
of World Bank programs that dole out billions in development assistance to needy countries.
Internals – US Econ  Global Econ

[ ] US economic collapse will destroy the global economy
Mead 04 – Senior Fellow at Council on Foreign Relations

[Walter Russell, “America's STICKY Power,” Foreign Policy, Mar/Apr, Proquest]
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.

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Internals – FD  Stable Econ
[ ] Fiscal Discipline is critical to economic success
Summers 01
[Lawrence H., is the president-designate of Harvard University. He served as Treasury secretary during the Clinton
administration. , “Keep Growth Alive!”, DLC Blueprint Magazine,
http://www.ndol.org/ndol_ci.cfm?kaid=125&subid=162&contentid=3296]
Maintaining a prudently managed budget.

Fiscal discipline has been critical to our economic success of the
last eight years, and it will be critical in the years ahead, especially as we tackle the demands of
an aging society. It would be a significant error to threaten our fiscal discipline by enacting an excessive tax cut.
In the past decade, the American economy underwent a transformation and became the envy of the world. As the 1990s began, unemployment and interest rates were high, and
confidence in the economy was low. Key U.S. businesses seemed to have lost their competitive edge. Today, all that has changed. Even with the current slowdown, the U.S.
economy is the world leader. Unemployment is still low, and wages across the income spectrum have risen. Many factors contributed to the transformation of the U.S. economy.
First and foremost, of course, was the hard work and entrepreneurial spirit of American workers, farmers, and businessmen. Technological advances gave birth to new businesses
Thanks to fiscal discipline, we moved from a vicious
and new ways of conducting business, which helped productivity to increase.
cycle of rising public debt, higher interest rates, lower private investment, and slower
productivity growth to the opposite: a virtuous cycle of lower deficits and eventually higher
surpluses, debt reduction, low interest rates, increased private investment, and greater
productivity growth. Because of this prudent budget management, roughly $2.5 trillion that would otherwise
have been absorbed by government borrowing was instead invested in making America more
productive.
[ ] Fiscal Discipline is crucial to the economy – booming business and controlled

interest rates
Lemieux 01 - The senior economist of the Progressive Policy Institute

[Jeff, “Economic Stimulus and the President's Proposals for Unemployment Relief and Additional Tax Cuts”, October 15,
Progressive Policy Institute, http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=127&subsecID=177&contentID=3844]
Renewed fiscal discipline is important for two reasons. First, world financial markets have greatly
rewarded U.S. fiscal discipline during the last 7 or 8 years. Low interest rates and booming
business possibilities -- which are both made possible by fiscal discipline, open trade, and
government policies that help foster productivity growth -- have made the United States the
world's most desirable place to invest. Losing the fiscal discipline that dominated Washington policymaking in
the 1990s would directly hurt the U.S. economy by increasing interest rates and lowering prices for
U.S. assets, including stocks of U.S. firms.
[ ] Fiscal Discipline is key to the economy, national security and competitiveness
Walker 05 – Comptroller General of the US

[“Spending Is Out of Control; The head of the GAO calls for controls on both tax cuts and spending,” Business Week,
Lexis]
The Roman Empire fell for many reasons, but three seem particularly relevant for our times: (1) declining moral and ethical
values and political comity at home, (2) overconfidence and overextension abroad, and (3) fiscal irresponsibility by the
central government. All these are certainly matters of significant concern today. But it is the third area that is the
focus of my responsibility and authority as Comptroller General, the nation's top auditor and chief accountability officer. Unfortunately, there is no question that both U.S.
government spending and tax cuts are spiraling out of control. Recent increases in federal budget deficits have far outpaced the cost of the global war on terrorism and
incremental homeland security costs. Although the $319 billion fiscal 2005 deficit was considerably lower than the previous year's, it is still imprudently high -- especially given
that federal spending is expected to increase dramatically when the baby boomers begin to retire later this decade. Less well known, the federal government's long-term liabilities
and net commitments, such as those relating to Social Security and Medicare, have risen from just over $20 trillion in fiscal 2000 to more than $43 trillion in fiscal 2004, in large
part because of the passage of the Medicare prescription drug bill in December, 2003. This translates into a burden of more than $150,000 per American and $350,000 per full-
time worker, up from $72,000 and $165,000 in 2000, respectively. Those amounts are growing fast because of continuing deficits, our aging society's longer lifespans, slower
workforce growth, and compounding interest costs. THAT'S WHY IT'S TIME to get serious about our nation's fiscal future.

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The federal government should provide more clarity about where we are and where we are
headed from a fiscal perspective. It also should reimpose meaningful budget controls on both the
tax and spending sides of the ledger and begin a long-overdue review of all major federal
spending programs, tax policies, and operating practices. Believe it or not, much of the
government is on autopilot and based on economic, security, workforce, and other conditions that existed in the 1950s and 1960s. It is time to rationalize
and modernize the mission, programs, policies, and operations of the federal government to reflect the challenges and opportunities of the 21st century. We also need a set of key
national indicators to help assess America's position and progress over time and in relation to other countries. Using outcome-based economic, security, environmental, and social
indicators -- such as life expectancy, infant mortality, and medical error rates, for example -- would help strategic planning, enhance performance and accountability reporting,
and facilitate the necessary reengineering of the federal government. Indeed, without a more disciplined approach to our fiscal challenges, policymakers as a default will tend to
resort to across-the-board spending cuts and other sweeping measures. Such actions, even if used year after year and on a large scale, won't come near to closing our fiscal gap
and will actually result in perverse incentives in some cases. For example, effective agencies and programs with reasonable budgets would be treated the same as ineffective
ones with bloated budgets. Recent increases in the total number and dollar amount of congressional ``pet projects'' serve to make the job more difficult. Our fiscal challenge is far
the President and Congress need to make some tough
too great to continue such business-as-usual approaches. Instead,
choices in connection with entitlement programs, spending practices, and tax policies to put us
on a more prudent path. It's true that other industrialized countries also face serious long-range fiscal challenges. But that's
no excuse to delay getting our house in order. After all, our future economic security, competitive standing,
quality of life, and even national security are at stake.

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Internals – FD  Stable Econ
[ ] Fiscal Discipline is crucial to a successful economy
The Washington Times 6/8/08

[“How to impose fiscal discipline,” Lexis]
Fiscal responsibility is about more than balancing the nation's checkbook; it is about keeping our
promises to our seniors and our young people and promoting job creation and prosperity. Without fiscal
discipline, America will pass on a legacy of debt, fail to meet the demands the baby-boom generation will place on
Social Security and Medicare, and undermine access to capital, the lifeblood of new and growing
businesses. In 2007, the new Democratic Congress began to restore our nation's fiscal health while inheriting a fiscal challenge
of historic proportions. President Bush and the Republican Congress turned a $5.6 trillion, 10-year surplus inherited from the Clinton
administration into a $3 trillion deficit. Thanks largely to the cost of the war in Iraq and the Republican penchant for tax cuts for the
wealthy, the deficit ballooned to $248 billion in 2006. When Democrats promised a new direction for America in the 2006 campaign,
we pledged to begin a new era of investing in American jobs and strengthening our national security - all while restoring the principle
of fiscal responsibility. And we have. On Day One of the 110th Congress, we restored pay-as-you-go budget rules that helped
balance the budget and spurred the record economic growth of 1990s. Last year, we achieved many historic victories for the
American people: We implemented the 9/11 Commission recommendation to make America safer; enacted the largest investment in
veterans' health care in history; passed landmark energy legislation to increase fuel efficiency and reduce our dependence on foreign
oil; invested in innovation with a new generation of math and science teachers and a new commitment to basic science research;
and, we cut taxes for the middle class and those who aspire to it. We did all of this and more without raising taxes on the American
people or adding a single penny to the deficit. The simple concept of generational responsibility demands
that our children not pay for this generation's actions. Yet the Bush administration policies were paid for by
adding some $3.7 trillion to the federal debt, or about $48,600 for each American family of four. Seniors and baby boomers should
be concerned about continued deficits as well. Had the Bush administration used the projected $5.6 trillion budget surplus wisely, it
could have shored up Social Security and Medicare and met other pressing needs. While Social Security is not in crisis, stresses on
Medicare threaten the health and economic security of future retirees. The restoration of budget discipline will help position us to
meet this challenge. As we proved in the 1990s, the benefits of budget discipline can also be felt by
hardworking Americans across the country. Between 1993 and 2000, the economy generated more than
200,000 new jobs each month. Yet during a Bush administration that abandoned pay-as-you-go
budgeting, we have seen the American economy falter. Since 2001, the nation has lost 3.5 million manufacturing
jobs alone. Even after the failures of the past seven years, President Bush and congressional Republicans refuse to adopt more
fiscally responsible policies. They reject Democratic efforts to fully offset all new spending or tax cuts and have proposed billions
more in spending - much of it on the war in Iraq and tax cuts for the wealthy - without even attempting to pay it. The record of
Republican economic and budget policy since the Reagan administration provides ample evidence of its shortcomings. In 1993, a
Democratic president and a Democratic Congress inherited a sluggish economy and massive budget deficit from the Bush White
House but met the challenge by making difficult choices and smart investments that paid dividends for the American people and our
economy. History will have to repeat itself. Over the past 18 months, the Democratic Congress has begun putting the
brakes on six years of fiscal recklessness. In 2009, we look forward to having a partner in the White House who shares
our goal of restoring America's fiscal strength. Our nation's future depends on it.
[ ] Fiscal Discipline is a key internal link to the economy – it’s empirically proven
Summers 00 – Former Secretary of the Treasury

[Lawrence H., “THE CASE FOR FISCAL DISCIPLINE", press room, office of public affairs, May 3
http://www.ustreas.gov/press/releases/ls605.htm]
there has been a widespread recognition of the importance of fiscal discipline, the benefits
Globally,
of crowding in the private sector rather than crowding it out, and the important role that
confidence can play in ensuring the long-term success of economic policies. The idea that fiscal
discipline would help an economy expand by promoting confidence and crowding the private
sector in rather than out, used to be considered theoretical. In that sense our fiscal policies in 1993 had an
experimental element. Today the results of that experiment are in: the link between fiscal discipline and
higher growth has been demonstrated.

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Internals – FD  Stable Interest
[ ] Fiscal Discipline is key to stable interest rates
Orszag, Rubin and Sinai 04

[Peter, Senior Fellow in Economic Studies, Robert, Office of the Chairman at Citigroup, and Allen, Chief Global Economist,
Decision Economics, Inc. http://www.brookings.edu/views/papers/orszag/20040105.htm]
Someskeptics of the linkage between future fiscal conditions and current long-term interest rates
argue that the current macroeconomic context “proves” that there is no such connection, since
nominal long-term interest rates have remained relatively low despite the recent dramatic deterioration in the long-term budget
outlook. This argument is problematic for several reasons. First, it is possible during economic downturns
that financial markets do not focus on long-term fiscal issues; if this is the case, the effect of the fiscal
deterioration on long-term interest rates will manifest itself only as the economy recovers. Second,
the overall level of nominal interest rates is affected by many factors, including inflationary expectations,
fiscal policy, monetary policy, and other variables. The Federal Reserve, for example, has reduced the short-term Federal funds rate
to historic lows to bolster aggregate demand. For purposes of assessing the effects of future budget surpluses
or deficits, it may be more insightful to examine the spread between long-term and short-term
interest rates. That spread is currently relatively high compared to its average level since 1960, and has increased substantially
since the 2001 tax cut. To be sure, the interest rate spread typically widens during recessions and other
periods of sluggish economic performance, and it is unclear to what extent the elevated spread
reflects budget dynamics as opposed to other current and expected macroeconomic conditions.
The point, however, is that it is not possible to dismiss the potential effect of deficits on interest rates
merely by pointing to current market interest rates.

