[Eagevawax]

Mati-lah Singapura!

http://sg.news.yahoo.com/afp/2009031...t-972e412.html

US industrial output falls to 2002 low
AFP
AFP - Tuesday, March 17

WASHINGTON (AFP) - - US industrial production fell for the fourth consecutive month in February, to a 2002 low, as the manufacturing sector reeled from recession, government data showed Monday.
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A separate report on manufacturing in the state of New York showed a steep deterioration in conditions in March, signaling further pain for the country's battered manufacturing sector.

The Federal Reserve reported industrial production fell a seasonally adjusted 1.4 percent from January, slightly more than analysts' consensus forecast of a 1.3 percent drop.

Industrial output, at its lowest level since April 2002 in February, was 11.2 percent lower than a year ago.

"The monthly numbers are erratic but the trend is clearly downwards," said Ian Shepherdson, chief US economist at High Frequency Economics.

"There is no relief in sight as inventories rocket and exports plunge."

The Fed's industrial output index last rose in October and has fallen a combined 6.8 percent in the past four months.

The index has declined for 10 of the past 12 months.

The Federal Reserve central bank said that the capacity utilization rate dropped to 70.9 percent in February, slightly below the consensus 71.0 percent, from a revised 71.9 percent in January.

The February industrial capacity utilization reading was 10 percentage points below its average in the 1972-2008 period and matched a historical low in December 1982, during a severe recession, the Fed noted. The data has been tracked since 1967.

"If anyone is worried about bottlenecks forming when the economy eventually rebounds, forget it. Manufacturing capacity utilization is as low as we have seen it except during the steep recession in the early 1980s," said Joel Naroff at Naroff Economic Advisors.

Manufacturing production, excluding mining and utilities, declined in February for the fourth straight month, by 0.7 percent. On a 12-month basis, manufacturing was down 13.7 percent.

"After falling to a historical low in January, the factory operating rate, which dates back to 1948, moved down an additional 0.5 percentage point in February, to 67.4 percent," the Fed said.

An increase in auto and auto parts production in February after plant shutdowns in January offset the manufacturing decline by nearly a half percentage point, the central bank said.

Mining output dipped 0.4 percent in February, and output in the utilities sector plunged 7.7 percent, in part due to above-average temperatures that lowered energy demand.

Separately, the Federal Reserve Bank of New York said its monthly survey of manufacturers in New York state showed conditions "deteriorated significantly in March."

The overall Empire State index fell 3.5 points to a fresh low 38.2 points, while new orders and shipments indexes also fell to record lows.

Naroff said the early data on March activity was "pretty ugly" and noted that "with orders continuing to dwindle, it is hard to see that a bottom may be forming."

[Eagevawax]

http://www.latimes.com/news/local/la...tory?track=rss


California budget faces new $8-billion shortfall
Paul Sakuma, Associated Press
STUMPING: Gov. Arnold Schwarzenegger defends the six budget-related measures on the May special election ballot in a speech to the Commonwealth Club in San Francisco.
Plunging revenue has already put the new budget plan out of balance, the state legislative analyst says. The news may complicate the bid to have voters OK special-election measures in May.
By Jordan Rau and Evan Halper
March 14, 2009
Reporting from Sacramento -- The plan that Gov. Arnold Schwarzenegger and lawmakers approved last month to fill California's giant budget hole has already fallen out of balance with a projected $8-billion shortfall, the Legislature's nonpartisan budget analyst said Friday.

After analyzing recent data showing rapidly rising unemployment and lower-than-expected economic growth, Legislative Analyst Mac Taylor said the state is on track to have even less money than lawmakers anticipated in February.



* Falling short
Falling short

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California plans $4-billion tax-free bond offering
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School employees stage pink-slip protest

State leaders said then that they had ended the financial crisis through $42 billion in lowered spending, increased taxes, borrowing and accounting shifts.

California's economy in is such bad shape that Taylor's office anticipates that residents' combined personal income will be lower this year than it was last year, leading to fewer tax dollars for state coffers.

