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tv   [untitled]  CSPAN  June 5, 2009 3:00pm-3:30pm EDT

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third, unlike most previous fiscal packages that were always too late, and looks like this was in time. you have seen in a number of states where they have put cuts on hold. . .
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is $183 billion, which is huge from historical standpoint there go i would personally argue if i put my crystal ball of many states have indicated they have a shortage in 2011 but could and giving number, so i would probably crystal ball and give a range that my sense is a the bottom line is probably between 200 and 250 billion in terms of deficits over the next three years. if you talk about the middle of that range i would argue that is about an average of 75 billion per year over the next three years, if you compare that to general fund revenues which are about 640 billion and that says essentially a 11 to 12% closing that is necessary breyer over these three years. second, and mentioned again and
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the spending, the why i look at scott mention we are down 2% in own nine and expect to be down another 2.5%, about four and a half percent of the two years. generally spending is up about 6% per year so you can see going down 2% is a huge cuts relative to the long run. down third point is that in the budget states are recommending that taxes for 2010 really are increased by 24 billion. now if you look historically we have seen numbers and times of 14 or 15 billion but never in number of that magnitude and unfortunately as we go along i think what governors will continue to want to cut budgets but they are going to be forced more and more i think to look unfortunately on the ravenous sign here, -- on the ravenous
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signed. most of this has been on the economy and even medicaid has been somewhat under control. affleck de till other is a significant number of states seen revenues down 210 or 20% in terms of personal income. tax revenues and actually four or five states over 20 percent, so huge revenue was offset. the only other comment i would make to this we are also headed for a cliff that some particular point is funding from the federal government ends in december 2010 which means some time after that when that money goes away in the economy has not recovered enough, we are going to have another pretty significant problem to address. id is a time when you would want to build a rainy day funds, prepare for that, but given this kind of situation in this very little ability to do that.
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and it's interesting even to compare this. scott mentioned back 21983 in terms of cuts, but it's interesting when you look at it was one year down 7p. in 1982 going into that here spending group over 6% and coming out of it on the other side, 1984, spending grew 8% so as bad as that one was, we were down an ad of a relatively quickly. this one is going to be deeper and much much longer, so you're not going to have that capacity to build the revenue base going forward. so with that, when we open up to questions. let's hold on the the conference call and see whether there are any questions in the room. yes. >> [inaudible] to what degree are these problems concentrated in california then say michigan?
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>> i would say these are pretty broad. i mean, those states are probably in that category of some of the worst, but florida and nevada, rhode island, you've got a number of others in that category but you have a whole bunch of others that are close to that. i think when you look the other side and we all ought to move to north dakota because it seems to be the only state that is doing well but the only states doing well are north dakota, wyoming, states that have has son of an energy base but as i sank when you look at the 20 states revenue personal income tax losses between 10 and 20%, that means it is pretty broad. >> i just want to add it is interesting to us because if you look at the mid '70s or the early eighties or early 90's, you still have as race and a fair amount of states, anywhere from six to a dozen doing very
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well primarily because of energy and this is a very different in their universal with the exception of very small handful of states like boiling in north dakota, you see this across the country and every region whether, philadelphia federal reserve, any data shows basically universally 50 stay downturn. >> [inaudible] i was wondering what you think it means for a bond financing, will states shy away because expecting lowering but will try and fill the gaps? >> i think it is going to been depending on the state. i think that the overwhelming majority of states will probably do what they would normally do in this type of recessionary time which is to the extent they can turn to bond financing. i think there are a handful, frankly the larger of is the california, that will still utilize bond financing but i
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think they have their own very difficult issues that they have to deal with to ensure that they can continue, but we have never seen a state the faults. usada some transportation in the '30's but states are still exceptionally low risk 96 out -- good investments i think investors realize that and i don't expect that to be an issue. >> anything else in the room? >> if you look at and i appreciate the percentage of tom% of the budgets here, if you look back into the 80s and the seven days as a percent of the budgets, is this on a scale you haven't seen or is it similar to the state budgets smaller then? >> i would say and then i think
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we don't have statistics back to the 30's but i thank you really got to go back there. i think this is the worst thing we have seen. most people and we initially it this downturn a body would be similar to 83. from one i have seen again we were down 83, but the year before and a year after we have very good revenue and we were down and back very quickly. and this started december 2008 so we are into this a while. we have to do three more years ago so i think it is related deaths and the length of this. there is no capability to sort of bill the revenue base, built the rainy day funds generally on the defense of the entire time. >> [inaudible] -- and the black
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this tussle to be a very long and deep downturn? >> no, i haven't heard of any states discussing that, i think they -- i think they will all is to do that frankly partly because of bond rating issues, but i think it is really the choices are dealing on the expenditure sign in the revenue side tax systems and so forthwith. >> when you talk about the number of states, 24 states i think that are going to be increasing taxes, that was that -- was that billion or a million? >> adel a member the exact number of states. is 24 million ha but 25 the 30 states i think are in that. >> we will check back for you. >> okay, what we go to the phone operator, are there any