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Internals – FD  Budget Control
[ ] Loss of fiscal discipline leads to unsustainable budget deficits

Decision Economics, Inc. http://www.brookings.edu/views/papers/orszag/20040105.htm 1/5]
budget deficits also do not put enough emphasis on three other related factors: uncertainty; the
Conventional analyses of
spending
asymmetries in the political difficulty of revenue increases and spending reductions relative to tax cuts and
increases; and the loss of flexibility in the future from enacting tax cuts or spending increases today. Budget
projections are inherently uncertain, but such uncertainty does not provide a rationale for fiscal profligacy. The
uncertainty surrounding budget projections means that the outcome in the future can be either better or worse than expected today.
Such uncertainty can actually increase the incentive for more saving ahead of time—in other words, for more
fiscal discipline. In addition, it is much harder for the political system to reduce deficits than to
expand them. As a result of this asymmetry, enacting a large tax cut or spending increase today is costly
because it reduces the flexibility to adjust fiscal policy to future events. Therefore, large tax cuts or
spending increases today carry a cost typically excluded from traditional analysis: They constrain
policy-makers' flexibility to respond to unforeseen events in the future. Thus, in our view, to ensure
healthy long-run U.S. economic performance, substantial changes in fiscal policy are needed to
deal preemptively with the risks stemming from sustained large budget deficits and the
economic imbalances they entail. The political system, however, seems unwilling to address the threat posed by future
deficits and to make the necessary choices to put the nation on a sustainable fiscal course.4 Failing to act sooner rather
than later, though, only makes the problem more difficult to address without considerable
instability, raises the probability of fiscal and financial disarray at some point in the future, and
runs the risks of further constraining policy flexibility in the future.>

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Internals – High Interest  Econ Collapse
[ ] Increase in interest rates is bad for the economy – in this unique situation it
would actually cause more inflation and collapse
Ariff 6/26/08 - The executive director of the Malaysian Institute of Economic Research.
[Mohamed, “Opinion: A recession pill is just what the US must take”
http://www.nst.com.my/Current_News/NST/Thursday/Columns/2277128/Article/index_html]
An increase in interest rates is likely to adversely impact the region's GDP growth, through
moderation in consumption and investment expenditure. Growth for the year as a whole may average around
four per cent for Asean member countries, admittedly a best-case scenario, which is not bad in current circumstances. The above
prognosis is premised, however, on the assumption that a
US recession will be mild and short-lived. But the chances are it may
last for some time. Experience has shown that a sharp decline is usually followed by a sharp recovery. Now that the US
is slipping into a recession gradually, the pace of recovery is also likely to be gradual as well. In this
scenario, commodity prices, especially non-oil, would fall markedly, as demand would contract. There are ominous signs that the
industrialised countries are headed in the direction of protracted economic woes, as they battle to avoid economic recession and
defuse inflation simultaneously, which does not add up. These two goals require diametrically-opposed policies. Anti-
recessionary polices tend to fuel inflationary pressures, while anti-inflationary measures tend to
depress the economy. The chances are that anti-inflationary and anti-recessionary polices would
negate each other, stoking stagflation, a combination of economic stagnation and inflation,
which can be painful. Obviously, these are not easy times for central banks the world over, as they face tough choices with
little space for monetary policy manoeuvres. It would be easy for central banks to fix the problem, were inflation a simple case of
This time, however, inflation
"too much money chasing too few goods", in which case higher interest rates should suffice.
is fuelled by rising costs rather than excess demand; a situation where higher interest rates may
contribute to higher costs and higher prices. Even for high-flyers like China and Vietnam, which have been growing
at or near double-digit rates in recent years, high inflation rates are not a sign of economic overheating, as costs of fuel, foods and
raw materials have been rising in sync with global trends. Economies with moderate growth, in particular, cannot afford to shave off
some growth in exchange for lower prices. Besides, there is no certainty that tight monetary measures would lead to lower prices.
There is no simple explanation for the phenomenon of rising prices, regardless of whether it is described as "cost-push" or "demand-
pull" inflation. Rising prices have been blamed on a number of wide-ranging factors, from climate change to speculative trade deals
in commodities, and rightly so. While there are no quick fixes for the problem of climate change, which calls for a concerted
collective action by all countries, the problem of disruptive speculation can be contained by regulating the futures market. The
malaise of the world economy has much to do with global imbalances, which have shown up in national and international statistics
relating to balance of payments deficits or surpluses, international reserves, savings-investment gaps, external debt, and exchange
There has been much talk of a US recession, but without concrete
rate valuation, to mention a few.
evidence, with various indicators moving in different directions. While analysts are divided, the fact remains
that it would be better for the US and the rest of the world if the US can put up with a mild recession now instead of resisting what
may well be part of the solution to the problem of global imbalances. A recession now may well be a cure for some of the ills of the
US economy. Attempts to stave off a recession would only serve to postpone, not prevent nor pre-empt, the inevitable.
[ ] High interest causes massive economic decline
Swanson 04 – Professor of economics at University of Arizona

[Gerald J., “America the Broke, “page 10]
The more government spends, the more it has to borrow; the more it borrows, the more it has to
spend for interest on its loans. Last year's $318 billion in interest on the national debt meant that we paid an average 4.6
percent. At 9 percent interest, we would pay roughly twice as much ($636 billion), leaving too little cash
on hand to cover Social Security, Medicare, and Medicaid beneficiaries—and nothing to pay for
nondefense discretionary programs such as education, justice, transportation, and other government functions we take
for granted. The inevitable shortfalls would, of course, require still more borrowing and still more
interest payments, ballooning the debt even more. You get the picture: If interest rates climb and tax
rates don't keep up, then at some point the government's interest payments will exceed its tax
revenues. And that assumes that the debt isn't constantly expanding, which it is. The chart on the previous
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page shows the rising-interest path to fiscal collapse. At last year's income tax revenues of $1.3
trillion, total insolvency would occur when rates hit 18 percent, thereby pushing interest costs above total tax
revenues. And if you think 18 percent interest rates are out of the question, think again. We surpassed that number in the early
1980s, a decade that many of us remember all too well. To put it bluntly, this country is facing national insolvency
in
the near future. Interest rates on Treasury securities are at historic lows. And when they go up, as
they most assuredly will, paying those rates will consume more and more of the government's
income.

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Internals – Low Interest  Global Collapse
[ ] Negative interest rates destroy the global economy – It creates artificial price
fixing and distortions that create inflationary pressures and ultimately depression
Askari and Krichene 7/15/08 - professor of international business and international affairs at GWU
and IMF senior economist
[Hossein and Noureddine, “The G-8 ignores basics,” http://www.atimes.com/atimes/Global_Economy/JG15Dj05.html]
the US Federal Reserve, to rein in

The Hokkaido summit should have urged central banks around the world, especially
overly expansionary monetary policy as this is the most pressing requirement for stabilizing food
and oil prices and paving the ground for a non-inflationary and stable economic growth. Only by
restoring monetary discipline and setting strict ceilings on respective money and credit
aggregates can we hope to stabilize prices. There is no inflationary experience in the past that
did not end without applying the money brakes and contracting monetary and credit growth. Only by
abandoning interest rate setting and swiftly controlling monetary aggregates can inflation be
subdued. That is how Paul Volcker when US Federal Reserve chairman was able to arrest the
stagflation of the 1970s. By following their own domestic priorities, beggar-thy-neighbor policy, and competitive devaluation,
the G-8 leaders have deliberately sidestepped the true cause for oil and food price inflation and decided instead to pursue
destabilizing cheap money policies, irrespective of the dangers that such policies pose for the world economy. The monetary
character of the present financial crisis and rampant inflation have been underlined by many eminent figures. George Soros, in his
2008 bookThe New Paradigm, considered the present financial crisis as the worst since the 1930s
and attributed it to the Fed's overly expansionary policy since 2000, with interest rates at lowest
levels in half century, and real interest rates becoming largely negative. He wrote: "Cheap money engendered a
housing bubble, an explosion of leveraged buyouts, and other excesses. When money is free, the rational lender will keep on lending until there is no
one else to lend to. Credit safety standards have been relaxed and monumental loans went to subprime borrowers." In the same vein, Theodore J
Forstmann, in a recent article in Wall Street Journal (July 5, 2008), titled "The Credit Crisis is Going to Get Worse", attributed the present crisis to over
the Fed pumped so much money into the financial system that it
money supply by the Fed since 2001, noting that
distorted the incentives and the decision-making of everyone in finance. When real interest rates
are negative, borrowing money is effectively free - the debt loses value faster than the interest
adds up. When money becomes too plentiful, bankers and other financial intermediaries end up
taking on more and more risk for less return. Contending that there was no other episode in the history of the US
during which money was ever this inexpensive, he indicated that the creation of too much money caused all kinds of
excesses and was responsible for the worst financial instability in the post-World War II period.
While the G-8 Summit in Hokkaido was underway, Fed chairman Ben Bernanke reassured the financial system of the
Fed's continuing availability of bailout money. Bernanke was certainly ignoring the plight of
millions of people, oil prices, or the value of the dollar. His twin objective is to finance Wall Street and the US
budget deficit. By injecting billions of dollars in bailout money since August 2007, Bernanke has not created any additional oil, corn,
or rice; he only put more flames into the oil and food markets, sending oil prices racing from $65 per barrel to $145 per barrel and the
dollar tumbling from $1.27 per euro to $1.6 per euro. Corn and rice prices rose two-fold, triggering waves of food riots. Bailout
money, besides increasing moral hazard, is highly inflationary, imposing a heavy tax burden on cash holders,
creditors, retirees and workers, and socializing the losses of unsafe banking. It is an abhorrent form of social injustice
because of its tax burden and impoverishment effects. It punishes the public for errors the public
did not make. Certainly, Bernanke does not want to be remembered as liquidationist of the financial system; however, by cutting real incomes,
he will be remembered as a liquidationist of millions of retirees, workers and vulnerable groups, as cheap money policy was carried while he was
chairman of the Counsel of Economic Advisors and as Fed chairman. The sharp contrast between Bernanke's cheap-money policy for fiscal deficit
financing and bailout and his strong words against inflation and currency depreciation makes the Fed chairman the most ambivalent and least
transparent of all previous Fed chairmen. Absence of consistency between his policy and words creates more uncertainty and disorder in foreign
The setting of interest rates by central banks, or what is known now as
exchange, commodities and financial markets.
has been
Taylor's rule (designed to adjust rates to stabilize the economy in the short term and maintain long-term growth),
severely criticized, and continues to be an unsafe monetary policy rule which confers absolute
and arbitrary powers to the central bank, and is totally in contradiction with the mandate of a
central bank: to manage safely liquidity and not to control prices or the economy at large. An
interest rate is a price, like many other prices. Fixing any price in the economy will create
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distortions and cause inefficiencies. The fixing of interest rates at negative levels by the Fed in the past
seven years has contributed to the housing boom, followed by the meltdown of subprime loans, financial crisis , faltering
Bearn Stearns, Fannie Mae and Freddie Mac, and many other financial institutions, and explosive inflation in oil and
energy prices. Consider the yield of a six-month treasury bill; it is 2.074% per year in July 2008. Compare it with the return from oil futures. With
oil prices climbing from $65 per barrel in August 2007 to $145 per barrel in July 2008, the annual return on oil has been 122%. Fantastic annual yields
and hedges exist in gold, copper, corn, rice, soybeans and so forth. Such a difference in yields, combined with unmistakably upward trends due to cheap
monetary policy, will entice more institutional investors and speculators to invest in commodities markets and hedge their incomes and assets against
inflation. Only when yields are close in yield will investors seek traditional investments in the form of securities and bonds. By fixing interest rates at low
levels, the Fed has forced traders and investors to seek income opportunities in freer and more predictable speculative markets. This is the fundamental
notion of parallel markets, or smuggling of commodities across borders from low- to high-price countries. Bernanke's stated goal for aggressive low
Do low
interest rates is the same as Greenspan's: boost economic growth, restart a new housing bubble, and support government bonds prices.
interest rates always succeed in boosting real economic growth? The answer is "no" when the
economy is low on gas. It would be unfair to say that low interest rates and abundant credit do not stimulate the economy. They did
stimulate economic growth under Greenspan's tenure and even caused the asset price bubble. They were the driving force of reputed speculative
booms, including the 1929 stock market boom. In 1933, renowned economist Irving Fisher argued that only over-indebtedness followed by deflation
could bring dramatic booms and traumatic contractions. He strongly ruled out any real shock as a source of major fluctuation in the economy. The boom
as soon as inflation is unleashed and real
phase is limited to a short period as long as real interest rates remain positive. But
interest rates become negative, low interest rates become a drag on the economy. The boom phase is
followed by a prolonged recession or even a depression.
Internals – Deficit  Economic Collapse
[ ] Deficit spending threatens global economic collapse
Farrell 06 – President of the National Defense Industrial Association

