From Volume 37, Issue 26 of EIR Online, Published July 2, 2010

U.S. Economic/Financial News

Protests Mount as State Economies Implode

June 25 (EIRNS)—States and municipalities already reeling from the economic depression sweeping the country, will be forced to adopt sharp new budget cuts, tax hikes, and layoffs of state workers, as a result of Congress's criminal refusal to pass the jobs bill that also contained the extension of unemployment benefits. Politically, the new cuts will be like throwing oil on the mass strike fire.

Forty-six states are short a total of $112 billion on their budgets for the fiscal year beginning next week, according to a June 25 Bloomberg wire, and, as a result, are "facing Greek-style deficits." California leads the way with a $9 billion budget gap and 12.4% unemployment. But all states, in Wall Street outlet Bloomberg's view, "are going to have to cut back spending and raise taxes the same way Greece and Spain are." Bloomberg favorably quotes the bloodthirsty former New Jersey Gov. Christine Todd Whitman (R) saying: "States don't have a choice anymore. These problems are going to require major surgery."

But that is not at all what 80% of Americans think. For example:

* In Yonkers, N.Y., rats were released into the City Hall during union protests against budget cuts to fire and other services. Police were called by a city councilman to deal with one firefighter who, the councilman complained, was "endlessly berating" him.

* In Lansing, Mich., 5,000 teachers descended on the state capitol June 24 to protest a new requirement to pay 3% of their wages into the retirement system, without a guarantee of any actual retirement benefit.

* In California, protests hit school board meetings in Los Angeles and San Francisco on June 24. A $113 million budget gap caused the San Francisco school board to reduce Summer programs, force all district administrators to take five unpaid days off, and possibly lay off 900 teachers next year. Up to 4,000 Los Angeles school employees could begin to be laid off July 1 due to a $640 million deficit.

* The San Jose, Calif. airport was hit by worker protests at the opening of a $1 billion "high-tech" terminal that budget cuts will cause to be run with half the present workforce.

Panic at Beleaguered Unemployment Offices

June 25 (EIRNS)—The failure of Congress to extend emergency jobless compensation will cause about 1.3 million Americans to lose their unemployment checks by the end of this week, and about 2 million by the first week of July, according to the Wall Street Journal.

A spokesman for the National Association of State Workforce Agencies told EIR that state offices are being swamped with calls from panicked people, responding to the news of the Congressional "screw you" to the unemployed. Adding to the agencies' hardships from state budget cuts and personnel shrinkage, the states are generally using computers whose average age is 23-24 years, to handle the cases of claimants. State personnel are counselling the jobless to keep refiling their claims, so that if the Federal government restores the compensation, their names will at least be on file.

Congress also held up the planned $25.5 billion Federal Medical Assistance Percentages (FMAP) Medicaid help to the states. California had planned for $1.5 billion in FMAP aid in the state budget, and will now cut Medicaid benefits to the poor. Pennsylvania Gov. Ed Rendell (D) aid if Congress did not approve FMAP, his state would be "another $850 million short and because we are already down to the bone in programmatic cuts, that will produce tens of thousands of layoffs."

The only component of the original bill that was salvaged was the provision to rescind the planned 21% reduction in Medicare payments to doctors.

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