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Budget updates

DDI ’08
California economy

California deficit is growing by billions each month.

The Sacramento Bee 8-8-2008
The budget crisis in California continues. In case you missed it, this will catch you up to speed.California SynopsisCalifornia's
deficit is growing by about $1 billion a month.California has the largest budget deficit in the US, dwarfing New York by a
factor of three, and the Schwarzenegger has cut the wages of 200,000 workers to the US minimum wage which is lower than
the California minimum wage.In response, state controller John Chiang sent a letter to Schwarzenegger saying he will defy the
order and issue employees their regular paychecks. With that backdrop this might not seem so surprising. ...

Counterplan is impossible – normal means proves California won’t pass plan –

Arnold’s not passing new legislation.
The Sacramento Bee 8-8-2008
Gov. Arnold Schwarzenegger announced this afternoon that he is refusing to sign any bills into law until legislators pass a
budget."There is no excuse for the Legislature's failure to reach a compromise and to send me a budget," Schwarzenegger said
at a 2:45 p.m. press conference, more than a month into the new fiscal year. "Until the Legislature passes a budget that I can
sign, I will not sign any bills that reach my desk." The move follows Schwarzenegger's order last week to drop to the federal
minimum wage the salaries of most of of the state's 235,000 workers. After a budget is passed, they would be repaid.The
governor also laid off more than 10,000 part-time and seasonal workers.

Budget updates
DDI ’08
Deficit spending

Deficit is at nearly 500 billion.

Mayur Pahilajani - AHN News Writer U.S. Government Estimate Fiscal 2009 Deficit To Record $490 Billion July 28th, 2008
Washington, D.C. (AHN) - A federal official on Monday said that the government has increased its estimate for next year's
deficit to nearly $490 billion, which is a record figure for the budget year ending in September 2009. The reasons for the record
rise in U.S. budget deficit are the continuing slowdown in the economy, higher government spending including $168-billion
fiscal stimulus package and recent $300 billion approval from Congress to rescue debt-ridden homeowners. The United States
Senate has approved a landmark housing bill to rescue America's battered housing market. The Senate, meeting in a rare
weekend session on Saturday, voted 72 to 13 in favor of the bill that offers up to $300 billion in loan guarantees for
homeowners to get cheaper loans. The measure, which some Republican critics claim will cost the taxpayers billions, will
allow troubled homeowners the chance to refinance with state-backed, fixed rate loans. Early this month, the Commerce
Department reported that the U.S. economy grew at an annual rate of 1 percent in the first quarter of the year amid the sluggish
housing market. President George Bush, whose administration had the record deficit of $413 billion set in 2004, had projected
in the month of February that the 2009 deficit would be $407 billion.

Deficit to pass half trillion next year.

ANDREW TAYLOR [AP writer] Jul 28, 2008 “US deficit zooming to half-trillion as Bush leaves”
The government's budget deficit will surge past a half-trillion dollars next year, according to gloomy new estimates, a record
flood of red ink that promises to force the winner of the presidential race to dramatically alter his economic agenda. The deficit
will hit $482 billion in the 2009 budget year that will be inherited by Democrat Barack Obama or Republican John McCain, the
White House estimated Monday. That figure is sure to rise after adding the tens of billions of dollars in additional Iraq war
funding it doesn't include, and the total could be higher yet if the economy fails to recover as the administration predicts. The
result: the biggest deficit ever in terms of dollars, though several were higher in the 1980s and early 1990s as a percentage of
the overall economy.

Budget updates
DDI ’08
Dollar and oil
The euro is falling while the dollar is growing – compared to the yen.
Stanley White and Kosuke Goto [Bloomberg writer “Euro Slumps to Five-Month Low on Reduced Bets for Higher Rates”] Aug. 8
The euro slumped to a five-month low against the dollar as traders pared bets that the European Central Bank will raise interest
rates due to a slowing economy. The euro also fell to a three-week low versus Japan's currency after ECB President Jean-
Claude Trichet said economic growth will be ``particularly weak'' through the third quarter. The dollar headed for its biggest
weekly gain against the yen in almost two months as oil dropped 18 percent from a record. The Australian dollar declined for a
ninth day, the longest stretch since 1980, as futures show the central bank will cut borrowing costs this year.

The dollar is high and – oil prices dictate that the economy will not weaken
Stanley White and Kosuke Goto [Bloomberg writer “Euro Slumps to Five-Month Low on Reduced Bets for Higher Rates”] Aug. 8
The dollar traded near a seven-month high against the yen as oil prices declined during the past week to trade at $119.80 a
barrel, on course for a 4.2 percent loss this week and compared with the record $147.27 set on July 11. ``Oil prices have turned
out to be much more supportive of the dollar than I expected,'' said Masanobu Ishikawa, general manager of foreign exchange
at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``It does temporarily relieve some concern that the U.S.
economy will weaken further. This is a plus for sentiment.''

Budget updates
DDI ’08
Unemployment rates are hurting the US economy – jobs account for two thirds
of the US economy
STEVENSON JACOBS [AP writer Stock futures lower on jobs report, Wal-Mart sales] 8-7-2008
Wall Street headed for a lower open Thursday after weekly unemployment claims jumped to a six-year high and Wal-Mart
Stores Inc. and other retailers reported disappointing sales, adding to fears of a slowdown in consumer spending. The Labor
Department said the number of newly laid off people seeking jobless benefits increased by a seasonally adjusted 7,000 to
455,000 last week, the highest level since late March 2002. Wall Street had expected that new claims would rise to around
430,000. The number of people continuing to collect unemployment benefits went up by 31,000 to 3.3 million for the week
ending July 26, the most recent period for which that information is available. That was the highest since early December 2003.
The data indicated that the labor market continues to weaken. In recent weeks, General Motors Corp., Weyerhaeuser Co., and
Starbucks Corp. have all announced job cuts, sending more people to the unemployment lines. Wal-Mart, the world's largest
retailer, said same-store sales, or stores open at least one year, rose 3 percent in July as consumers began using up their
government stimulus checks. Analysts had expected on average a 3.4 percent rise. Other retailers also reported sluggish sales.
The results added to the market's worries that a souring U.S. economy and rising unemployment are hurting consumer
spending, which accounts for two-thirds of the U.S. economy.