[Lawrence P., Jr., “We must prepare for defense budget crunch,”
http://www.ndia.org/Content/NavigationMenu/Resources1/Presidents_Corner2/January_2006.htm]
Today, the United States is saddled by a large national debt and arising deficit. Even if increases to military
spending were to end immediately, an explosion in the growth of entitlement programs--especially Social Security and Medicare--will
Without fundamental
be very difficult to manage with 78 million baby boomers slated to retire in the coming decades.
reforms, the nation is headed for economic collapse, cautioned David Walker, the U.S.
comptroller general. "We could be doing nothing more than paying interest on federal debt in
2040," he told lawmakers. Just this month, outgoing Federal Reserve Chairman Alan Greenspan expressed concern
that failure to deal with the exploding budget deficit would not only affect the United States but
also the global economy.
[ ] Deficit irresponsibility leads to global economic collapse
Swanson 04 – Professor of economics at University of Arizona

[Gerald J., “America the Broke, “page 13]
increasing
Because foreign investors view the dollar as nothing more than another asset they buy in hopes of making a return,
economic turmoil in the United States would probably provoke them to sell some, if not all, of their
dollar assets, causing the currency's value to drop farther. As this vicious cycle gathered speed, foreign
investors might quit buying Treasury securities altogether. They might even start cashing in the
bonds they already held. That would force the government to print the money it couldn't borrow
—a surefire trigger for inflation and another blow to the value of the dollar. What would happen then? We
can only guess, because such a debacle has never occurred in modern times. At the very least, the United
States—and because of our wide-ranging influence, the rest of the world, too—would be plunged
into economic chaos, all because of our unwillingness to rein in our reckless spending.

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Internals – Deficit  Inflation
[ ] Continued United States debt will lead to a dollar collapse
UN Press Conference 07
[Department of Public Education United Nations]
Global imbalances were projected to stabilize in 2007 and 2008, but were still very large, he said. The United States deficit had
increased to $860 billion at the end of 2006, and was expected to fall to $800 billion in 2007. That deficit was basically being
financed by surpluses in the developing and oil exporting countries, as well as some major developed countries, in particular Japan
and Germany. The European Union,at large, was projected to continue to have a slight deficit on its current account. United
States debt, which had now deepened to well over $3 trillion, might turn out to be unsustainable in the rest of 2007 or next,
putting further downward pressure on the United States dollar, he said. Since its peak in 2002, the dollar had
depreciated vis-à-vis the major currencies by some 35 per cent and by 25 per cent against a broader range of other currencies. With
that increased debt the risk of a sharp depreciation of the dollar continued, he said. If countries willing
to invest in United States dollar assets expected further depreciation, they might be less willing
to hold dollar assets, triggering a much sharper fall in the United States dollar. The risk of
disorderly adjustment and the steep fall of the dollar existed. The policy challenge was how to prevent a hard
landing of the United States dollar and forge a benign adjustment of the global imbalance.
[ ] Reducing the budget deficit is key to stop inflation
Newsday 07
[“U.S. must face up to dollar’s drop,” Lexis]
More likely the dollar's decline is the result of passing economic forces. But just because America doesn't
face a currency catastrophe today doesn't mean it can keep up its financial high-wire act forever. Eliminating federal budget
deficits is the essential step to putting the dollar back on a firm footing.

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Internals – Deficit  High Interest
[ ] Budget deficits drive up interest rates
Taipei Times 04
[“US deficits threaten global economy: IMF,” http://www.taipeitimes.com/News/worldbiz/archives/2004/04/16/2003136899)]
Uncontrolled US budget deficits would pose a serious threat to global prosperity in coming years
as rising interest rates depress economic growth in the US and around the world, the IMF said. The IMF
released a new analysis on Wednesday that predicted if nothing is done to get control of the soaring US deficits, it
would shave global economic output by 4.2 percent by 2020 and reduce US economic growth by 3.7 percent during the same period. IMF
economists said much of the adverse impact would occur because of increased borrowing
demands in the US to finance the budget deficit. This would drive up US interest rates and
interest rates in other countries as the global supply of available capital is reduced.
[ ] Budget deficits decrease savings and increase interest

In reality, to raise revenues, governments most often resort to taxes on labor and capital income
or to taxes on goods and services. One could then be tempted to disregard the Ricardian
equivalence theory as a cute abstraction that is empirically flawed and, therefore, not a serious
guide for policymaking. Consequently, an increase in the budget deficit would most likely
lead to a fall in national savings and to an increase in interest rates.
[ ] Even the expectation of deficit will drive up interest rates

However, what matters for real long-term interest rates is not so much the current budget deficit,
but what the budget deficit is expected to be in the future. A higher expected deficit im- plies
that the government’s borrowing needs will be higher in the future. The standard theory would
then predict a higher (short-term) interest rate in the future. But higher future short-term interest
rates must necessarily raise long-term interest rates today

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Internals – Inflation  Econ Collapse
[ ] Failure of the dollar would crush the global economy
Free Market News 06

[http://www.freemarketnews.com/Analysis/28/4835/2006-05-10.asp?wid=28&nid=4835, “In A Post Dollar World”]
In fact, there could come a time -

God bless ‘em. But we doubt the lenders are quite as dumb as the borrowers believe.
any minute, in fact - when the lenders wise up. The dollar could end its gentle decline...and drop
like a stone. Then, the lending would cease, too. The U.S. economy would come to a halt, and all
those people who are finding it difficult to keep up with their interest payments would suddenly
find it impossible. The defaults and bankruptcies would multiply. American debt may be wiped
out by inflation, but Americans will probably be wiped out first.
[ ] A major collapse of the dollar will destroy exports and cause a global economic
avalanche
Venkatesh 07 - Chartered Accountant

[M.R., Rediff News, “The Coming Collapse of the U.S. Dollar”, http://inhome.rediff.com/money/2007/jun/11dollar.htm]
countries are increasingly realizing that the value of the US

Doomed if it does, damned if it doesn't Meanwhile,
dollar that they are holding is fast eroding, whatever be the 'officially managed exchange rate.'
And if fewer people want the US dollar -- as for instance when oil is traded in Euro the demand for the US
dollar will fall -- it would trigger an avalanche. No wonder, the US Fed is unwilling to make public the
M3 figures, as it does not want the holding position of the US dollar to be publicised. Interestingly, in
such a doomsday scenario, some economists are still betting on central banks of other countries to defend the US dollar. It would
seem that the US has 'outsourced' even this sovereign function to the central banks of other countries. After all,
should the US
dollar collapse, the biggest losers will not be the US but those who have US dollar-denominated
forex reserves Naturally, countries holding US dollar reserves are caught on the horns of a serious dilemma -- should they seek to
correct the global imbalance, it could result in the imminent collapse of the US dollar, and should they continue to defend the US
dollar, they would be a long-term loser as the current arrangement has seeds of self destruction. While every central banker is
conscious of this fact and thereby seeks to postpone the inevitable while nervously looking for his counterpart in any other country to
There are only two possibilities
break ranks and thereby trigger the collapse. Surely, the emperor is without any clothes.
from here on: Either we are witness a global meltdown of the US dollar, or allow controlled US
dollar devaluation (read, revaluation of other currencies). If it is a global meltdown the global economy is
doomed, if is an orderly devaluation, it is damned.

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Internals – Pay Go  FD
[ ] Pay Go is key to fiscal Discipline
Friedman and Greenstein 04 – Center on budget and policy priorities

[Joel and Robert, “Side-by-Side Comparison of the HBC and the Expired Statutory Pay-As-You-Go Rule,”
http://www.cbpp.org/3-17-04bud.htm]
The proposal also would distort policy debates, pushing policymakers

Proposal Would Distort Policy Debates.
to adopt tax-based approaches to problems rather than programmatic approaches even when
the tax-based approaches are costlier and less effective. Consider, for example, proposals to reduce the ranks of
the uninsured. Proposals to reduce the numbers of uninsured people by broadening Medicaid coverage or expanding the State
Children’s Health Insurance Program (SCHIP) would have to be paid for, while proposals to write tax breaks related to health
insurance into the tax code would not have to be paid for. A number of health insurance tax breaks that have been proposed in the
past few years would most heavily subsidize individuals in the top tax brackets, the vast bulk of whom already have health insurance.
Such proposals would be far less effective at reducing the ranks of the uninsured than an SCHIP or Medicaid expansion. The one-
sided pay-as-you-go rules that the House Budget Committee has approved thus would force policymakers to debate competing
proposals on an unlevel playing field and would confer a large advantage on tax-cut approaches to health insurance over program-
based approaches, regardless of their relative merits. Proposal Lacks “Shared Sacrifice” Needed for Deficit Reduction The original
pay-as-you-go rules played an important role in moving the nation from deficits to surpluses in the
1990s. That approach was successful in large part because it enforced budget discipline on
everyone — both those who favored tax cuts and those who advocated entitlement expansions.
Each side was willing to accept the imposition of the pay-as-you-go requirement — and thereby
to constrain its policy priorities — knowing that the pay-as-you-go rules were being imposed equally on the other side.
This balance, or shared sacrifice, was one of the keys to ensuring that the pay-as-you-go rules
were successful in promoting fiscal discipline. If the pay-as-you-go rules are reinstated only on the entitlement side,
there will be no shared sacrifice. Only entitlement programs will face the pay-as-you-go constraint; tax breaks will face no similar
hurdles. Nor is it credible to think that applying the pay-as-you-go rules solely to entitlement programs would be a first step to
restoring the full pay-as-you-go requirement, with the rules being extended to taxes soon thereafter. To the contrary, once the pay-
as-you-go rules are imposed only on entitlements, it is likely to become more difficult to extend these requirements to taxes, since
those who advocate further tax cuts will no longer have any incentive (in terms of placing further restraint on entitlement spending)
to accept pay-as-you-go restraints on taxes. If the pay-as-you-go rules are to apply to both the entitlement and tax sides of the
ledger, as they did in the 1990s, the rules need to be extended to both entitlements and taxes at the same time. The sharp reversal
in the nation’s fiscal outlook over the past few years is stimulating interest in budget process proposals as a way to help restore fiscal
discipline. Reinstating the pay-as-you-go rules on both entitlements and taxes would constitute an important step.
Butimposing these restraints solely on entitlements would not only be of limited effectiveness,
but would likely make meaningful budget discipline harder to achieve in the future. It would be
more likely to retard the cause of fiscal discipline than to advance it.