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questions on the fan? >> thank you, i have a question, and there are any questions press star and then one on your touch-tone phone. we have a question from frank wolf from education daily, please go ahead. >> i wondered if you could discuss education funding by the states were in a little bit, one impact we are seen and what they can do to sort of protect programs? >> well, they were beginning to do some cuts in education and then when the recovery package came i think they sort of backed off a somewhat. governors generally like to protected, but on for some lovely going forward is going to be hard to continue to protect them in spite of a recovery package binding because it is such a significant portion and,
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in other words, if you look at health care and education you have 70 percent of your total budget and i think so far when they have done is they have cut the rest of that, but now i think going forward and, of course, they're probably going to have to look more both at hiring secondary and elementary. >> write thank-you. >> our next question is from kevin from associated press, please go ahead. >> given the economic environment and should the federal government consider guaranteeing short-term loans and bond issues from the state's? >> i will let you take that. [laughter] >> well, we certainly don't have a position on that, and that does seem to be an issue with the states vary in their positions on that, just depending on their current ability or at least they're
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perceived ability to go out in the markets. i do think though that while there was a lot of consternation at the beginning of this financial crisis last fall is interesting to see that again i think there is a realization that despite the turmoil and a difficult fiscal situation from my financing side, again the states compared to other entities are very low risk and even in california frankly very low rest both historically and otherwise and i think over time and that will be realized he mack the only other thing i would say is it is not easy, as i remember the federal reserve really can't do that legally. i thank you need congress to act to provide the right and i would just say in the average and in terms of broadly congress is not pushing it forward. >> our next question, please go
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ahead and. >> [inaudible] >> our next question is from lisa jann from abc news. >> thanks, my question has to do with the recovery act and the state's fiscal spending with respect to which you talked a little bit about now even with the recovery act the decline has gone up, i think a little bit more about how the recovery act impacted in medicaid and education, where we're seeing specifically how that has helped? >> okay, as i mentioned, those two programs represent about 135 billion. is the only flexible money that is their. and what is allows states to do particularly in the medicaid because it is also the medicaid money retroactive to october as
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i remember 2008 and is over 27 months the number that has out states to take their money because the fed was picking up an extra 6% share and to spread it around and factual find places where that money was even used to protect education. from a macro economic standpoint it was very positive because we have shortfalls of 200 billion going into the downturn before the recovery package and that would have had a larger negative impact, so the medicaid money in the education money really you can see it as soon as it was the bill was going to go through. and number of states have are the announced cuts were able to put them on hold. the problem is that we always figured it would be nice to get
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30 to 50 percent of the shortfall and a particular time and that is what it pinned down to me, but the economy deteriorated so much more after that that there is just not enough flexible money. so i think it was a very very good policy, it was a fair amount of flexible money and it was highly targeted. basically the two areas that governors wanted to protect, so i'm very positive about the recovery package, but this downturn is just much worse than anyone anticipated. >> if i could just follow up, have states anecdotally said anything to you about the multiplier affected how the hope that impacts their revenues in terms of some of the targeted non flexible spending that is supposed to go on in their states'? >> well, there is a multiplier a fight on all of the stimulus and unfortunately in a lot of the other is going to be much later. and other words the highway money will pay out over to the
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three years and the money of from water and so on and so it will create a multiplier, but unfortunately it will be significantly later. >> the recovery package i think did a good job because most of the tax cuts were very fine and in. the flexible money to states was front and it but a lot of the construction money was further down, but is pretty positive from the standpoint that it really did help over a to a three-year time. >> thank you. >> next question is from stephen from state, please go ahead and. >> this is a question for both of you. they usually the lifetime for states to catch up to the retiree is about two years. are you saying today from york, some with that you think it might be three, four or five years this time?
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>> scott, do you want to take that? >> i think it could and i think what they're telling us right now and certainly when we look at this report what we say is if you do have the recession and this year or by the end of this year, we hope that at least by fiscal year 11 usc but does come close to 2008 levels and then we would see growth budgets in 2012, but the severity in length of this recession continues then it could go further. but as ray and others have said to, the problem is that we have some real difficult structural issues going for and just in terms of all kinds of a cause drivers like correction costs for prisons and so the question is as the recovery money and is, how much is made up my increase in revenue from an improved economy? so i thank you said -- could see
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depending on the state airline in terms of growth rates for budgets not until fiscal year 2012 came and the only other comment i would make is if the unemployment begins to come down then you can soon -- assume state revenues will begin to, but the big problem here is the medicaid growth is going to be very late in the cycle and if you don't get a fairly strong uptick that growth is really going to be a huge problem for several years to come. >> i just want to add another reminder because it is all born from the revenue side is that most days particularly those with personal income taxes are extremely dependent on the wealthiest individuals for basically that capital gains in investment income so really what happens with and source of revenue of the next two to five years really is going to have a huge impact on the fiscal situation in the state's.