"I went as far back as 1950, and I could not find a situation in which personal income had actually declined in the state, so that's a rather unusual event," Taylor said at a news conference Friday.

The dour projection is likely to complicate Schwarzenegger's effort to win voter approval for a package of budget-related ballot measures scheduled for a special election May 19.

The governor and legislative leaders have said the propositions -- which include controversial bids to extend the recent tax increases, borrow against future lottery proceeds and siphon money from popular programs for children and the mentally ill -- are necessary to restore the state's fiscal balance.

For opponents, the new forecast is "going to give them a tremendous argument," said Larry Gerston, professor of political science at San Jose State.

He noted that since last fall, Schwarzenegger and lawmakers have repeatedly announced that they have resolved the state's financial troubles, only to see deficits rapidly reemerge.

"Their campaign was based on a shaky foundation as far as credibility goes . . . and this isn't going to make it any better," said Jon Coupal, president of the Howard Jarvis Taxpayers Assn., which opposes the special election measures.

H.D. Palmer, a spokesman for the state Department of Finance, noted that Taylor's estimate was based on more recent data than lawmakers had in February when they crafted their rescue plan.

"We are continuing to work our way through a recession that has hit California's economy extraordinarily hard," Palmer said. "That means there is clearly a potential for the state's revenue picture to get worse."

The governor is scheduled to release a revised financial forecast in May, when the Capitol traditionally focuses on the state budget. Lawmakers tried to head off a summer budget fight this year by tackling the deficit early and writing a spending plan that would last through the middle of next year, but Taylor's analysis suggests they will be forced to make major revisions this spring.

Assembly Speaker Karen Bass (D-Los Angeles) said the new estimate made it more imperative that voters approve the May ballot measures. If the package of propositions --particularly the lottery borrowing -- is rejected, the budget gap would increase by $6 billion, she said.

"We must keep a careful watch on revenues during these volatile times," Bass said. "All of us, Democrats and Republicans alike, must be prepared to continue to make tough decisions."

Assembly GOP leader Mike Villines, who supported the taxes and cuts passed in February, said the new budget hole would have to be plugged with further cuts if the economy does not recover.

Senate minority leader Dennis Hollingsworth (R-Murrieta) said he did not believe the three Republicans in his caucus who voted for tax increases would do so again.

"We're going to have to find efficiencies and reduce spending on a lot of programs," he said. "It's very painful, but it's going to have to be a very necessary step."

Even though they are in the minority, Republicans can block any spending plan they don't like, because of California's requirement that budgets be supported by two-thirds of the Legislature.

Taylor said the new $8-billion budget hole should not be as difficult to grapple with as was the $42-billion gap. He said the state may be able to tap $3 billion in federal money intended to increase schools spending as part of the federal economic stimulus package passed by Congress.

"We're not that far away if we can use those federal dollars," he said in an interview.

That idea may not fly with California's school leaders. Kevin Gordon, a lobbyist for school districts in Los Angeles, San Bernardino, Riverside, Orange and other counties, said Taylor was proposing to "hijack federal dollars that the president and Congress intended to use to offset cuts that have already been made."

Beyond the short-term problems, Taylor also projected a grim long-term fiscal outlook for the state, with a $12.6-billion shortfall emerging by mid-2011 and growing to $26 billion three years later.

"Given these budgetary pressures, the state could experience recurring cash flow pressures in the coming months and years," Taylor wrote.

[Eagevawax]

http://www.mercurynews.com/politics/...092?source=rss


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More tax hikes, spending cuts for California?

By Mike Zapler

Mercury News Sacramento Bureau
Posted: 03/14/2009 06:00:00 PM PDT

SACRAMENTO — After all the drama in the capital early this year, you might think the state was done with its budget debate for a while. But there's one more big decision to make this month about how much to hike income taxes and how deeply to cut higher education and programs for the poor.

And it appears the answer may be: higher taxes and deeper cuts.

