bizcon da - dunn

8/14/2019 Bizcon Da - Dunn

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Gonzaga Debate Institute 2008 1

Gordon/DunnEcon DA

Shell 1/2................ ................ ................ ................ ................. ................ ................ ................ ................ ................ ..... .....3Shell 2/2................ ................ ................ ................ ................. ................ ................ ................ ................ ................ ..... .....4UNIQUENESS-ECON UP...............................................................................................................................................5UQ: Econ Up....................................................................................................................................................... ............5UQ: Econ Up....................................................................................................................................................... ............6UQ: Biz Con High............................................................................................................................................................7UQ: Biz Con High............................................................................................................................................................8

UQ: Biz Con High............................................................................................................................................................9UQ: Manufacturing Up...................................................................................................................................................10UQ: Manufacturing Up...................................................................................................................................................11UQ: Consumer Con Up.................................................................................................................................................12UQ: Consumer Con Up.................................................................................................................................................13UQ: Auto Industry Up.....................................................................................................................................................14UQ: Auto Industry Up.....................................................................................................................................................15UQ: Investor Con Up.....................................................................................................................................................16UQ: Investor Con Up.....................................................................................................................................................17UNIQUENESS-ECON DOWN.......................................................................................................................................18UQ: Econ down.......................................................................................................................................... ...................18UQ: Econ down.......................................................................................................................................... ...................19UQ: Biz Con Low...........................................................................................................................................................20UQ: Manufacturing Down..............................................................................................................................................21UQ: Manufacturing Down..............................................................................................................................................22UQ: Consumer Con Down.............................................................................................................................................23UQ: Consumer Con Down.............................................................................................................................................24UQ: Consumer Con Down.............................................................................................................................................25UQ: Consumer Con Down.............................................................................................................................................26UQ: Auto Industry Down................................................................................................................................................27UQ: Auto Industry Down................................................................................................................................................28UQ: Auto Industry Down................................................................................................................................................29UQ: Auto Industry Down................................................................................................................................................30UQ: Investor Con Down.................................................................................................................................................31UQ: Investor Con Down.................................................................................................................................................32Brink: High Energy Prices..............................................................................................................................................33Brink: Auto industry .......................................................................................................................................................34Brink: Small Business....................................................................................................................................................35Link: Solar- Elec Prices.................................................................................................................................................37

Link: Solar- Elec Prices.................................................................................................................................................38Link: Solar- Elec Prices.................................................................................................................................................39Link: Wind energy- Elec Prices......................................................................................................................................40Link: Wind Energy- Elec Prices.....................................................................................................................................41Link: Biofuels- Food Prices............................................................................................................................................42Link: Biofuels- Food Prices............................................................................................................................................43Link: Biofuels- Food Prices............................................................................................................................................45Link: Biofuels- Food Prices............................................................................................................................................46Link: Renewables- Elec Prices......................................................................................................................................47Link: Renewables- Elec Prices......................................................................................................................................48Link: Renewables- Elec Prices......................................................................................................................................49Link: RPS- Energy Cost.................................................................................................................................................50Link: RPS- Elec Prices..................................................................................................................................................51Link: Nuclear Energy- Expensive..................................................................................................................................52Link: Nuclear Energy- Elec Prices.................................................................................................................................53

Link: Nuclear Energy- Elec Prices.................................................................................................................................54Link: Regulations- Biz Con............................................................................................................................................55Link: Regulations- General............................................................................................................................................56Link: Regulations- General............................................................................................................................................57Link: Regulations- Small Business................................................................................................................................58Link: Regulations- Elec Prices.......................................................................................................................................59Link: Carbon Reduction- Elec Prices.............................................................................................................................60Link: Carbon Reduction- Electricity...............................................................................................................................61Link: Carbon Reduction- General..................................................................................................................................62Link: Carbon Reduction- Poor.......................................................................................................................................63Link: Carbon Reduction- Econ growth...........................................................................................................................64Link: Carbon Reduction- Emissions..............................................................................................................................65Link: Carbon Reduction- Reg demands........................................................................................................................66




Gordon/DunnEcon DA

Link: AE Incentives- Business.......................................................................................................................................67Link: AE Incentives- Business and Investor...................................................................................................................68Link: AE Incentives- Investors.......................................................................................................................................69Link: Cap and trade- General........................................................................................................................................70Link: Cap and trade- General........................................................................................................................................71Link: Cap and trade- General........................................................................................................................................72Link: Cap and Trade- Biz Con ......................................................................................................................................73

Link: Cap and Trade- Biz Con ......................................................................................................................................74Link: CAFE- General.....................................................................................................................................................75Link: CAFE- Auto Industry.............................................................................................................................................76Link: OTEC- Investor Con.............................................................................................................................................78Link: OTEC- Investor Con.............................................................................................................................................79I/L: Regulations Spillover...............................................................................................................................................80I/L: High Electricity Prices Hurt Econ.............................................................................................................................81I/L: Small Business key ................................................................................................................................................82I/L: Small Business key ................................................................................................................................................83I/L: Small Business key ................................................................................................................................................84I/L: Small business key .................................................................................................................................................85I/L: Small business key .................................................................................................................................................86I/L: Consumer Key.........................................................................................................................................................87I/L: Consumer key.................................................................................................................................................. .......88I/L: Auto industry key ....................................................................................................................................................89I/L: Biz Con key ..................................................................................................................................................... .......91I/L: Investor key.............................................................................................................................................................92I/L: High Food Prices hurt the economy........................................................................................................................93I/L: US key to global econ ..................... ................ ................ ................ ................ ................ ................ ................. .. ....94I/L: US key to global econ..............................................................................................................................................95I/L: Cheap Electricity key to econ..................................................................................................................................96I/L: Cheap Electricity key to econ..................................................................................................................................97!- Extinction....................................................................................................................................................................98!- Laundry List................................................................................................................................................................99!- Turns Case...............................................................................................................................................................100!- Power Wars..............................................................................................................................................................101!- Nuclear War..............................................................................................................................................................102A/T: Renewables solve econ.......................................................................................................................................103AFF.................... ................ ................ ................ ................ ................ ................. ................ ................ ............... ...... ....104