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>> any other questions, operator? >> we have a question from john coffee from the commercial, please go ahead. john, your line is open, go ahead with your question. >> the know how many state legislatures and governors are late or deadlocked in passing the budget for the next fiscal year because of financial problems and disagreements? >> we don't have a number right now. i think that question will be particularly apropos and about three weeks because it will be interesting to see how many finish up. i think there are states concerned the right now i would only be a handful of anywhere
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from five or 10. >> you can imagine three wakes is an eternity in terms of the legislatures and governors trying to fix budgets. >> next question is from tanning from cnn the money, please go ahead. >> to think that calendars are getting a battle abashed gunners are getting a better handle on the budgets for 2010 who are going to be more i don't use a realistic for accurate or will we see continued year scramble to close the gaps? >> i personally don't, i name, until the rate of decline really begins to bottom out, in terms of the state revenue numbers, it's going to be very difficult.
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one of the hardest problems and economic forecasting is to the turning points and it is very difficult, so once you begin now to see that on a main and then i think the accuracy will decrease quite dramatically but until lead time i think there's going to be a lot of unknowns. >> i have to say that is what is so remarkable about this because the fiscal folks, i can tell you how much they can wait for the day when the have civility between the amount of money coming in and their forecasts and the continue to believe that they have rammed their forecasts as far down as possible and there still missing and so it is remarkable as to how difficult this recession has been promised standpoint of state revenues. >> the only other thing i mentioned is everybody was looking for so-called green shoots and today there are now questioning whether the green shoots are really they're so we've got to have the shoots
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first before we talk at all about revenue. >> thank you. >> next question is from chris buckley, please go ahead. >> a quick question about the program cuts. you talked about in 2009 we have the chart that showed that higher education and k. 312 and a heisman of cuts in terms of the most states making cuts, do you have numbers in terms of dollar figures that show which areas by a dollar figure out the biggest cuts across all states? >> we did not specifically asked that in this report, we just asked if they did a particular cut to that area in that particular topic area. >> do you know generally the education sectors when compared to other areas? in terms of dollars generally.
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>> my guess is and from what we have heard is you primarily will see that in the higher education area to the extent it was k-12 and a lot has been made up by the recovery act funds and, of course, there are requirements not to allow for further declines based on previous levels, so to the extent to see that it would be primarily concerned higher education areas but again there are maintenance of effort requirements for higher education also so my guess is the percentage would be very low although you did see cuts in those areas. >> thank you. >> we have a question from frankel from education daily, please go ahead and. >> i just wanted to make sure these are estimated fiscal year 2009, 2.2% decline in state spending is projected. i guess most days and there year
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whether may or jann? >> yes, 46 states at the end of this month on june 30th so you are correct, those are estimates and when we do the fiscal report in december we will have actuals. >> great, thanks. >> at this time we have no further questions. >> okay, thank you very much, we appreciate it. >> think use ladies and gentlemen, this concludes the conference call, you may disconnect at this time. [inaudible conversations]
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our party needs a lot of work. >> sunday on c-span2 and a coming indiana republican governor mitch daniels on revitalizing the gop. the maquis think looking in ridley and think about how it can speak more meaningfully to
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the problems of today and to the americans of today, the young people of today specifically. maybe i can be a part of that we don't have to be a candidate to do that. >> q&a with governor mitch daniels sunday night on c-span, also on xm radio or download this c-span podcast >> earlier this week fbi director robert mueller talk about the fbi's role infighting financial crime including crimes and haven't happened yet as funds are being distributed. held by the economic club of new york this lasts about 40 minutes. [inaudible conversations] >> good afternoon everyone, if i can have your attention. it's my pleasure to invite you
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and welcome you to this 404th meeting of the economic club of new york, and our hundred second year come i'm a glenn hubbard and the chairman of the club. at the club is the nation's leading non-partisan speaking for on on the economy and business. more than a thousand guests speakers have been before this group over the past century and their names are listed in your program. they established a very strong tradition of excellence and big ideas in the economic club of new york roster. alan also like to recognize the members of our centennial society, several dedicated club members sparked the formation of the society in order to ensure the ongoing financial viability of the organization, the 110 members of the society are also listed in your program. we are, of course, honored as a club today to hear from robert mueller, the director of the
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fbi. he is the sixth director of the agency and nominated by president george w. bush, he was sworn in as director on september 4th, 2001. just a week before 9/11. after receiving his undergraduate degree at princeton university and his master's degree in international relations from the york university, the director joined the marine corps, he served as a marine officer for three years and led a rifle platoon of a third of marine division in vietnam for one year. for his service you received the bronze star, two navy commendation medals, the purple heart, and of the vietnamese cross of gallantry. following his career in the marines, the director went on to earn his law degree from the university of virginia law school, he served as a litigator, the u.s. attorney, and acting deputy attorney general for the department of justice. he will speak to us today about
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a very important topic in the economy generally and to this city in particular, financial crime. director mueller, you have the floor, they give. [applause] [applause] >> thank you all in good afternoon, it is a pleasure to be with you here today. a few months ago the economist magazine and announced plans to build an entertainment venue that in their words which continue the magic of a theme park with the excitement of the macroeconomics. [laughter] among the planned rise or the currency high roller or one could fly like a butterfly with the hero or sink like a stone with a pound. the chamber of horrors where one could travel with your in the face of distressed debt to and leslie my favorite, the fiscal fantasy land where one could


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