The budget plan that Gov. Arnold Schwarzenegger signed recently contains a lengthy menu of measures to fix the state's $40 billion deficit. But part of the menu is subject to conditions: Almost $3 billion in tax increases and program reductions would be scrapped if California receives enough money from the federal stimulus package, which was still under construction when the budget was passed.

Specifically, the state would have to receive enough from the feds to offset $10 billion in general fund spending through mid-2010. But with the federal aid package now signed into law, two recent estimates peg the total the state will receive at just $8 billion, though the matter is far from settled.

To be clear, the federal spending package will actually deliver much more than $10 billion to California — some estimates peg the figure at as much as $50 billion in aid to local governments, business tax credits and other programs. But much of that money is earmarked for specific purposes, like unemployment and health benefits, and won't help plug the state's deficit.

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have conflicting views of which federal dollars will actually boost California's main budget fund, which pays for everything from public schools to prisons.

"It's a question of how you read the law," said Jean Ross, executive director of the California Budget Project, a think tank that advocates for working-class and poor people. "The language (in the budget) is very broad."

Indeed, the governor and legislative leaders left lots of room for interpretation in the budget package.

The decision ultimately rests with the governor's finance director, Mike Genest, and state Treasurer Bill Lockyer, who will hold a public hearing on the issue Tuesday and must decide by April 1 if the federal funding on its way will be sufficient.

Size of surtax

The stakes are high. If they decide that California won't clear the $10 billion hurdle, it will mean an extra surtax for residents at every income level. As it stands, personal income tax rates are slated to increase by 0.25 percentage points for two or four years, depending on the outcome of a May 19 ballot measure to curb state spending.

But that figure would be cut in half — to 0.125 percentage points — if the finance officials determine the stimulus bill will deliver $10 billion. For a family of three with $80,000 in income, the difference could be roughly $100 a year on their state income tax bill. For the state, the extra surtax is expected to generate $1.8 billion annually.

Nearly $1 billion in program cuts are also riding on the outcome. They include:

# Eliminating dental and other benefits for people enrolled in Medi-Cal, the state's health insurance program for the poor.

# Reducing monthly stipends by an additional 2.3 percent for 1.1 million blind, disabled and elderly people enrolled in the Supplemental Security Income program.

# Cutting the monthly stipend for CalWorks welfare recipients by about 4 percent. A family of three that now receives $723 a month would get $693, roughly the same dollar stipend that was provided two decades ago.

# Trimming an additional $100 million from the state university system, which is already planning tuition hikes to counter other state budget cuts.

"These are real programs that affect real people," said Mike Herald, a legislative advocate for the Western Center on Law and Poverty.

Political math

Finance officials are framing the decision whether to trigger the extra tax hike and spending cuts as a just-the-facts calculation. But heavy political pressure will be brought to bear, and their decision is far from simple mathematics.

One example: At this point, the governor's staff isn't counting nearly $5 billion in federal education money the state is expecting to receive, saying it's unclear how it would be spent. But advocates for the poor say those funds almost certainly will be used to counter state cuts to public schools and therefore should be counted toward the $10 billion threshold.

"It's a little disingenuous" not to include that money, Herald said.

Of course, there may be a strong incentive for finance officials to play it conservative. With revenue continuing to deteriorate — the state controller said Thursday that tax receipts in February were nearly $1 billion below the governor's estimate just a month earlier — California may well need the $2.8 billion that would be generated from the extra tax hikes and spending cuts.

As the protracted budget standoff demonstrated, generating that kind of money later through the legislative process could be a tall order. Officials also may be mindful of a report released Friday by the independent Legislative Analyst's Office that, thanks to lower-than-expected revenue, the newly signed state budget is already billions of dollars in the red.

"They may be thinking it's better to take the bird in the hand," said Barbara O'Connor, a professor at California State University-Sacramento's Institute for the Study of Politics and Media.