A/T: Consumer Con key to econ..................................................................................................................................104A/T: Consumer Con key to econ..................................................................................................................................105A/T: US key to global econ..........................................................................................................................................106A/T: US key to global econ..........................................................................................................................................107A/T: US Key to global econ..........................................................................................................................................108A/T: US Key to global econ..........................................................................................................................................109A/T: High food prices hurt the econ???????//..............................................................................................................110A/T: Investor/ Consumer Conf key ................ ................ ................ ................ ................ ................ ....... ..... ..... ..... ...... .111A/T: Small Business key to econ..................................................................................................................................112A/T: Nuc War !..............................................................................................................................................................114




Gordon/DunnEcon DA

Shell 1/2

a- US economy set to rebound

Merle D. Kellerhals Jr. in 2008 (Staff Writer, Economic Growth Decline Predicted for 2008,

with Rebound in 2009, America.gov, online at: http://www.america.gov/st/econ-english/2008/January/20080124144024dmslahrellek0.8207666.html)

The pace of U.S. economic growth will slow somewhat through 2008, and an economic rebound is likely

to begin early in 2009 as the housing and financial sectors improve, says a Congressional Budget Officeforecast. Peter Orszag, director of the nonpartisan Congressional Budget Office (CBO), said in testimony

before several congressional budget and finance committees that the current economic weakness was

created by tight credit, a housing crisis and rising oil prices. The CBO provides Congress at least twoeconomic outlook forecasts annually. "The state of the economy is particularly uncertain at the moment. The

pace of economic growth slowed in 2007, and there are strong indications that it will slacken further in2008," Orszag said January 24 in congressional testimony. "In CBO's view, the ongoing problems in thehousing and financial markets and the high price of oil will curb spending by households and businesses thisyear and trim the growth of [the gross domestic product]." A nation's gross domestic product (GDP) is thetotal market value of all final goods and services produced by a nation. It generally includes four components-- consumer spending, investment, government spending and exports and imports. For 2008, CBO estimatesthe U.S. GDP to reach approximately $13.67 trillion and will rise further to $14.2 trillion in 2009.

b- narrow tax incentives hurt businesses and stop economic growth

Chris Edwards, Director of Tax Policy Studies, Cato Institute May 24 , 2007 Energy Efficiency: CanTax Incentives Reduce Consumption?

Mr. Chairman and members of the committee, thank you for inviting me to testify today regarding energyefficiency and the federal tax code. http://www.cato.org/testimony/ct-ce05242007.htmlAdditional tax incentives, such as tax credits, probably could reduce U.S. energy consumption modestly.1

However, narrow incentives complicate the tax code, create distortions that reduce growth, and move

down the slippery slope of widespread social engineering through the tax system.

On the other hand, Congress should reform tax provisions that hinder new investments in energy

production and conservation. Current business depreciation rules for energy and conservation

investments are unfavorable compared to the rules in other countries. Congress should reform those

rules, and it should pursue broader tax reforms to spur more rapid replacement of older structures andequipment with newer, more energy efficient infrastructure throughout the economy.Policymakers have long considered major reforms to the federal tax system. Some favor a broad-basedconsumption tax, while others favor a broad-based (or Haig-Simons) income tax. The difference between thetwo is the treatment of savings and investment. Consumption taxes apply one layer of tax to savings andinvestment, while income taxes apply two layers. The current federal "income tax" is a hybrid between thetwo systems.Reforms to move the current tax code toward a consumption-based system dovetail with the goals of thoseconcerned about America's energy future. A consumption tax would limit current consumption, including

energy consumption, while removing tax barriers to investment—including investment in energy

production, energy technologies, and energy conservation. As discussed below, more favorabledepreciation rules would be an important step in a consumption tax direction.

http://www.america.gov/st/econ-english/2008/January/20080124144024dmslahrellek0.8207666.html


http://www.cato.org/testimony/ct-ce05242007.html#1








Gordon/DunnEcon DA

Shell 2/2

c- The U.S. economy accounts for 30% of the world economy – a collapse would be

devastating

The Guardian on 6/4 (Ashley Seager, economics correspondent, “World still dependent on US economy, saysBush adviser”, http://www.guardian.co.uk/business/2008/jun/04/useconomy.usa)

Ed Lazear, chairman of the Council of Economic Advisers, said that the idea of decoupling would only be

realistic if the US's share of the world economy had fallen and if international trade flows dried up. But, he

said, the giant US economy still accounts for 30% of the world total and trade flows have increased in recent

years. "It is difficult to argue that the rest of the world is less connected to the US and not more connected,"

Lazear said at a conference of the Organisation for Economic Cooperation and Development in Paris.

d- economic collapse causes global war that goes nuclearLewis 1998 (Chris H., environmental historian, University of Colorado-Boulder, THE COMING AGE OFSCARCITY, p. 56)

Most critics would argue, probably correctly, that instead of allowing underdeveloped countries towithdraw from the global economy and undermine the economies of the developed world,the United States, Europe, Japan, and others will fight neocolonial wars to force thesecountries to remain within this collapsing global economy. These neocolonial wars will resultin mass death, suffering, and even regional nuclear wars. If First World countries choose militaryconfrontation and political repression to maintain the global economy, then we may see mass death andgenocide on a global scale that will make the deaths of World War II pale in comparison.However, these neocolonial wars, fought to maintain the developed nations' economic and politicalhegemony, will cause the final collapse of our global industrial civilization. These wars will sodamage the complex economic and trading networks and squander material, biological, and energyresources that they will undermine the global economy and its ability to support the earth's 6 to8 billion people. This would be the worst-case scenario for the collapse of global civilization.