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Internals – Stimulus  Econ Growth
[ ] The new stimulus is key to the economy – direct injections of liquidity are
needed
Winston-Salem Journal 7/20/08

[Economic Stimulus, http://www2.journalnow.com/content/2008/jul/20/economic-stimulus/]
Efforts are under way in Washington to provide a second economic stimulus package this year.
Let's hope that Congress and the Bush administration get it right this time. That's not to say that most of
us didn't enjoy the government check — or electronic transfer — that came in the spring or early summer. Americans got as much as
$600 each, and that money helped pay bills and flowed into the economy, giving retail sales a bump. But an economic stimulus of
that nature is temporary at best, and now America's children are saddled with billions more in public debt to pay sometime in their
lifetimes. The citizenry should get something more positively tangible for the debt the government
will incur with this round of largesse. And other elements should be directed at the areas of the
country that are in the greatest need of a shot in the arm. Congressional Democrats and that party's
presidential candidate, Sen. Barack Obama, are considering a big piece of infrastructure spending. The United States faces a crisis in
highway, bridge, mass transit, water and sewer-line and school building needs. If the government has money to spend
to spark the economy, then it should go toward projects that we truly need. The Republican presidential
candidate, Sen. John McCain, prefers tax cuts to stimulate the economy, and we'll get to that later. But one of his chief economic
advisers, Mark Zandi, the chief economist at Moody's Economy.com, agrees with the infrastructure
idea. He says that it gets money into the economy, by creating jobs, four times faster than does
a much slower tax cut. There's another reason to oppose a round of tax cuts. The past decade has been very good for the
wealthiest Americans, and data show that they are riding out the current economic downturn much better than is the middle class.
The wealthy, who would get the bulk of the cuts, don't need the money as much as wage-earning families do. During the winter
debate over the first economic-stimulus package, a strong case was made that money should be directed to those areas of the
country where unemployment is highest. The idea is to extend unemployment benefits. This kind of targeted benefit will
immediately get into the economy. Give laid-off workers a few extra weeks of benefits, and they will immediately put
that money to work. They'll buy groceries, clothes for their children and gas for the car, and they will pay their back rent.
Economic conditions are getting worse, not better. A stimulus is needed. But it needs to go
toward the right sectors of the economy. Infrastructure projects and extended unemployment benefits are the right
approach.
[ ] The equity market is key to the US economy
CNN 7/25/08
[http://money.cnn.com/2008/07/25/markets/dollar/?postversion=2008072513]
"The equity market is a barometer for the U.S. economy," explained Sylvester. "It is
representative of the U.S. market psyche," he said, so when the equity markets take a
beating, that leads to weakness for the greenback. The Census Bureau reported Friday
that sales of new single-family homes in June came in at a seasonally adjusted annual
rate of 530,000, down 0.6% from May's revised reading of 533,000. While the sales
numbers were down from May, economists read the report as a positive because the
previous three months were revised up significantly, indicating that the housing market
may be stronger than initially expected. But sales of existing homes slowed more than
expected, hitting their lowest level in 10 years, according to a report released Thursday
by the National Association of Realtors. Sales by homeowners slowed to an annual pace
of 4.86 million, down 2.6% from a pace of 4.99 million in May. "A lot of other
consequences regarding consumer confidence are all directly affected by the housing
data," said Sylvester.
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Internals – Subsidies Fail
[ ] Subsidies fail at driving alternative energy markets
Lieberman 08 - Senior Policy Analyst in Energy and the Environment at The Heritage
Foundation.
[Ben, “The 2008 House Energy Tax Bill: Repeating Past Mistakes,” http://www.heritage.org/Research/Taxes/wm1816.cfm]
Much of the extra revenue generated from these taxes would go toward subsidizing politically correct alternative
energy sources such as wind and solar power. However, the 30-plus-year history of federal attempts to encourage
such alternatives includes numerous failures and few, if any, successes. Indeed, many of the recipients
of tax breaks and incentives in the bill have been subsidized for decades—ethanol since 1978, for
example—originally with the promise that they would become viable within a few years and then go
off the dole and compete in the marketplace. But this has never happened. Instead, Congress just passed
a huge expansion of the ethanol mandate, essentially forcing Americans to use more of it even as it continues to be heavily
subsidized. Wind and solar are doing no better. Even after decades of special tax breaks, alternative energy
still provides only a small fraction of America's energy needs. For example, wind and solar energy account for
less than 3 percent of America's electricity because of their high costs and unreliability.[3] Further, the overall percentage of
electricity attributable to renewable sources is not expected to increase by 2030, according to the
Energy Information Administration.[4] After all these years, Washington has failed to grasp the serious
economic and technological shortcomings of these technologies, which is why they needed
special treatment in the first place. Federal efforts to pick winners and losers among energy
sources—and to lavish mandates and subsidies on the perceived winners—have a dismal track
record relative to allowing market forces to decide the direction of energy innovation.

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*Impacts*

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Impacts – Lopez
[ ] Economic decline leads to wars of all kind
Lopez 98
[Bernardo V., Business World, 9/10/98, Lexis]
What would it be like if global recession becomes full bloom? The results will be catastrophic.
Certainly, global recession will spawn wars of all kinds. Ethnic wars can easily escalate in the
grapple for dwindling food stocks as in India-Pakistan-Afghanistan, Yugoslavia, Ethiopia-Eritrea,
Indonesia. Regional conflicts in key flashpoints can easily erupt such as in the Middle East, Korea,
and Taiwan. In the Philippines, as in some Latin American countries, splintered insurgency forces
may take advantage of the economic drought to regroup and reemerge in the countryside.
Unemployment worldwide will be in the billions. Famine can be triggered in key Third World
nations with India, North Korea, Ethiopia and other African countries as first candidates. Food
riots and the breakdown of law and order are possibilities. Unemployment in the US will be the
hardest to cope with since it may have very little capability for subsistence economy and its
agrarian base is automated and controlled by a few. The riots and looting of stores in New York
City in the late '70s because of a state-wide brownout hint of the type of anarchy in the cities.
Such looting in this most affluent nation is not impossible. The weapons industry may also grow
rapidly because of the ensuing wars. Arms escalation will have Primacy over food production if
wars escalate. The US will depend increasingly on weapons exports to nurse its economy back to
health. This will further induce wars and conflicts which will aggravate US recession rather than
solve it. The US may depend more and more on the use of force and its superiority to get its
ways internationally.

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Impacts – Bearden & Mead
[ ] Economic collapse results in total extinction
Bearden 00 - Director of the Association of Distinguished American Scientists and a Fellow Emeritus of the Alpha Foundation's
Institute for Advanced Study
[T. E., "The Unnecessary Energy Crisis: How to Solve It Quickly"]
desperate nations take desperate actions. Prior to the final economic collapse,
History bears out that
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 (2) 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. Strategic
nuclear studies have shown for decades that, under such extreme stress conditions, once a few
nukes are launched, adversaries and potential adversaries are then compelled to launch on
perception of preparations by one's adversary. The real legacy of the MAD concept is this side of the MAD coin that
is almost never discussed. Without effective defense, the only chance a nation has lo survive at all, is to launch
immediate full-bore pre-emptive strikes and try to take out its perceived foes as rapidly and
massively as possible. As the studies showed, 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.
[ ] Economic decline causes nuclear war
Mead 92
[Walter Russell Mead, Senior Fellow for U.S. Foreign Policy at the Council on Foreign Relations, World Policy Institute]
Hundreds of millions – billions – of people have pinned their hopes on the international market
economy. They and their leaders have embraced market principles – and drawn closer to the west – because
they believe that our system can work for them. But what if it can’t? What if the global economy stagnates – or
even shrinks? In that case, we will face a new period of international conflict: South against North,
rich against poor. Russia, China, India – these countries with their billions of people and their
nuclear weapons will pose a much greater danger to world order than Germany and Japan did in
the 30s.

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Impacts – Hege
[ ] Economic strength is vital to hegemony
Khalilzad 95
The United States is unlikely to preserve its military and technological dominance if the U.S.
economy declines seriously. In such an environment, the domestic economic and political base for global
leadership would diminish and the United States would probably incrementally withdraw from the world,
become inward-looking, and abandon more and more of its external interests. As the United States weakened,
others would try to fill the Vacuum.
[ or ] The economy is key to hegemony
Hungtington 93
[Samuel, Professor of the Science of Government at Harvard, “Why International Primacy Matters,” International Security,
v17 n4, Spring, p. 81]
“Economics,” as Daniel Bell has said, “is the continuation of war by other means.” Economic primacy matters
because economic power is both the most fundamental and the most fungible form of power. For
the United States, the loss of economic primacy to Japan could be highly damaging, as would have
been the loss of political-military primacy to the Soviet Union. This loss to Japan would, first, make U.S.
influence in world affairs subor dinate to that of Japan and, second, reduce long-term U.S. economic welfare, as Japan
used its power, as its leaders and policies have said that it would, to accumulate high-technology, high-value-added industries in
Japan, and to reduce the United States to the status of a “giant Denmark.” The American public, in the phrase that provoked Robert
Jervis, very justifiably “is obsessed with Japan for the same reasons that it was once obsessed with the Soviet Union. It sees that
country as a major threat to its primacy in a crucial arena of power.” Does Professor Jervis really believe that Americans are wrong for
not wanting to live in a world where the major decisions affecting them economically are made in Tokyo? Does he really think that
those decisions would be the same as decisions made in Washington, New York, Chicago, Atlanta, Houston, and Los Angeles?
[ ] And the impact is Nuclear War
Khalilzad 95
Under the third option, the United States would seek to retain global leadership and to preclude the rise of a global rival or a return to
multipolarity for the indefinite future. On balance, this is the best long-term guiding principle and vision. Such a vision is desirable not
as an end in itself, but because a world in which the United States exercises leadership would have
tremendous advantages. First, the global environment would be more open and more receptive to American values --
democracy, free markets, and the rule of law. Second, such a world would have a better chance of dealing
cooperatively with the world's major problems, such as nuclear proliferation, threats of regional
hegemony by renegade states, and low-level conflicts. Finally, U.S. leadership would help preclude the rise of
another hostile global rival, enabling the United States and the world to avoid another global cold or hot
war and all the attendant dangers, including a global nuclear exchange. U.S. leadership would
therefore be more conducive to global stability than a bipolar or a multipolar balance of power system.

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Impacts – Proliferation
[ ] Economic Decline fosters the proliferation of nuclear weapons and ethnic
conflict that risks their use
Silk 93 - Prof of Econ at Pace and Senior Fellow @ Ralph Bunche Institute on the UN at the Graduate
Center, CUNY
[Leonard, Foreign Affairs]
In the absence 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.
[ ] And that leads to utter annihilation
Utgoff 02 - Deputy Director of the Strategy, Forces, and Resources Division of the Institute for Defense
Analysis
[Victor A., “Proliferation, Missile Defence and American Ambitions”, pgs. 87-90]
Further, the large number of states that became capable of building nuclear weapons over the years, but chose not to, can be
reasonably well explained by the fact that most were formally allied with either the United States or the Soviet Union. Both these
superpowers had strong nuclear forces and put great pressure on their allies not to build nuclear weapons. Since the Cold War, the US
has retained all its allies. In addition, NATO has extended its protection to some of the previous allies of the Soviet Union and plans on
taking in more. Nuclear proliferation by India and Pakistan, and proliferation programmes by North Korea, Iran and Iraq, all involve
states in the opposite situation: all judged that they faced serious military opposition and had little prospect of establishing a reliable
supporting alliance with a suitably strong, nuclear-armed state. What would await the world if strong protectors, especially the United
a few additional
States, were [was] no longer seen as willing to protect states from nuclear-backed aggression? At least
states would begin to build their own nuclear weapons and the means to deliver them to distant targets, and
these initiatives would spur increasing numbers of the world’s capable states to follow suit. Restraint would
seem ever less necessary and ever more dangerous. Meanwhile, more states are becoming capable of building nuclear weapons and
long-range missiles. Many, perhaps most, of the world’s states are becoming sufficiently wealthy, and the technology for building
nuclear forces continues to improve and spread. Finally, it seems highly likely that at some point, halting proliferation will come to be
the transition to a highly proliferated
seen as a lost cause and the restraints on it will disappear. Once that happens,
world would probably be very rapid. While some regions might be able to hold the line for a time, the threats posed
by wildfire proliferation in most other areas could create pressures that would finally overcome all
restraint. Many readers are probably willing to accept that nuclear proliferation is such a grave threat to world peace that every
effort should be made to avoid it. However, every effort has not been made in the past, and we are talking about much more
substantial efforts now. For new and substantially more burdensome efforts to be made to slow or stop nuclear proliferation, it needs
to be established that the highly proliferated nuclear world that would sooner or later evolve without such efforts is not going to be
acceptable. And, for many reasons, it is not. First, the dynamics of getting to a highly proliferated world could be very dangerous.
Proliferating states will feel great pressures to obtain nuclear weapons and delivery systems before any potential opponent does.
Those who succeed in outracing an opponent may consider preemptive nuclear war before the
opponent becomes capable of nuclear retaliation. Those who lag behind might try to preempt their opponent’s
nuclear programme or defeat the opponent using conventional forces. And those who feel threatened but are incapable of building
nuclear weapons may still be able to join in this arms race by building other types of weapons of mass destruction, such as biological
weapons. [The article continues…] The war between Iran and Iraq during the 1980s led to the use of chemical weapons on both sides