[Eagevawax]

http://www.rgj.com/article/20090314/BIZ/903140318/1071



California faces new shortfall

Associated Press • March 14, 2009



SACRAMENTO -- The recession will take an $8 billion bite out of California's finances next year unless Gov. Arnold Schwarzenegger and lawmakers make more spending cuts or close some tax loopholes, the state's leading budget analyst said in a report Friday.
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Despite a budget deal last month that was meant to close a $42 billion deficit through June 2010, the Legislative Analyst's Office said state finances already have fallen short as revenues have come in lower than expected.

The grim news suggested another round of budget fighting in the Capitol, just weeks after Schwarzenegger and legislative leaders hammered out a hard-won compromise that closed the gap by cutting $15.8 billion from state programs, raising $12.8 billion through tax increases and borrowing billions more.

Legislative Analyst Mac Taylor said the state's higher unemployment rate, now at

10.1 percent, further declines in the stock market and lower tax collections led to lower revenue projections in just a few weeks.

State Controller John Chiang also said this week that February revenues were almost

$1 billion below previous projections.

The LAO's report indicated the additional revenue loss will create a $6 billion deficit in the new fiscal year that starts July 1, plus

$2 billion that is needed for a cash reserve.

Unless Schwarzenegger and lawmakers take action, Taylor said the deficit will grow to $12.6 billion in 2010-11.

"Our year of shared sacrifice is not over," Assembly Budget Committee chairwoman Noreen Evans, D-Santa Rosa, said in a statement. "As grim as it is, this forecast is not even the worst-case scenario facing California. We must be prepared for more bad news to come."

Assembly minority leader Mike Villines, R-Clovis, said lawmakers should address the gap only through cuts.

The forecast also assumes voters approve all six budget-related measures in a May 19 special election. The budget compromise relied on passage of those measures, which seek to impose stricter spending restrictions, extend temporary increases in the state's sales and income taxes, borrow $5 billion against future lottery profits, and transfer money from special funds dedicated to early childhood development and mental health.


"Clearly, as far as looking at our fiscal situation, the passing of those measures are pretty critical in improving the state's fiscal situation," Taylor said Friday. "If they don't pass, it's going to be a lot more work."
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The downbeat report forecast double-digit unemployment rates continuing into early 2010 followed by slow growth that won't be nearly enough to cover future multibillion-dollar budget gaps.

Taylor recommended the state use as much federal stimulus money as possible to protect education programs and consider a mix of further spending cuts and revenue increases to solve the budget deficit without raising taxes.

His report suggested eliminating sales tax exemptions on animal feed, timber equipment and some medical items, as well as reducing credits for senior care. It recommended ending business tax exemptions on employer-provided parking, small business stock sales and corporate property trades.

The governor's finance department spokesman, H.D. Palmer, said the legislative analyst had more information than was available when the budget was passed. He said the administration will update its budget outlook after the May special election.

"We are continuing to work our way through a recession that has hit California's economy extraordinarily hard," Palmer said. "And that creates the potential for the state's revenue picture to get worse."

State Treasurer Bill Lockyer on Friday announced his office would sell $4 billion in general obligation bonds after California's nine-month absence from the financing market. Lockyer said there could be a second bond sale at the end of April.

California desperately needs to secure financing again since a cash crisis forced the state to freeze loans on thousands of infrastructure projects and halt tax refund payments during the budget crisis. Chiang, the controller, has announced his office will resume making payments.

Also Friday, the Schwarzenegger administration launched a Web site, www.recovery.ca.gov, dedicated to tracking how federal stimulus money is spent in California. The legislative analyst has projected California will receive $31.5 billion from the bill and billions more in competitive grants.

The budget passed last month addressed the current and next fiscal years. It reduced 2008-09 general fund spending to $94 billion from $101 billion, and allocated $92.2 billion in 2009-10.

[movlabz]

The USA is no longer a dream destination. With the huge deficit its only likely to get more difficult for middle class and poorer people. So instead of 'American Dream' it should be renamed 'American Nightmare'.