Gordon/DunnEcon DA

UNIQUENESS-ECON UP

UQ: Econ Up

US economy down now but expansion still possible

Anita Douglas and Carolyn Williams in 2008 (economic analysts, Analysts Cite "Strong GrowthPotential" of United States' Economy in Review of Progress Toward APEC Goals, APEC IAP Peer ReviewMeeting, online at: http://www.apec.org/apec/news___media/media_releases/010308_pe_usiap.html)

An independent review of United States' progress in meeting APEC's goals for free and open trade andinvestment has acknowledged the economy's strong growth potential, in spite of a substantial deficit in

its current account. The "Study Report on the United States' 2007 Individual Action Plan (IAP)" to achieveits commitment to APEC goals was prepared by analysts from Singapore and Japan. The report considered anumber of areas comprising American efforts to reach APEC Bogor Goals, which set a target of free andopen trade by 2010 for industrialized economies and 2020 for developing economies. While recent negative

effects of the sub-prime mortgage market suggest that US economic growth should be moderate in

2008, analysts believe this will not affect the "economic expansion of the U.S. economy in the medium-term."

http://www.apec.org/apec/news___media/media_releases/010308_pe_usiap.html






Gordon/DunnEcon DA

UQ: Econ Up

G-8 Leaders signal strong economic outlook

Malcolm Foster, 7-9-08. Associated Press. G-8 worried about food, oil; optimistic on economy.

http://ap.google.com/article/ALeqM5g05j91qkU0XD0arvbeZ5O1rtMdPAD91PMK680

"We remain positive about the long-term resilience of our economies and future global growth," thecommunique said, noting that growth in emerging economies remained strong. "However, the worldeconomy is now facing uncertainty and downside risks persist," it said. "We express our strong concern aboutelevated commodity prices, especially of oil and food, since they pose a serious challenge to stable growthworldwide, have serious implications for the most vulnerable, and increase global inflationary pressure," itsaid. Since the G-8 leaders met last year in Germany, the world economy has deteriorated dramatically amidaccelerating inflation, a credit crisis and plunging markets. Many experts say the it is in the worst shape sinceat least the Asian financial crisis of 1997-98. "You just have to look at stock markets around the world to

see how much faith people are putting in these pronouncements from the G-8," said David Cohen, aregional economist with Action Economics in Singapore. "The markets are braced for stagflation — higher oil prices boosting inflation and dragging down economic growth." On Wall Street, the Dow Jones industrial

average has fallen to nearly two-year lows, while Japan's benchmark Nikkei 225 index just recently suffereda 12-day slide, its longest in 54 years. Most Asian markets fell Tuesday, and major European indices slidmore than 1 percent in morning trade on persistent worries about the credit crisis. San Francisco FederalReserve President Janet Yellen said in a speech Monday the financial markets remained fragile, and that itwill take time for conditions to improve. For their part, the G-8 leaders noted in their statement that financialmarket conditions had improved somewhat in recent months but said "serious strains still exist." Uponarriving for the three-day summit in northern Japan on Sunday, President Bush acknowledged that theAmerican economy was "not growing as robustly as we'd like." But he also was hopeful that Washington's

$168 billion stimulus package, including tax rebates for people and tax breaks for businesses, will pull

the economy out of its slump.

The economy will be high soon

Sean O’Grady in 2008 (Paulson predicts US economy will pick up by end of the year;The Independent;http://www.independent.co.uk/news/business/news/paulson-predicts-us-economy-will-pick-up-by-end-of-the-year-860062.html)

The US Treasury Secretary, Henry Paulson, signalled yesterday that the worst may soon be over for the

American economy. As the price of a barrel of oil tested fresh highs once again, and acknowledging the"headwinds" to growth coming from rapidly rising global energy and food inflation, Mr Paulson nonetheless said:"We have a resilient economy, we have good productivity, we have good efficiency. I think

there's a very strong possibility that we will be growing at the end of the year, we will have

stronger growth at the end of the year than we have right now." That, however, could still be relativelyweak, and Mr Paulson continues to be more worried about growth than inflation."Our biggest concern is the downturn. There's nodoubt that high headline inflation numbers are a real concern to Americans, but core inflation is relatively contained and my

biggest focus is on the downside risks, which are housing, oil prices and what is going on in the capital markets." The USeconomy grew at an annual rate of a mere 0.6 per cent during the first quarter of this year, and Mr Paulson warned that below-trend growth could be a fact of economic life for some time: "I think the oil prices are a strong headwind and at this level, theyhave got a high risk that they are going to prolong the slowdown."Asked by reporters at a press conference also attended by theChancellor, Alistair Darling, what measures he could take quickly to deal with the oil crisis, Mr Paulson offered little hope: "Idon't believe this situation avails itself of quick fixes." He believed "supply and demand" rather than speculation was responsiblefor the rise in prices. He also supported the role of market forces in setting the pay of bankers and traders. Asked about the £50m

package received by Charles Prince after he was forced out in the wake of losses at Citigroup, Mr Paulson, who previouslyheaded the Wall Street bank Goldman Sachs, said: "No one wants to see high compensation for failure. It is a big issue and itshould be an issue." He added: "This is not something in our judgement that should be legislated or regulated. This is a matter

between boards and shareholders." Closer to home, Mr Darling repeated his call for pay restraint in the face of higher inflation.The Chancellor said it was crucial that "we don't allow inflation to become entrenched into our system as we saw 20, 30 even 10years ago." He said the UK economy would "continue to grow", but declined to say by how much.






Gordon/DunnEcon DA

UQ: Biz Con High

Despite lower economic output, major businesses are confident in sales and spending projectionsScience Letter in 2k8 (business roundtable, july 8, LN)The Business Roundtable CEO Economic Outlook Index -- which reflects sales, capital expenditures andemployment figures for the next six months -- declined to 74.5 in the second quarter of 2008, down from79.5 in the first quarter, according to results released (see also Business Roundtable). Most leaders of America's top companies still expect sales and capital expenditures to either increase or remainunchanged over the next six months, but more now anticipate a drop in future employment, according tothe survey. "This quarter's results reflect the broad cross currents at work in the U.S. economy," saidHarold McGraw III, chairman of Business Roundtable and chairman, president and CEO of The McGraw-Hill Companies. "Our CEOs clearly have tempered their overall expectations against a backdrop of continued housing declines and mounting energy prices. That said, CEOs remain cautiously optimisticabout their sales and spending projections."