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and exchanges of missiles against each other’s cities. And more recently, violence in the Middle East escalated in a few months from
rocks and small arms to heavy weapons on one side, and from police actions to air strikes and armoured attacks on the other.
Escalation of violence is also basic human nature. Once the violence starts, retaliatory exchanges
of violent acts can escalate to levels unimagined by the participants before hand. Intenseand blinding anger is a
common response to fear or humiliation or abuse. And such anger can lead us to impose on our opponents whatever levels of
violence are readily accessible. In sum, widespread proliferation is likely to lead to an occasional shoot-out
with nuclear weapons, and that such shoot-outs will have a substantial probability of escalating to
the maximum destruction possible with the weapons at hand. Unless nuclear proliferation is stopped, we are
headed toward a world that will mirror the American Wild West of the late 1800s. With most, if not all, nations
wearing nuclear 'six-shooters' on their hips, the world may even be a more polite place than it is today, but every once in a while we
will all gather on a hill to bury the bodies of dead cities or even whole nations.

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Impacts – Terrorism
[ ] Economic Collapse stimulates terrorist activity
Bloomberg and Hess 02 - Economics Department at Claremont McKenna College

[S. Brock Bloomberg and Greg Hess, “Terrorism From Within: An Economic Model of Terrorism,” August 2002
http://ideas.repec.org/p/clm/clmeco/2002-14.html]
In this paper, we develop and explore the implications of an economic model that links the incidence of terrorism in a country to the
economic circumstances facing that country. We briefly sketch out a theory, in the spirit of Tornell (1998), that describes terrorist
activities as being initiated by groups that are unhappy with the current economic status quo, yet unable to bring about drastic
groups with limited access to opportunity
political and institutional changes that can improve their situation. Such
may find it rational to engage in terrorist activities. The result is then a pattern of reduced economic
activity and increased terrorism. In contrast, an alternative environment can emerge where
access to economic resources is more abundant and terrorism is reduced. Our empirical results
are consistent with the theory. We find that for democratic, high income countries, economic contractions (i.e.
recessions) can provide the spark for increased probabilities of terrorist activities.
[ ] And terrorism causes extinction
Alexander 03 - Professor and director of the Inter-University for Terrorism Studies

[Yonah, Washington Times]
brutal suicide bombings in Baghdad and Jerusalem have once again illustrated dramatically
Last week's
that the international community failed, thus far at least, to understand the magnitude and
implications of the terrorist threats to the very survival of civilization itself. Even the United States and
Israel have for decades tended to regard terrorism as a mere tactical nuisance or irritant rather than a critical strategic challenge to
their national security concerns. It is not surprising, therefore, that on September 11, 2001, Americans were stunned by the
unprecedented tragedy of 19 al Qaeda terrorists striking a devastating blow at the center of the nation's commercial and military
powers. Likewise, Israel and its citizens, despite the collapse of the Oslo Agreements of 1993 and numerous acts of terrorism
triggered by the second intifada that began almost three years ago, are still "shocked" by each suicide attack at a time of intensive
diplomatic efforts to revive the moribund peace process through the now revoked cease-fire arrangements [hudna]. Why are the
United States and Israel, as well as scores of other countries affected by the universal nightmare of modern terrorism surprised by
new terrorist "surprises"? There are many reasons, including misunderstanding of the manifold specific factors that contribute to
terrorism's expansion, such as lack of a universal definition of terrorism, the religionization of politics, double standards of morality,
weak punishment of terrorists, and the exploitation of the media by terrorist propaganda and psychological warfare. Unlike their
historical counterparts, contemporary terrorists have introduced a new scale of violence in terms of conventional and unconventional
The internationalization and brutalization of current and future terrorism make it
threats and impact.
clear we have entered an Age of Super Terrorism [e.g. biological, chemical, radiological, nuclear
and cyber] with its serious implications concerning national, regional and global security concerns.

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Impacts – Famine
[ ] Economic collapse causes famine that outweighs war
Ellwood 03
[Charles Ellwood, University of Missouri. "Sociology and Modern Social Problems" 2003 Online
http://www.nalanda.nitc.ac.in/resour.../chapter9.html]
economic depression exercises a very considerable influence upon death rate,

As already implied, then,
particularly when economic depression causes very high prices for the necessities of life and
even widespread scarcity of food. This cause produces far more deaths in modern nations than
war. The doubling of the price of bread in any civilized country would be a far greater calamity
than a great war. While modern civilized peoples fear famine but little, there are many classes in
the great industrial nations that live upon such a narrow margin of existence that the slightest
increase in the cost of the necessities of life means practically the same as a famine to these
classes. Statistics, therefore, of all modern countries, and particularly of all great cities, show an enormous increase
in sickness and death among the poorer classes in times of economic depression.

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Impacts – China
[ ] US economic decline spills over to Asia and most of Europe igniting global
recession
Ariff 6/26/08 - The executive director of the Malaysian Institute of Economic Research.
[Mohamed, “Opinion: A recession pill is just what the US must take”
http://www.nst.com.my/Current_News/NST/Thursday/Columns/2277128/Article/index_html]
To be sure, it is just not the US that is in trouble, as fuel and food price increases are hurting nearly all economies across
the globe, with economic growth in these countries slowing. Understandably,the US factor weighs heavily on the
world economy, given its enormous clout and connectivity. Countries that are dependent on the
US market, especially countries that import oil, are likely to be hurt by a recession in the US.
Open economies with small domestic markets are particularly vulnerable. China and India have
large domestic markets to fall back on, but high oil prices will cause a slowdown in these
economies nonetheless. Emerging Asian economies have not decoupled from industrialised
economies, as their exports of final goods are directed largely at these markets. No doubt, intra-
regional trade among the emerging Asian economies has increased enormously, but this trade is
dominated by intermediate goods, especially components and parts, while the final products are exported mainly to
industrialised countries. Any slowdown in the exports of final goods will spill over to the exports of
intermediate products as well. In other words, Asia's intra-regional trade is largely a function of its
extra-regional trade with the US and European Union. Asean countries have close economic ties with the US,
European Union and Japan. A slowdown in these economies, let alone a recession, will adversely affect
Asean economies. Those dependent on manufactured exports and oil imports are likely to be
worst hit. The Philippines and Thailand seem particularly vulnerable. Malaysia as a net oil exporter is in a better position, but it
cannot insulate itself from the fallout.
[ ] Chinese collapse means WW3
Plate 03 - Prof at UCLA

[Tom, “Neo-Cons A Bigger Risk to Bush Than China”, Straits Times]
But imagine a China disintegrating - on its own, without neo-conservative or Central Intelligence Agency prompting, much
because the economy (against all predictions) suddenly collapses. That would
less outright military invasion -
knock Asia into chaos. A massive flood of refugees would head for Indonesia and other places
with poor border controls, which don't want them and can't handle them; some in Japan might
lick their lips at the prospect of World War II Revisited and look to annex a slice of China. That
would send Singapore and Malaysia - once occupied by Japan - into nervous breakdowns.
Meanwhile, India might make a grab for Tibet, and Pakistan for Kashmir. Then you can say hello
to World War III, Asia-style. That's why wise policy encourages Chinese stability, security and
economic growth - the very direction the White House now seems to prefer.

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Impacts – China Internal
[ ] In a world of US collapse, chinese investment and US stabilization would cease
and disrupt the entire Asian economy
Evans-Pritchard 7/21/08 – International business expert and director of international news at

the telegraph
[Ambrose, “The global economy is at the point of maximum danger,”
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/21/ccview121.xml]
China, Russia, petro-powers and other foreign states own $985bn of US agency debt, besides
holdings of US Treasuries. Purchases of Fannie/Freddie debt covered a third of the US current account deficit of $700bn over
the last year. Alex Patelis from Merrill Lynch says America faces the risk of a "financing crisis" within months. Foreigners have a veto
over US policy. Japan did not have this problem during its Lost Decade. As the world's supplier of credit, it could let the yen slide. It
also had a savings rate of 15pc. Albert Edwards from Société Générale says this has fallen to 3pc today. It has cushioned the slump.
Americans are under water before they start. My view is that a dollar crash will be averted as it becomes clearer that contagion has
spread worldwide. But we are now at the point of maximum danger. Britain, Japan, and the Antipodes are stalling. Denmark is in
recession. Germany contracted in the second quarter. May industrial output fell 6pc in Holland and 5.5pc in Sweden. The coalitions in
Belgium and Austria have just collapsed. Germany's left-right team is fraying. One German banker told me that the doctrines of "left
Nazism" (Otto Strasser's group, purged by Hitler) had captured the rising Die Linke party. The Social Democrats are picking up its
themes to protect their flank. This is the healthy part of Europe. Further south, we are not far away from civic protest. BNP Paribas has
just issued a hurricane alert for Spain. Finance minister Pedro Solbes said Spain is facing the "most complex" economic crisis in its
history. Actually, it is very simple. The country was lulled into a trap by giveaway interest rates of 2pc under EMU, leading to a current
account deficit of 10pc of GDP. A manic property bubble was funded by foreigners buying covered bonds
and securities. This market has dried up. Monetary policy is now being tightened into the crunch
by the ECB, hence the bankruptcy last week of Martinsa-Fadesa (€5.1bn). With Franco-era labour markets (70pc of wages are
inflation-linked), the adjustment will occur through closure of the job marts. China, India, East Europe and emerging
Asia have all stolen growth from the future by condoning credit excess. To varying degrees, they
are now being forced to pay back their own "inter-temporal overdrafts". If we are lucky, America
will start to stabilise before Asia goes down. Should our leaders mismanage affairs, almost every
part of the global system will go down together. Then we are in trouble.

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Impacts – Magnitude Outweighs
[ ] Severity of economic collapse due to the deficit justifies weighing the impact
over more probable scenarios

Decision Economics, Inc. http://www.brookings.edu/views/papers/orszag/20040105.htm 1/5]
The U.S. federal budget is on an unsustainable path. In the absence of significant policy changes, federal
government deficits are expected to total around $5 trillion over the next decade. Such deficits
will cause U.S. government debt, relative to GDP, to rise significantly. Thereafter, as the baby
boomers increasingly reach retirement age and claim Social Security and Medicare benefits, government
deficits and debt are likely to grow even more sharply. The scale of the nation's projected
budgetary imbalances is now so large that the risk of severe adverse consequences must be
taken very seriously, although it is impossible to predict when such consequences may occur.