Business confidence is high now, and is steadily increasing.Market Wire ’08 (Market Wire, U.S. Small Business Confidence Index Increases 10 Points; Optimism inWestern States Drives the SBCI Increase, http://www.reuters.com/article/pressRelease/idUS137491+09-May-2008+MW20080509?sp=true

The Small Business Research Board (SBRB) U.S. Small Business Confidence Index (SBCI) increased

to 43.67 in the first quarter of 2008, an upturn of nearly 10 points (29.5%) from the previous quarter,

according to a report issued here today. The greatest increase of confidence is among businesses in the

Western states. Where the index increased to 59 from the 37 points (59%) recorded in the previous study,according to the report co-sponsored by International Profit Associates. Businesses in the Western states

reported they are most optimistic about the improvement of the overall economy. 67% of the

respondents in the region expect an improved economy and 61% expect revenues to increase in the

next 12 months. 49% say they plan to increase hiring. Businesses in the Midwest and the South -- the

same regions that provided the foundation for optimism in the first half of 2007 when the SBCI rose

from 41 to 46 -- remain consistent with the national average. Each of those regions reported slightincreased confidence indexes looking toward a better economy and revenue increases, based on the previousreport. The Southern states are most optimistic in regard to their hiring expectations with an

increase of 14 points over the results from the first quarter report. The Midwestern statesare most optimistic in regard to revenue increase expectations with a 12 point

jump over the results from the same first quarter report. The most pessimistic region was the Northeast,where the SBCI dropped from 34.66 to 33 points from the previous quarter. The Northeastern stateswerethe only states to report a decrease in confidence. This was led by a reported 13% decrease in revenueexpectations and is seven points below thenational average.More than 1,000 small businesses participated inthe SBRB poll.Nationally, small business owners and managers throughout the U.S. reported slightly

higher levels of expectations for the next 12 months in all three categories comprising the confidenceindex. Only 37% of the respondents indicated they intend to increase hiring the next 12 months, a slightincrease of 13 points from the 24% who reported increased hiring in the previous study. Of the participants,42% said they believe the economy will improve, 13 points higher than the last study. The current report alsoshowed 52% of the businesses are projecting revenue increases, 4 points higher than the 48%last quarter.

http://www.newsrx.com/library/topics/Business-Roundtable.html

http://www.newsrx.com/library/topics/Business-Roundtable.html




Gordon/DunnEcon DA

UQ: Biz Con High

Small Biz Con up nowBusiness Wire in 2008 (An economic analyst, Discover(R) Small Business Watch(SM): Small BusinessEconomic Confidence Rebounds after Six-Month..., business wire magazine, online at:

http://www.allbusiness.com/economy-economic-indicators/economic-news/6949254-1.html)Small business owners' attitudes about the U.S. economy in February improved for the firsttime since July 2007, according to the Discover Small Business Watch. The monthly index rosein February to 90.9, a 4.6-point increase over January's 86.3 with noticeable changes in howsmall business owners view the overall economy and the conditions for their ownbusinesses."Small business owners are seeing some of the larger efforts being made to improve theeconomy, such as the Fed interest rate cuts and slowing down of downward momentum, sothey appear to be less apprehensive," said Sastry Rachakonda, director of Discover's businesscredit card. "Not only are they more positive about their perceived notions of the economy,but they indicated this month more willingness to start investing again in their businesses."

Small Biz Con up in 2008

Reuters in 2008 (covering breaking news in business, finance, politics, entertainment, U.S. Small BusinessConfidence Index Increases 10 Points; Optimism in Western States Drives the SBCI Increase, Reuters, online at:http://www.reuters.com/article/pressRelease/idUS137491+09-May-2008+MW20080509)

The Small Business Research Board (SBRB) U.S. Small Business Confidence Index

(SBCI) increased to 43.67 in the first quarter of 2008, an upturn of nearly10 points (29.5%) from the previous quarter, according to a report issuedhere today.

Congress currently business friendly

Roll Call, December 17, 2007. Defying expectations, Business finds a democratic congress not so bad.http://www.rollcall.com/issues/53_72/vested/21388-1.html

Big business had big fears at the start of the year. Lobbyists for major corporations and trade associations

woke up to nightmares of massive tax hikes and new laws that would hurt their industries' bottom lines with

a Congress under Democratic control. But after 12 months of Democratic rule, lobbyists for business interests

big and small say their worst fears have not materialized. And some say the Democratic Congress has courted

their clients for not only campaign money but also for their suggestions on myriad legislative issues including

the energy bill - which could have been much worse for oil companies - patent reform and free trade. "Business

has dodged a bullet," said David Hoppe, vice chairman of Quinn Gillespie & Associates and a former chief of staff to then-Senate Majority Leader Trent Lott (R-Miss.). "Congress didn't do enough to complain about."

http://www.allbusiness.com/economy-economic-indicators/economic-news/6949254-1.html



http://www.reuters.com/article/pressRelease/idUS137491+09-May-2008+MW20080509



http://www.reuters.com/article/pressRelease/idUS137491+09-May-2008+MW20080509




Gordon/DunnEcon DA

UQ: Biz Con High

Business confidence remains, but the future is uncertain

International Herald Tribune, December 25, 2007, http://www.iht.com/articles/2007/12/25/business/usecon.php

U.S. companies are expected to keep hiring next year as stronger global demand requires

them to add to their work forces, still lean in the aftermath of the 2001 recession. Hiring,however, will be cautious and at rates insufficient to keep the unemployment rate from rising asnew workers enter the labor force. Strong exports, aided by a weak dollar that makes

American goods cheaper in foreign markets, should also lend support until lower interest ratesspark faster growth in the second half of the year. The U.S. Federal Reserve has cut interest

rates three times since September, lowering its benchmark rate to 4.25 percent. Economists

expect the Fed to keep cutting, dropping the rate to as low as 3 percent by midyear, which

would be the lowest since May 2005. That should help the economy because lower interest

rates encourage consumer and business spending by lowering borrowing costs. The U.S.

economy will be most vulnerable in the first half 2008, when growth is so slow that even a mildshock, like another surge in oil prices, could push it into recession. By mid-2008, Diane Swonk,chief economist of Mesirow Financial, a Chicago investment firm, said that the impact of lower interest rates should filter through the economy and lift growth to an annual rate of nearly 3 percent by year-end. But such growth rates, while solid, only tell part of the story, Swonk said.