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*AFF*

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Uniqueness – Economy Bad
[ ] We are already in recession, banks and the subprime mortgage crisis prove
ABC News 7/16/08

[No end in sight for US economic woes, http://www.abc.net.au/news/stories/2008/07/16/2305780.htm]
There have been more dire warnings today about the outlook for the US economy with
predictions of a prolonged recession that could spread globally. In a change of language after an earlier
optimistic assessment, the powerful head of America's central bank, Ben Bernanke, says the economic difficulties facing
the US show no sign of easing. While President George W Bush continues to talk up the world's biggest economy, his
assurances are being contradicted by a falling US dollar and the proposed government bailout of the mortgage giants Fannie Mae and
Freddie Mac. Many economists maintain the US is already in a recession, as fears about the
weakened banking sector intensify. Throughout the escalating financial meltdown in the United States, President Bush
has been urging Americans and the rest of the world not to panic. Back in March, in the days after the near collapse of the Wall
Street investment bank Bear Stearns, Mr Bush told reporters: "We are going to be just fine." Now the Bear Stearns crisis is a blip on
the radar compared with the technical insolvency of the two American mortgage giants Fannie Mae and Freddie Mac, which together
account for around $6 trillion of outstanding home loans. Optimism Today the US President's language had a different tone when he
was pressed on the state of the world's biggest economy. "I am not an economist. I'm an optimist," he told reporters in Washington.
Facing what many economists regard as the biggest shock since the Great Depression, President Bush insisted the US would emerge
stronger than ever despite the sobering outlook. "I think the system basically is sound, I truly do," he said. "I understand there's a lot
of nervousness and the economy is growing, productivity is high, trade is up." Today the pessimism was coming from another man in
the hot seat - Ben Bernanke. The powerful chairman of the US Federal Reserve was also using slightly different language after
declaring last month that the downside risk to the US economy had diminished. "The economy continues to face numerous
difficulties including ongoing strains in financial markets, declining house prices, a softening labour market and rising prices of oil,
food and some other commodities," Mr Bernanke told a congressional committee on Capitol Hill. Recession? But Mr Bernanke
refused to acknowledge signs of a recession in the United States, leaving that verdict to the statisticians. "I don't know whether they
will determine we've been in a recession or not according to these technical definitions," he told the hearing. But other
economists are already making the call. Nouriel Roubini of New York University's School of Business
says the shockwaves from Fannie Mae and Freddie Mac are contributing to a turning point with
serious global consequences. "This is going to be the worst US recession in decades and this is
also the worst US financial crisis since the great depression. This is a really severe all over systemic, financial
and banking crisis," Mr Roubini said. "In my view things are going to get worse in financial markets where Fannie and Freddie they're
insolvent; where hundreds of smaller banks are insolvent; where major regional banks are bankrupt. Even some of the national major
banks are insolvent. "A year out from now, or two years from now, maybe there is not going to be any major independent broker
dealer. This is a systemic financial crisis, there is no end to it." The anxiety has already led to the US
Government takeover of California's IndyMac Bank after a run last Friday. Now there are worries about runs on other banks and
mortgage providers across America, with some very big names in banking exposed to even greater losses in the coming weeks,
including Bank of America, JP Morgan, Merrill Lynch and Citigroup. To date, the subprime mortgage crisis has cost
global banks around $250 billion in write-downs.
[ ] The economy is deteriorating and fed policies will fail at fixing it
The Times 7/16/08

[“It’s worse than we feared and there’s more pain to come, but it will pass,”
http://www.timesonline.co.uk/tol/comment/columnists/gerard_baker/article4340443.ece]
The whole US banking sector posted their largest one-day decline in share prices since 1989.
Yesterday investors around the world joined in the panic, pummelling the US dollar, which dropped
to yet another record low against the euro. The dollar’s latest losses also pushed the pound back above the $2 mark.
The mood among policymakers in Washington is one of growing dismay; some might call it alarm.
Despite their best efforts to keep the world’s largest economy afloat, despite a succession of
unprecedented measures to restore calm to financial markets, the situation continues to
deteriorate. Yesterday, even as Ben Bernanke, the chairman of the Federal Reserve, the US central bank, Henry Paulson, the
Treasury Secretary, and even President Bush sought once again to reassure markets, there was a deepening sense that the worst
of the financial turmoil may be yet to come. One senior central banker likened the role of
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policymakers to that of the hero in a science-fiction movie. Faced with a mortal threat, he tries
everything to avert disaster but nothing seems to work. He frantically pushes buttons and pulls
levers, but it is no good. Nemesis, in the form of an alien, a giant beast or a headlong, bone-crunching rendezvous with
eternity, is inevitable. A year ago the term “sub-prime mortgage” migrated from the lexicon of obscure financial terminology
to the daily conversations of worried consumers and investors around the world. Banks that had invested too heavily in this always
high-risk mortgage business suddenly found themselves with huge losses as US house prices fell and interest rates rose. In the past
12 months the Federal Reserve and the Treasury – along with other authorities in other countries – have moved
with astonishing speed and creativity to try to save the system. They have extended special lines of credit to
banks in trouble and dramatically increased the number of financial institutions permitted access to central bank funds. The Fed
has cut interest rates seven times, by a cumulative 3.25 percentage points, to a level well below
the inflation rate. It has orchestrated the rescue of Bear Stearns, one of the nation’s most famous investment banks, and now
it has backstopped the losses of the nation’s largest mortgage companies. And still, like the villain in the movie, the
threat seems to be getting larger and closer.

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80
Uniqueness – Economy Bad
[ ] Economic indicators are at extremely low levels proving the economy is
sucking
Reuters 7/25/08
[Gauge of future US economy near a 5-year low: ECRI,
http://www.reuters.com/article/businessNews/idUSNAT00423020080725]
NEW YORK (Reuters) - A gauge of future U.S. economic growth fell to its lowest level in nearly five years and
its annualized growth rate was also down, indicating that an upturn in the business cycle is not yet in
sight, a research group said on Friday. The Economic Cycle Research Institute, a New York-based independent
forecasting group, said its Weekly Leading Index fell to 129.4 in the week to July 18 from 131.1 in the previous period,
downwardly revised from 131.2. The decline in the index --to its lowest since it hit 129.0 in the week to October
24, 2003-- was due to higher interest rates and jobless claims and to weaker housing, Lakshman
Achuthan, managing director at ECRI said in an instant message interview. The index's annualized growth rate slipped to a 10-week
low at negative 6.9 percent from minus 6.5 percent, revised down from minus 6.4 percent. "The way a good leading index works is
that its level always turns up months before the end of the recession," Achuthan said. "With the WLI level falling to its
lowest reading in nearly five years, it is clear that a business cycle recovery is nowhere in sight."

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Uniqueness – Econ Resilient
[ ] The US Economy is resilient – the big collapse won’t happen for at least a
decade
Martin 9/24/07 - independent economic-political analyst with 25 years of experience as a trader on

NYMEX, CME, CBOT and CFTC.
[Al, The Bernanke Fed: Following the ‘Economic Collapse’ Script, http://www.almartinraw.com/public/column327.html]
although you are seeing one major bank on this planet every week, going down the
In conclusion,
tubes, there won’t be an overall global shock. The week before last, Northern Rock bank in the UK. Last week, the
Russian Standard Bank, the fourth largest bank in Russia. Every week you will see a major bank on the planet
collapse. Every day you will see another hedge fund collapse. Every 3 weeks or so, you see a
money market fund collapse. Yes, there’s going to be pain, but it’s not going to be enough at any
one time to create panic in the economic marketplaces. If you’re looking at it in terms of an investor, we are in a
whole new era of dramatically increased volatility in the planet’s equity, debt and commodity marketplaces. But as long as the
Fed can ease off interest rates and increase liquidity by changing regulations, it is likely that they
can jam enough money into the system, and flood the system with cheap money. All central banks are
now acting together to do the same thing -- to prevent the collapse of a major banking house or a quick series of collapses within
brokerage firms, etc. I don’t think the collapse is going to come this way because it hasn’t been
planned this way. It’s too early for the collapse. People ask me, “Aren’t all the ingredients for the collapse there
now?” And I say, “Yes, the ingredients are there. But the reason why I think it will be avoided is because I think
the central banks, combined with ever looser government regulatory standards regarding
equities and debt markets, will combine to prevent any cascading collapse because it’s too soon.
The great global economic collapse has not been planned until the next decade. In other words,
economic collapse of the planet is going to occur, and it was meant to occur and must occur. This does not change what is going to
happen in the next decade. What will happen in the next decade is the fruition of policy started in the immediate post-war
environment, which made economic collapse inevitable. What is happening now does not change that. The only thing it does is it
forces central banks, globally, to scramble, and to forestall the collapse until it was meant to happen. You don’t have the top 20%
fully prepared for it yet. Also you don’t have governments fully prepared for economic collapse yet. There’s got to be more Patriot
Acts. There’s got to be a Patriot Act III, then a Patriot Act IV. And then the deluge...

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Uniqueness – Inflation High
[ ] Inflation is high – producer prices are growing the highest rate in thirty years
Reuters 7/15/08
[“US Fed Chief warns on growth,” http://africa.reuters.com/world/news/usnN15305285.html]
INFLATION UP Stock prices initially tumbled after Bernanke's comments, but recovered later as oil futures suffered their largest one
day price fall in 17 years. The U.S. dollar remained weak, after seeing a new record low against the euro overnight, while U.S.
Treasury bond yields fell. In its semi-annual monetary policy report to Congress, the Fed raised its projection for growth in 2008 to a
range of 1.0 percent to 1.6 percent from the 0.3 percent to 1.2 percent range it forecast in April, on expectations of stronger
consumer spending. President George W. Bush said the economy was still growing, although he acknowledged that there was
"obviously financial uncertainty". With energy costs rising, the Fed also raised its inflation forecast to a
range of 3.8 percent to 4.2 percent, up substantially from its previous 3.1 percent to 3.4 percent
projection. Sluggish economic growth and stubborn inflation has made Bernanke's job more
difficult as he tries to restrain inflation without tipping the economy into a deep recession.
Pressure has grown, both inside and outside his policy-making committee, for the Fed to consider raising
the benchmark federal funds interest rate after cutting it by 3.25 percentage points to 2.0 percent since mid-September. Shortly
before Bernanke testified, government reports underlined the dilemma. Sales at retail stores barely edged up in June
but producer prices, which reflect wholesale inflation, jumped a larger-than-expected 1.8 percent,
while the annual rate rose to 9.3 percent, its highest in 27 years. News from the corporate arena was no more
reassuring. General Motors, struggling with declining vehicle sales, said it will cut 20 percent of its salaried work force, while
Kimberly-Clark cut its profit outlook because of high energy costs. Bernanke said the Fed's efforts to date, including the interest rate
cuts and a series of new lending facilities for banks, had had a positive effect but the economy still faced "numerous difficulties."
"Many financial markets and institutions remain under considerable stress, in part because the outlook for the economy, and thus for
credit quality, remains uncertain," he said. "Helping the financial markets to return to more normal functioning will continue to be a
top priority of the Federal Reserve," he added.

2005 – 2003 – 2002 – 1999 – 1998 – 1995 – 1994 – 1980 – 1978 – 1973 – 1966 – 1959 – 1958
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83
Internals – No US Econ Spillover
[ ] In today’s global economic boom the US economy is meaningless, no spillover
will occur
The Globe and Mail 7/18/08

[“A top down problem,”
http://www.theglobeandmail.com/servlet/story/RTGAM.20080718.wcomanage18/BNStory/specialComment/home]
Now that the bubble has burst, the downturn is likely to be far worse than previous ones,
because U.S. enterprises will have to be rebuilt, slowly and carefully. The dramatic weakening of
the U.S. dollar may help the United States to narrow its massive trade deficit, but we should not
expect any sustained improvement without drastic changes in American management.
Fortunately, it may be possible to minimize the fallout for the rest of the world. While U.S.
economists, politicians, and business leaders have for years sought to sell their model of management
abroad, many companies elsewhere have not been buying it. As a result, other key economies
remain healthier than that of the United States. Make no mistake: This problem was made in the
U.S.A., and that is where it will have to be solved.
[ ] There is no link between a US economic decline and a global decline
Time 07
[Peter Gumbel, Time magazine, “Global Trade's Precarious Balance”
http://www.time.com/time/magazine/article/0,9171,1580033,00.html]
the answer seems to be that the world can indeed ride out a period of U.S.
But so far, at least,
weakness. "The overwhelming evidence of the past few months is that the rest of the world is doing
just fine, and that some places are doing better than just fine," says Jim O'Neill, London-based head of global
economic research for Goldman Sachs. Even if the U.S. economy remains soft for much of the year, O'Neill adds, "we're
pretty confident that the rest of the world will withstand it." At the German Engineering Federation in Frankfurt, chief
economist Ralph Wiechers concurs. "It used to be that the U.S. economy supported the world economy, " he
says. "Now it's the other way around."