Gordon/DunnEcon DA

UQ: Manufacturing Up

Manufacturing taking a turn for the better

Barrington Research, 7/10/08. (Barron’s “Recess Time for Recession Talk”

http://online.barrons.com/article/SB121563111459740069.html?mod=googlenews_barrons)

Globalization has decentralized economic power allowing strength in some regions to partially offset andcushion downturns elsewhere. The proportionately smaller but more efficient U.S. manufacturing sector hasreduced cyclical volatility. The weak dollar and resulting increased competitiveness has sharply increasedU.S. exports, which in turn are currently a strong offset to weakness in domestic demand for U.S.manufacturers.




Gordon/DunnEcon DA

UQ: Manufacturing Up

Manufacturers are confident in a successful industry.

Chiappinelli and Brousell ’08. (MA editorial staff and contributing editor, MA News, U.S ManufacturingLooking Up, Survey Says,

http://www.managingautomation.com/maonline/news/read/US_Manufacturing_Looking_Up_Survey_Says_32079,June 18, 2008)Despite reports heralding the decline of U.S. manufacturing, industrial companies in North America see

their competitive position improving in the next five years, a new survey by Deloitte and the National

Association of Manufacturers found.

Optimism among manufacturers was a key finding of the “Made in North America” survey of 321

manufacturing executives in the United States, Canada, and Mexico.

Looking ahead, 57% of manufacturing executives in the United States predicted that their companies

would be better positioned against their primary competitors five years from now. That compared with41% who thought they were currently ahead of their competition. Only 11% expected that they would beworse off in five years. Among Mexican manufacturers, 49% expected a stronger competitive position in2012, while 46% of Canadian executives reported similar optimism.

Manufacturing is growing, expect five year consistancyAbid Aslam, 7/5/08. (IPS NEWS, Alternet, “Economy: Small Comfort in Manufacturing

Uptick”

http://www.alternet.org/workplace/90516/?ses=562de9e2b38e3df7b97b087063eae9e8)Last week, the private sector Institute for Supply Management (ISM) bucked economists' expectations andsaid the manufacturing sector last month clawed its way back to positive growth.The ISM's manufacturing index rose to 50.2 in June, up from the May reading of 49.6. Economists polled bynews and business organisations had expected a reading of around 48.6. Anything above 50 reflects growthin the sector; anything below it indicates contraction.

"The manufacturing sector showed a slight improvement in June as the [index] registered above 50 percent after four months of decline," said Norbert Ore,chairman of the ISM's manufacturing survey committee.

In particular, the index showed that exports in June continued to grow. Although exports slipped between May and June -- from 59.5 to 58.5 -- the reading remaineddecidedly positive, and consistent with a five-year expansion in U.S. exports.

2008 is the rebound year for manufacturing.

Reuters; WASHINGTON, Sept 5, 2007 (Reuters; US manufacturing growth to rebound in 2008 – survey; http://www.reuters.com/article/basicindustries-SP-A/idUSN0522930220070905 ) –The U.S. manufacturing sector had healthy growth in the second quarter but the housing market

slump will restrain growth for the rest of the year before rebounding in 2008, a manufacturingsurvey showed on Wednesday.

Manufacturing production growth will slow to 2 percent in 2007 from 4.7 percent in 2006, beforerebounding to 2.9 percent in 2008, the Manufacturers Alliance/MAPI Quarterly Industrial Outlook reportshowed. "An improvement in manufacturers' exports in most industries and the end of an inventory

drawdown explains the bounce back in second-quarter industrial activity," said Daniel Meckstroth,Manufacturers Alliance/MAPI chief economist. The trade group says about three-quarters of the housingcollapse is over and the remaining decline in housing starts will bottom out in the first quarter of 2008. The

automotive sector continues to drift lower, the group said. Motor vehicle and parts production will oscillatearound a small drop in production this year and a minor rebound in 2008. Manufacturing production

expanded at a 3.9 percent annual rate in the 2007 second quarter from an anemic 0.8 percent in the firstquarter, the trade group said. Six industries showed double-digit year-over-year growth in the second

quarter, including electrical equipment, and mining and oil and gas field equipment, each at 13 percent,while aerospace products and parts; communications equipment; industrial machinery; and privatenonresidential construction all grew by 12 percent. "Unfortunately, the manufacturing sector cannotcompletely shake off the depressing effect of the housing collapse and the downward drifting motor vehiclesmarket. Furthermore, we no longer look to strong business investment to lead economic growth," Meckstrothsaid.

http://www.reuters.com/article/basicindustries-SP-A/idUSN0522930220070905







Gordon/DunnEcon DA

UQ: Consumer Con Up

Consumer confidence in the United States is increasing now.

ISAE ’07 (Institute for Economic Studies Analysis, CONSUMER CONFIDENCE REACHES A FIVE-YEAR HIGH IN THE UNITED STATES AND DECLINES, INSTEAD, IN THE EURO AREA. ALSOMANUFACTURING FIRMS’ CONFIDENCE WORSENS IN EUROPE,http://www.isae.it/not_confronti_ing_01_07.pdf)

In the United Kingdom, consumer climate worsened slightly in January, coming in at -7

(compared to -6 in December), due to a more pessimistic evaluation of the respondents’ personal

economic situation, of the country’s general economic conditions and of labour market developments .Future saving opportunities improved instead. Finally, with regard to prices, consumers expected anacceleration in inflation (to 21 from 19 in the previous month). The United States sent instead signs of

general optimism. The Conference Board index increased from 110 to 110.3, reaching the highest level

in the last five years, backed mainly by the improvement in the present situation sub-index, which rose

from 130.5 to 133.9 (the sole expectations component declined instead from 96.3 to 94.5). The

University of Michigan showed an improvement in the confidence indicator from 91.7 to 96.9, thanks

to the respondents’ more avourable assessments on the economic trend.

Consumer confidence in America is constantly on the rise.