2005 – 2003 – 2002 – 1999 – 1998 – 1995 – 1994 – 1980 – 1978 – 1973 – 1966 – 1959 – 1958
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84
Internals – Inflation Inevitable
[ ] There is no way to avoid inflationary pressures because of low interest rates
Kee 08 - President and CEO of Stock Traders Daily

[Thomas, “The Bernanke Fed's Next Interest Rate Cut Will Be Its Last,” http://seekingalpha.com/article/68737-the-bernanke-
fed-s-next-interest-rate-cut-will-be-its-last]
Inflation is like a cancer which spreads rapidly through the economy. We all know food and
energy prices are increasing exponentially, but now those are creeping into core prices too, and
that's where it starts to spread like wildfire. The worst part of the current scenario is that the FOMC has relinquished
control of inflation. We have already seen proof from the Airlines. The price hikes from United Airlines (UAL), Delta
Airlines (DAL), American Airlines (AMR), and Northwest Airlines (NWA) are just the beginning. Shipping and other costs are
going up for every manufacturer and those higher costs are finding their way to consumers and
businesses. The next round of price hikes are likely to come from companies such as Federal
Express (FDX) and American Express (AXP). From there, products offered by Proctor and Gamble (PG), 3M (MMM) and
Johnson and Johnson (JNJ) are poised to increase too. There's no way to avoid this, and with interest rates as
low as they are, companies can pass these costs along and increase core inflation measures
accordingly.

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Internals – Stimulus Won’t Be Offset
[ ] Stimulus is exempt from pay go rules
Global Power Report 2/14/08

[“Pelosi, others plan to bring vote on package to extend tax credits for renewables, efficiency,” Lexis]
House leaders plan to revive an energy tax package that was jettisoned from comprehensive energy legislation last December after
Senate Republicans blocked it. Speaker Nancy Pelosi is considering bringing to the House floor for a vote a
measure that would pay for multiyear extensions to tax credits for wind, solar energy, biomass,
hydropower and energy efficiency, sources said. The bill would offset the costs of extending the tax
credits by rolling back tax incentives for oil and natural gas. The offsets mean the package is unlikely to be
supported by most Republicans and some Democrats from oil and natural gas producing areas. The measure, which was originally
crafted by the House Ways and Means Committee last year, has resurfaced after Republicans blocked an attempt to extend the
renewable and energy efficiency tax credits through an economic stimulus bill. Pelosi never favored adding the extensions to the
stimulus package, saying that they would have distracted from the bill's purpose of giving a timely shot in the arm
to a flagging economy, mainly in the form of tax rebates. Other legislators are pessimistic about the tax bill's
prospects. A leading Senate supporter of renewable energy tax credits said this week that if it were to come to the Senate for another
vote, the bill would likely fail a third time. Senate Finance Committee member Maria Cantwell, a Washington Democrat, said "I think
we're going to look at a different way of doing it, considering that we've had two attempts already." "The fundamental disagreement
is that the White House won't do this by paying for it," Cantwell said. "The House, and I'm sure many of us, would like to do this by
paying for it." Cantwell predicted that if a House of Representatives bill, which was due to be introduced February 13, is sent to the
Senate, the same 59 senators who voted for it in December as part of the Energy Independence and Security Act of 2007 would
probably vote for it again, but 60 votes are need to move controversial legislation in the Senate and an additional seven votes would
be needed to overcome a likely veto from President Bush. Renewables advocates see it differently. Christine Real de Azua, a
spokeswoman for the American Wind Energy Association, called the stimulus package a "missed opportunity." Stimulus
legislation is traditionally exempt from "pay-go" rules, meaning the extensions could have been
approved without tax increases to pay for them. "We hope this isn't like that movie Groundhog Day," said Monique
Hanis of the Solar Energy Industry Association, who was also worried that opposition to offsets would doom the bill. Brad Penney of
the Alliance to Save Energy said he thought the bill would extend four incentives his group is "vitally concerned" with, which provide
incentives to manufacturers, homeowners and builders who meet efficiency standards. Kevin Book, a senior analyst with the
investment firm Friedman, Billings, Ramsey, said he was warning clients to "curb enthusiasm" for the extenders because the offsets
will likely kill the bill. He thinks the incentives will be extended before they expire, but the best opportunities for that
will come after the November elections when fiscal discipline and pay-go rules become less politically
significant.

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86
Turn – Employment
[ ] Tax incentives spur economic growth through job creation – it’s a fiscally
responsible move
Pelosi 08
[“Renewable energy and energy conservation tax act,” http://www.speaker.gov/legislation?id=0162]
On February 27th, the House of Representatives passed the Renewable Energy and Energy
Conservation Tax Act of 2008, H.R. 5351, which will end unnecessary subsidies to Big Oil companies and invest in
clean, renewable energy and energy efficiency. It will extend and expand tax incentives for
renewable electricity, energy and fuel, as well as for plug-in hybrid cars, and energy efficient
homes, buildings, and appliances. These provisions are critical to creating hundreds of thousands
of jobs. And the preservation of existing jobs relies on them too: a recent study showed that
allowing the renewable energy incentives to expire would lead to about 116,000 jobs being lost in
the wind and solar industries through the end of 2009. The bill is fiscally responsible – paying for these energy
incentives by repealing unnecessary tax subsidies for large integrated oil companies. The big five oil companies recently reported
record profits for 2007, with ExxonMobil earning $40.6 billion - the largest corporate profit in American history. While oil company
profits have quadrupled, high energy prices continue to squeeze American families – gas prices have skyrocketed and home heating
oil has jumped along with other household costs.
[ ] Tax credits stimulate employment opportunities
TMCNet 6/22/08
[“Congress in Clouds on Tax Credits,” http://www.tmcnet.com/usubmit/2008/06/22/3510991.htm]
Once-enthusiastic investors are getting jittery about

Meanwhile, the solar industry especially is in panic mode.
sinking more money into an industry that doesn't have the assurance of government subsidies.
Remember, oil and nuclear each lived off of government subsidies for years. In fact, to some extent, they still do. Rhone Resch,
president of the Solar Energy Industry Association, made a special trip to the National Press Club to meet with me on this issue last
week. "We will lose 39,000 jobs in 2009 if this tax credit is allowed to expire," he said. "I represent
650 companies. Every single one of them is going to lay off people ... if this tax credit doesn't get
extended." When I started digging into this tax-credit business two months ago, no one in the solar industry wanted to antagonize
Congress by stating the obvious. Several failed votes later, Resch didn't mince words. "There is no one to blame but Congress," he
said. Of course New Mexico, the second sunniest state in the union behind Arizona, stands to gain from the solar tax-credit
extensions. Schott Solar of Germany is setting up shop in the state, and others are considering packing up their bags and doing the
same. We've already established ourselves as in important state for wind production, and there's lots of room for growth there, too.
But for either industry to reach its full potential, Congress must act -- and fast. The credits expire Dec. 31. Japan,
Germany, Russia and other countries are already way ahead of America when it comes to
developing and manufacturing powerful new solar and wind technologies. America can catch up. But
first, Congress needs to do its job.

2005 – 2003 – 2002 – 1999 – 1998 – 1995 – 1994 – 1980 – 1978 – 1973 – 1966 – 1959 – 1958
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Turn – Tax Incentives are Sweet
[ ] Tax incentives for corporations is the best way to stimulate the economy – it
creates sustainable industries and employment markets without creating inflationary
pressure
Vickerman 6/10/08 – Executive Director of RENEW Wisconsin

[“Congress must extend renewable energy tax incentives,” http://renewenergyblog.wordpress.com/2008/07/10/congress-must-
extend-renewable-energy-tax-incentives/]
federal tax credits have been the principal policy tool for accelerating renewable
As you very well know,
energy development in this country. Right now, most renewable energy technologies are more
expensive than fossil fuels, but the federal incentives level the economic playing field, providing
breathing room for solar, wind and biogas to mature and become cost-competitive with more
established energy resources. This has been especially true with wind generation, which has expanded from 6,500 megawatts in January 2005 to over
19,000 today. This tripling of windpower capacity in less than four years could not have happened without the production tax credit being in place during that time. Here in
Wisconsin, the renewable energy marketplace has exploded over the last three years, especially in the solar arena. As of this moment, there are 73 full-service solar electric and
solar hot water installation firms active in Wisconsin, more than double the installer base in 2005. While a handful have been around before 2000, most are new entrants into this
field. The contractor who installed our solar electric system, Full Spectrum Solar, has seen its revenues increase sevenfold since 2005, when it was established with two co-owners
and one employee. That was also the year when Congress established the solar investment tax credit. Now Full Spectrum has 12 full-time employees, five of them hired this year.
How critical is the solar tax credit in driving solar’s growth in the United States? If our middle-class household is at all representative of the solar-installing customer base, I can
honestly say that the federal incentive was a necessary component to making that investment work for us. Had federal incentives not been available this year, our budget would
have been insufficient to absorb the substantial up-front expense that comes with owning a solar energy system. Indeed, when I compare the flurry of installation activity now
with the near-dormant conditions that prevailed just three years ago, it’s clear that the federal tax credit has greatly expanded the size of the domestic solar energy market.Bear
there are no other federal policies in place to promote renewable energy development
in mind that
and use. While other nations have adopted different mechanisms—CO2 limits, carbon taxes and feed laws, for example–to nurture
this sector, renewable energy policy support in the United States begins and ends with tax credits.
Allow them to expire and the safety net underneath renewables disappears with it. The current cycle
of tax credits for wind, solar and biogas will expire January 1, 2009, less than six months from now. Considering how
important renewable energy has become for our nation’s environmental health and economic
well-being, a citizen could be forgiven for thinking that extending renewable energy credits
would be something of a no-brainer for Congress. But despite repeated attempts to extend them, Congress has not yet
found a legislative formula that clears a path through the forest of interest groups and narrow partisan agendas standing in the way of timely passage.
Anxiety is growing in the renewable energy world that Congress could very well fumble away its remaining chances to adopt the necessary extension
the momentum built up over the last three years will dissipate next year, and
language. Should that happen,
potentially throw the solar, wind and biogas industries into reverse. This is no idle fear. Congress waited until
October 2004 to extend the renewable enegry incentives that expired January 1st that year. The commercial wind industry ground to a virtual standstill
that year and didn’t bounce back until the next year. Plans by overseas wind turbine manufacturers to build up a U.S.-based supply chain were put on
hold as demand for commercial turbines sagged. Even though the wind industry has been on a roll over the last three-and-a-half years, memories of the
Should Congress fail to take action this year,
2004 bust continue to inhibit development of a U.S. manufacturing presence.
the effects will be even more devastating than in 2004. This time around the entire solar industry
—installers, equipment manufacturers, and third-party system owners—will experience a taste of
what the wind industry went through before. So, too, will those companies–system designers,
general constractors, civil construction companies, component manufacturers and environmental
consulting firms—that have recently found a protfitable niche in the expanding renewable energy
world. The ripple effect from a lapse in federal policy support, however temporary, will be felt by
a wider circle of market actors, including utilities. And who are some of these market actors? What follows is a partial list, by no means complete, of
Wisconsin companies that have a stake in this country’s renewable energy future: GDH, Inc. (Chilton), Pieper Power/Clear Horizons LLC (Milwaukee), Johnson Controls (Milwaukee),
H&H Solar Services (Madison), EcoEnergy (Madison), RMT WindConnect (Madison), Lake Michigan Wind and Sun (Sturgeon Bay), Bassett Mechanical (Kaukauna), Paterson Solar
(Bayfield), Manitowoc Cos. (Manitowoc), Green Sky Energetics (Manitowoc), Tower Tech (Manitowoc), Magnetek (Menomonee Falls), Bubbling Springs Solar (Menomonie), Oscar
Boldt Construction (Appleton), Orion Construction Group (Appleton), Timmerman’s Talents (Platteville), Wausaukee Composites (Wausaukee and Cuba City), Cardinal Solar (Sun
Prairie), Badger Transport (Clintonville), Mitchell’s Heating and Cooling (Waupaca), Energy Concepts (Hudson), and Chet’s Plumbing and Heating (Stevens Point).
Extending the renewable energy tax credits would cost U.S. taxpayers somewhere between $3
and $4 billion a year, most of it going to wind generation. Some members of Congress consider that an
unacceptably large expense. But these are not permanent incentives. In the case of windpower
installations, which have a book life between 20 and 30 years, federal tax credits cover no more than 10 years of
operation. After the 10th year, project output is fully taxable. In my view, this is an
underappreciated facet of the tax subsidy argument. Long after the tax credits are exhausted, the