ISAE ’07 (Institute for Economic Studies Analysis, CONSUMER CONFIDENCE REACHES A FIVE-YEAR HIGH IN THE UNITED STATES AND DECLINES, INSTEAD, IN THE EURO AREA. ALSOMANUFACTURING FIRMS’ CONFIDENCE WORSENS IN EUROPE,http://www.isae.it/not_confronti_ing_01_07.pdf)

US consumers showed more upbeat sentiment in January: the confidence climate indicators of theConference Board and of the University of Michigan improved from 110 to 110.3 and from 91.7 to

96.9, respectively. In the Euro Area, consumers gave a more pessimistic appraisal of the economic trend, butwere less concerned about inflationary pressures. Among the main countries, in Germany confidencereached a 5-year high, whereas Spain and the United Kingdom sent negative signals




Gordon/DunnEcon DA

UQ: Consumer Con Up

Consumer confidence is reaching a high for the first time in recent monthsRyan Szporer in 2008 (U.S. Dollar Down Despite Better-than-Expected Consumer Confidence Report;http://www.economicnews.ca/cepnews/wire/article/single/98803/)Even a rebound in U.S. consumer confidence for the first time since January on Friday could do little to savethe U.S. dollar from ever-increasing oil prices.

The preliminary consumer sentiment survey from Reuters and the University of Michigan rebounded for the first

time since January, reaching a score of 56.6 in July from June's reading of 56.4. The consensus was expecting

a further decline to 55.5.

US Consumer confidence rose again this month

Reuters in 2008 (US trade gap narrows despite higher oil prices;http://business.inquirer.net/money/breakingnews/view/20080712-147988/US-trade-gap-narrows-despite-higher-oil-prices)

Other data showed US consumer confidence rose unexpectedly in early July from a 28-year low

with the help of retail discounts. But the Reuters/University of Michigan Surveys of Consumers also showed a vastmajority think the country is in deep recession. US exports, helped by the weak dollar, rose 0.9 percent in May to a record $157.5

billion, including individual records for exports to Canada, the European Union and South and Central America, the departmentsaid.




Gordon/DunnEcon DA

UQ: Auto Industry Up

Due to GM sales, the US auto industry is rebounding.

Herbert Lash; 07.01.08, (4:25 PM ET; GLOBAL MARKETS-U.S. stocks rebound on surprise GM car saleshttp://www.forbes.com/reuters/feeds/reuters/2008/07/01/2008-07-01T202518Z_01_N01295460_RTRIDST_0_MARKETS-GLOBAL-WRAPUP-7.html )

NEW YORK (Reuters) - Surprisingly strong sales at struggling General Motors (nyse: GM - news - people )Tuesday helped Wall Street shrug off worries about higher oil prices and the credit-crunched banking

sector that have pushed it to the brink of a bear market. The stronger-than-expected sales at GM forcedgovernment debt prices that had gained on a flight to safety bid to turn lower. The dollar fell against the euroin a volatile session as investors debated the outlook for the U.S. economy. Crude oil rose to a new settlementhigh. Forecasts that global supplies will struggle to keep pace with demand and concerns over tensions betweenIsrael and Iran pushed up prices. The release of U.S. auto sales for June swept away a dour mood amonginvestors that initially pushed U.S. equity markets down more than 1 percent, especially the hard-hit financialsector, and cap a roller-coaster day on Wall Street. A report that showed U.S. factory activity expanded in

June for the first time in five months initially offset worries about rising energy prices and helped stocksrise as investors scoured for bargains among beaten-down sectors.Stocks later turned lower as the aversionto risk gripped investors, before bouncing back on the GM sales report that sent its shares up as much as 10

percent, before paring gains. A month-end clearance sale helped GM retain its No. 1 spot in U.S. auto sales

and avoid the wipeout many analysts had feared. Sales fell by a more limited margin industry wide than themost bearish forecasts, helping stocks turn around. "Two letters: GM. We're oversold and so with so many

people looking for that bounce, any news that is a little better than expected is going to get a bit of a rebound

going," said Joe Saluzzi, co-manager at Themis Trading in Chatham, New Jersey.

U.S auto industry has recovery and productivity is steadily increasing

KEITH BRADSHER ; June 16, 2000 (Efficiency on Wheels; U.S. Auto Industry Is Catching Up Withthe Japanese; The New York Timeshttp://query.nytimes.com/gst/fullpage.html?res=9501EFDA1E3EF935A25755C0A9669C8B63)

What is more, productivity has improved across the United States auto industry in recent years. Whilethe Ford plant in Atlanta ranked as No. 1, the biggest overall efficiency gains last year took place at

General Motors, which was once known for inefficiency. The Ford Motor Company is the most efficientAmerican automaker, although its performance was marginally worse by some measures last year

because of the production of very big, complicated vehicles like the new Ford Excursion sport utility.Over the last several years, the Big Three Detroit-based automakers have gradually made up much,though certainly not all, of the productivity gap between their factories and those owned by the

Japanese.

They have done so mainly through improved management and organization rather than through the

use of high-technology computers and robots, though they have integrated such equipment into their

factories, according to Harbour & Associates, a consulting firm in Troy, Mich., that issued the reportyesterday. Japanese automakers continue to set the standard in quality, but better management is helpingDetroit automakers start to catch up in reliability, too, although estimates vary widely for precisely how muchthe quality gap has closed.''In the 1980's, there was a widely held, popular view that Japan represented the economic future,'' saidRobert Shapiro, the under secretary of commerce for economic affairs. ''Since the 1980's, the U.S. auto

industry has recovered very nicely, and in part that reflects productivity gains.''

http://www.forbes.com/reuters/feeds/reuters/2008/07/01/2008-07-01T202518Z_01_N01295460_RTRIDST_0_MARKETS-GLOBAL-WRAPUP-7.html



http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=GM



http://www.forbes.com/markets/company_news.jhtml?ticker=GM


http://www.forbes.com/peopletracker/results.jhtml?startRow=0&name=&ticker=GM


http://www.forbes.com/afxnewslimited/feeds/afx/2008/07/03/afx5180691.html?partner=lingospot

http://query.nytimes.com/gst/fullpage.html?res=9501EFDA1E3EF935A25755C0A9669C8B63







http://www.forbes.com/afxnewslimited/feeds/afx/2008/07/03/afx5180691.html?partner=lingospot





Gordon/DunnEcon DA

UQ: Auto Industry Up

The US auto-industry is no doomsday scenario.

Reuters UK Mar 4, 2008 6:07pm (GMT; AUTOSHOW-US Auto Sales Not as Weak as Some Forecasts-GM; http://uk.reuters.com/article/basicIndustries/idUKN0445604620080304?pageNumber=2 )

GENEVA (Reuters) - General Motors Corp (GM.N: Quote, Profile, Research) Chief Executive Rick Wagoner on Tuesday said U.S. auto sales have been weak in the first two months of the year, but have not

approached the extremes of some forecasts.

"I think it is fair to say that it has been a little better than some of the doomsday people are thinking,"Wagoner told reporters on the sidelines of the Geneva auto show.He said GM, the largest U.S. car maker, had not made any radical changes to its spending plans andwas ready to react should the market weaken or fail to recover.GM on Monday reported a 16 percent decline in U.S. sales in February and trimmed its second-quarter

production plans.Overall, the largest U.S. automaker expects U.S. sales to recover in the second half of the year, but hasnot been building "a whole bunch of inventory" in anticipation of a rebound, Wagoner said.

http://uk.reuters.com/article/basicIndustries/idUKN0445604620080304?pageNumber=2


http://uk.reuters.com/stocks/quote?symbol=GM.N


http://uk.reuters.com/stocks/companyProfile?symbol=GM.N

http://uk.reuters.com/stocks/researchReports?symbol=GM.N



http://uk.reuters.com/stocks/companyProfile?symbol=GM.N

http://uk.reuters.com/stocks/researchReports?symbol=GM.N




Gordon/DunnEcon DA

UQ: Investor Con Up

U.S. Investor confidence growing

Mike Tyler, 2008, (moneymanagement.com “US investor confidence up, Asia Down”) online

http://www.moneymanagement.com.au/Articles/US-investor-confidence-up-Asia-down_0c0579e2.htmlUS institutional investors appear to be growing in confidence, with the latest State Street Global Markets

Investor Confidence Index rising again in May. The index, released this week, rose by 0.5 points to 81.4, with

confidence among North American institutional investors rising from 83.5 to 85.2 and European investor confidence rising from 73.4 to 81.6 on the index. By comparison, the confidence of Asian investors fell 5.8 points to79.4. Commenting on the outcome, Harvard University professor Ken Froot said the upturn in the index was

important. “In spite of the distinct sources of risk that we see – energy prices, inflation in the US and other

developed countries, rapidly weakening real estate markets and the global real economic slowdown,

institutional investors overall are cautiously finding value at current price levels,” he said. Foot said that whilesentiment, particularly in the US, remained low, it was now well above the all-time lows the index had witnessedover the past 12 months. The co-author of the index, State Street Associates director Paul O’Connell, said Europeanconfidence had been stronger during May, perhaps reflecting that the European Central Bank was likely to take amore pragmatic role in responding to the elevated levels of inflation that were plaguing Europe. He said the

situation in Asia was more pessimistic and that for the first time since the scare of early 2006, Asian investorswere processing the choice between more currency adjustment and greater inflation over the coming year.

Investor Confidence highest in 7 months

Reuters 2008 ( “Investor Confidence at seven-month high state st”) online :http://in.reuters.com/article/asiaCompanyAndMarkets/idINL204592520080520 accessed July 7, 2008LONDON, May 20 (Reuters) - Investor confidence jumped to its highest level in seven months in May, State

Street said on Tuesday, in what it said was a "significant" move led by North Americans. The U.S. financial

services giant said its global State Street Investor Confidence Index rose to 81.0 in May from a downwardly

revised 72.3 in April, previously 72.8. It marked a sharp increase since an all-time low of 65.9 charted in December and was the highest since October last year, just before global equities hit at all-time high and then turned downsteeply. "This month's increase ... suggests that the outlook of institutional investors is brighter than it has been for

some time," said Harvard Professor Ken Froot, a co-developer of the State Street index. On a regional basis, theNorth American index rose to 85.0 from a downwardly revised 77.0, previously 78.3. Asian investor

confidence rose to 86.4 from 86.2. European investors, however, showed less confidence, with their index

sliding to 76.3 from 76.8. "With European confidence remaining essentially flat this month, we note something of adivergence in the timing of the cycle on each side of the Atlantic," said State Street's Paul O'Connell, another co-developer. State Street compiles its indexes from movements in more than $15 trillion of assets it holds as custodianfor institutional investors. (Reporting by Jeremy Gaunt; Editing by Gerrard Raven)

http://www.moneymanagement.com.au/Articles/US-investor-confidence-up-Asia-down_0c0579e2.html

http://www.moneymanagement.com.au/view_company.asp?companyid=24233



http://in.reuters.com/article/asiaCompanyAndMarkets/idINL204592520080520


http://www.moneymanagement.com.au/Articles/US-investor-confidence-up-Asia-down_0c0579e2.html






Gordon/DunnEcon DA

UQ: Investor Con Up

Investor confidence is quickly increasing.

Rasmussen Reports ’08 (Rasmussen Reports, Rasmussen Consumer Index,http://www.rasmussenreports.com/public_content/business/indexes/rasmussen_consumer_index, July 12 2008)

The Rasmussen Consumer Index, which measures the economic confidence of consumers on a dailybasis, rose jumped nearly three points on Saturday to 74.9. The reading is up a point from two weeks agoand up eight points from a month ago. Consumer confidence has fallen twenty-five points since the

beginning of 2008.Investor confidence also bounced five points on Saturday to 86.1. The Rasmussen Investor Index is up

five points from two weeks ago and seven points from last month. Prior to this calendar year, the

Investor Index had never fallen below 91.1 and it had not been below 100 since early in 2003.Just 15% of adults rate the economy as good or excellent these days, while 54% rate it as poor. While 19% of men give today's economy positive ratings, just 12% of women do the same. Fifty-three percent (53%) of men and 54% of women give the economy a poor rating.