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installations that were aided by them will still be producing self-replenishing,
wind, solar and biogas
domestically sourced energy for the owner and/or the grid. “ An annual price tag of $4 billion is peanuts
compared with the $1.3 billion that leaves this country each day to slake our nation’s seemingly uncontrollable thirst for petroleum.
Here’s another metric for comparing the cost of renewable energy incentives: at current rates of spending, the
ongoing occupation of Iraq goes through $4 billion in less than 12 days. And one can argue that
the pittance that U.S. taxpayers have contributed thus far to support domestic renewable energy
sources has produced far better results in the areas of energy security and economic
development than the ongoing occupation of Iraq. But it’s a telling measure of Beltway
cluelessness that our federal lawmakers are more willing to make a show of fiscal discipline on
renewable energy policy than on an overseas military operation that now drains about $120
billion a year from the U.S. Treasury. The U.S. economy is on the ropes, and a lot of unpleasant policy trade-offs lie
ahead. As the cost of fossil fuels escalate, and the housing sector and the automobile industry contract further, the
U.S. can ill afford to skimp on the one energy pathway that can, with the proper policy support,
create jobs by the thousands and convert capital into socially productive and sustainable
enterprises. If Congress is truly serious about turning the economy around, reducing the trade
deficit, making progress on climate change, and creating a more energy-secure America, it must
extend the renewable energy tax incentives, preferably this month. No other action will accomplish so
much, or cost so little.
Turn – Stimulus Bad
[ ] Consumer rebates or spending does nothing to drive the economy – their
argument is based on flawed statistics and false economic principles

The Bush/Pelosi package of tax rebates that is already awash in the political news hour is NOT an
economic stimulus package, because it again applies remedies in places that do not stimulate re-
growth. Tax cuts will always be disproportional to the pain index and those that feel the pain the most. The Reagan theory is that
tax cuts stimulus should be "trickle down" driven - and maintain the fairness concept that those that pay, should be rebated. When in
truth, if tax collection was truly fairness driven, that logic might apply, but since tax policy is vastly skewed the logic is false. One can
not credibly use such logic, without fairness across the board. Yet, Nancy Pelosi and others have already jumped on
this bandwagon because they have also allowed the non-sense notion that consumer spending
drives the American economy to rule economic policy. I don’t want to jump too hard on Ronald Reagan to those
that were born after his presidency and have been driven to idolize him. His economic policy was actually that of David Stockman. It
was called supply-side economics. The name implied that the policies to realign and accumulate wealth and investment would be
realized through inertia within job and economic investment within America. What actually happened was the newly acquired and
concentrated wealth was far more fluid and mobile; less controllable; and more greed influenced than idealistically intended. More
investment dollars were exported to develop burgeoning and in some cases, third-World economic investment because you could
simply get more bang for the buck, more return on investment in those underdeveloped economies; with less competition and less
risk. This unbridled and uncontrolled policy, instead created a runaway competition to export industrial capacity to lower labor cost
areas, for example. The patriotic zeal that was envisioned and skillfully communicated as only Reagan could do had been hijacked by
personal and corporate zeal. The negative stigma of investing overseas first, rather than in America first was never checked post-
Reagan and still undermines the true American economy. So when I hear the phrase that America’s economy has become service
based, I recognize this reality as a result of poor economic policy that still has not been reversed. This is also using economic terms to
people who don’t want to understand economic principles as a cover for bad decision making in the past. Economic principles are not
easily understood because they are not tangible; yet are as basic and painful as reconciling and balancing the family checkbook.
When I hear the new mantra that this is now a consumer spending based economy, I cringe for
numerous reasons. First, consumers can not spend money they can not earn. And without jobs
that provide more than bare necessities, disposable income does not provide the ability to spend.
No amount of handout changes that truth. This notion is purely a political and journalistic cover
for poor policy of building economies world wide first and America last. Globalization is the next generation sham
principle of that same failed policy. While we can not isolate from the World and its economy, we can not export our ability to be self-
sustaining. Within all of this foundation of principle, I hope to comment using the inconsistencies of political
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speak of both parties as headed by both Bush and Pelosi and explain why this notion of tax
rebates is a new round of poor economic policy. Stimulus as a means of Recovery Stimulating consumer
spending as an economic stimulus is pure hogwash. It has no real affect. Giving the average
American a fifty dollar bill will not change anything. It, in fact, is an inflationary action and the
inflationary impacts will far outstrip the true value of that $50 average rebate. Yet the direct cost would
initially be $15 billion dollars and indirectly cost nearer seven times that amount. It doesn't alter the continuous rise in
costs - true inflation as opposed to inflation as measured by the revised, revised statistics of
today.
[ ] Abundant liquidity destroys the market and creates hyper-inflationary spirals
Askari and Krichene 7/15/08 - professor of international business and international affairs at GWU
and IMF senior economist
[Hossein and Noureddine, “The G-8 ignores basics,” http://www.atimes.com/atimes/Global_Economy/JG15Dj05.html]
Fiscal deficit financing, stimulus packages and

Savers, facing negative real returns, will be inclined to save less.
abundant liquidities will step up consumption of consumer goods and therefore reduce
considerably the amount of savings, defined as consumer goods available for workers in
investment or capital goods sector. As savings keep dwindling, inflation aggravates, food prices
explode. Inflation severely deflates real output. The upshot is that the economy will have lower savings and
consequently less investment. In view of the Harrod-Domar growth model, which stipulates that economic growth rate is a function of
the economy will
the investment rate, lower investment will yield low or negative economic growth. Hence, over the long run,
be forced on a downward trail. Such has been the history of inflationary economies. Can
Bernanke re-stimulate the US economy with low interest rates in the present subprime crisis? The
answer is that it is now a little too late. His unwise cheap money policy since 2007, aimed at re-inflating the economy
and boosting house prices, has needlessly precipitated the economy towards stagflation, accompanied by unbearable food and
In view of monetization of large fiscal deficits and unrestricted credit policy, the
energy inflation.
specter of the highest inflation in US history and in the world economy has become a real
possibility.

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Turn – Stimulus Bad
[ ] Consumer spending screws the economy

BALANCE THE BUDGET and pay as we go. We can't dig out of this mess without quitting digging.
When you go deeper and deeper with your budget, you have to quit digging before a recovery
can take place. We must now pay for the boondoggles of politics and follies of foreign policy that
have gone unpaid. Yes, this means that economic decisions now must strongly influence and maybe even dictate a major
portion of foreign policy. Imperialism is not an economically sustainable option. America has learned that four times in history and
supposedly learned by watching the rise and fall of other supreme nations including Great Britian This means that War in perpetuity -
the War on Terror or other Wars against factions rather than States - are simply not prosecutable until we have regained our economic
balance. It also means that "bridges to no-Where, Alaska" should become not only impeachable offenses, but criminally prosecutable
ones, as an example. Using the philosophy that this is a consumer-spending economy encourages
waste and corruption. Neither is tolerable within the building blocks of a strong economy. Realign
the tax system for fairness; not stimulus. Wealth realignment has been allowed to occur over the
past thirty years under the guise of economic stimulus. Any time local communities want to justify a bond issue
today, they call it economic and job development. This is literally false economic policy and politically
boondoggling. So is the practice of realigning wealth and protecting the ‘haves’ under the umbrella that they are the job
providers. Within any tax system that makes exceptions for one over another will become loopholes
that encourage waste and corruption as well. For example, why are Wall Street investors given special tax
consideration over those that, for example, invest in plant, equipment, real estate or jobs? Is this sound policy, or a reward to the
‘have’s’? If so, we now have not only the class warfare of the ‘have’s’ and ‘have nots’ but a new super ‘elite have’s’ from which to
provide different economic policy.
[ ] Stimulus jacks the economy through interest rate offsetting – long term
growth is threatened

Using the rebate process as a salve rather than true remedy also places
Now comes the Bush-Pelosi Washington solution.
the US government's fiscal house in even worse order. Believe me; in order to cover the outlays of
such a regressive measure, the budget will go further into the red; requiring higher interest
offsets within the prime rate and exacerbating the overall problem. This is a dangerous cycle that
will be driven within the economy; one that will last three to five times the pain of just facing the
problem to begin with. Adding just one quarter percent to the cost of a mortgage will cost the average home owner, AND
RENTER an additional $375 per year. But the deleterious affect of this policy will likely drive up true interest
four to five times that - simply on its own. So what is the true cost of this $50 rebate check? I would
say that by the time the rebates are privatized, and the cost of government is added, that a $50
stimulus rebate will actually cost each consumer in the neighborhood of $650-700. Bush/Pelosi are
thinking of $800 per individual taxpayer. Quick math says the up-front cost will be $120 billion and the real cost about 6.3 times that
amount or almost a trillion dollars. This is stupid economic policy .

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NHSI 2008

Northwestern University Debate Society

Northwestern University Debate Society

Northwestern University Debate Society

Friedman and Greenstein 04 – Center on budget and policy priorities

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Northwestern University Debate Society

Times of economic crisis produce international tension and politicians tend to go to

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The World Today 7/18/08

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Business Journal 7/18/08

[ ] The economy is growing, news reporters are just fear mongering

Saunders 7/10/08 – Director San Fran Chronicle and renowned columnist

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Northwestern University Debate Society

[ ] Though the economy is at risk, there is an upward trend in growth

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The Times 7/16/08

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The Chicago Tribune 7/16/08

[ ] New stimulus package is being considered now

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Edwards 5/24/08 – Director of tax policy studies at Cato

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Inside Energy with Federal Lands 4/14/08

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Northwestern University Debate Society

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Center on Budget and Policy Priorities 7/18/08

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[ ] Renewables are expensive

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[ ] Nuclear energy is uneconomical and dangerous

ABC News 2/20/08

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The Arizona Republic, 6/16/08

[ ] Solar relies on federal incentives – its way too costly

Norwich Bulletin 6/22/08

[ ] Solar thrives off of subsidies, large spending is necessary

Wall Street Journal 6/30/08

Northwestern University Debate Society

Boswell 04 – Internationally renowned space analyst

[ ] SPS costs billions

[ ] SPS is extremely expensive which is why it hasn’t taken off

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Northwestern University Debate Society

Lodge 7/7/08 - Research Fellow at the Centre for Policy Studies

[ ] Wind costs hundreds of millions

Statesman Journal, 7/2 /08

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[ ] RPS is costly and ineffective

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Statesman Journal 7/2/08

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Northwestern University Debate Society