Investor confidence upJohn Carney, 6/24/08 (Editor of Dealbreaker.com, Dealbreaker, “Sarbanes-Oxley:

Fooling More Of The People More Of The Time”

http://dealbreaker.com/2008/06/sarbanes-oxley_conning_investo.php)While the costs of Sarbanes-Oxley continue to mount, the law's defenders enjoy claiming that it has

performed the vital job of restoring investor confidence in the wake of the corporate scandals. No doubt thosedefenders will be heartened by a new study that shows that 62 percent of corporate executives agree that thelaw strengthened public and investor trust in corporate America.

Investor confidence rising

Jody Osborne, 6/17/08. (Senior Staff Writer & Options Strategist Optionetics.com,

Inside Future, “Economic Watchdog, June 17”http://www.insidefutures.com/article/69377/Economic%20Watchdog,%20June%2017

.html)Investor confidence rose slightly in June as measured by the State Street confidence index. This index

measures the actual measures of risk in investment portfolios with the higher the risk being taken, the

stronger the sentiment. This index came in at 81.4, just slightly higher than in May.




Gordon/DunnEcon DA

UNIQUENESS-ECON DOWN

UQ: Econ down

The US economy is currently in a huge strain.

Associated Press, 7-8-08. Dollar woes cramp US economy, US consumers, but the government’s options arelimited. http://www.iht.com/articles/ap/2008/07/08/business/NA-FEA-US-Dollar-Doldrums.php

Brazilian Supermodel Gisele Bundchen no longer wants to be paid in dollars. Signs saying "We accept euros" arecropping up in the windows of some Manhattan retailers. A Belgium company is trying to gobble up St. Louis-basedAnheuser-Busch, the nation's largest brewer and iconic Super Bowl advertiser.The almighty dollar is mighty no more. It has been declining steadily for six years against other major

currencies, undercutting its role as the leading international banking currency. The long slide is fanning

inflation at home and playing a major role in the run-up of oil and gasoline prices everywhere.

Vacationing Europeans are finding bargains in the U.S., while Americans in Paris and other world capitals are beingclobbered by sky-high tabs for hotels, travel and even sidewalk cafes. Northern border-city Americans who onceflocked into Canada for shopping deals are staying home; it's the Canadians flocking here now. Everything made in

America — from goods to entire companies — is near dirt cheap to many foreigners. Meanwhile, Americanconsumers, both those who travel and those who stay at home, are seeing big price increases in energy, food andimported goods. The dollar has lost roughly a quarter of its purchasing power against the currencies of major

U.S. trading partners from its peak in 2002.

Economy is currently slowing

Brian Morrissey, 7-8-08. Staff writer. Slowing Economy Hits Online Advertising.http://www.adweek.com/aw/content_display/news/digital/e3i7ac9ecf0f97619aa47dce20743c57f7d

The slowing economy is cutting into online ad growth -- although it is likely to take a greater toll on

offline media, according to a new survey. William Blair & Co. surveyed 150 Chicago-area interactivemarketing companies to gauge the health of the medium. While it discovered a positive outlook , the

investment bank found the gloomy outlook for the economy slowing growth. Two-thirds of

respondents said economic turbulence is affecting spending. Respondents indicated an expectationInternet advertising would grow slightly more than 16 percent in the next year. In its previous surveys,William Blair tracked 19 percent growth expectations. The areas forecast to thrive: paid search and directresponse ads that can be tied directly to ROI. "Online's healthy, but the economy is definitely having animpact," said Sean Riegsecker, CEO of Centro, a Chicago ad service for newspaper sites, in a conference callto discuss the findings. "In a weak economy, people are going to move more towards direct response. We'reseeing brand advertising take a much bigger hit this year."

http://www.iht.com/articles/ap/2008/07/08/business/NA-FEA-US-Dollar-Doldrums.php


http://www.adweek.com/aw/content_display/news/digital/e3i7ac9ecf0f97619aa47dce20743c57f7d

http://www.williamblair.com/Pages/index.asp


http://www.adweek.com/aw/content_display/news/digital/e3i7ac9ecf0f97619aa47dce20743c57f7d

http://www.williamblair.com/Pages/index.asp




Gordon/DunnEcon DA

UQ: Econ down

U.S. economy down and facing serious problems.

Yan Liang 2008-07-15 (Bernanke: U.S. economy continues to face "numerous difficulties"www.chinaview.cn; http://news.xinhuanet.com/english/2008-07/15/content_8551554.htm )

WASHINGTON, July 15 (Xinhua) -- The U.S. economy continues to face "numerous difficulties,"include persistent strains in financial markets, declining house prices and rising prices of oil and food,Federal Reserve Chairman Ben Bernanke said on Tuesday. "The U.S. economy and financial system

have confronted some significant challenges thus far in 2008," said Bernanke in a written testimony tothe Senate Banking Committee. "The effects of the housing contraction and of the financial headwinds onspending and economic activity have been compounded by rapid increases in the prices of energy and

other commodities, which have sapped household purchasing power even as they have boosted inflation,"he said. "Accurately assessing and appropriately balancing the risks to the outlook for growth andinflation is a significant challenge for monetary policy-makers," said the central bank chief.

US economy is paling in comparison to other foreign economies

Cheryl Chriswell in 2008 (Economic analyst, Low US Economy Opens Up Markets For ForeignProducts, Ezine, online at: http://ezinearticles.com/?Low-US-Economy-Opens-Up-Markets-For-Foreign-Products&id=1270250)

The low U.S. economy can be traced to economic decoupling, which means while global economies are

growing ,the U.S. economy is more like a dwarf . It isn't growing well. The main economies that arespiraling upward are those of China, Russia, India, and Brazil. The slowing of our economy has paved the

road for foreign products to move well in the world economy. The fastest growing economy in the worldis China. In 2007 some economic analyzers saw the world economy as adjusting into a correction of globalimbalances. Golden Sachs said last year that "emerging markets are far more resilient to external shocks thanever before." While market equities of emerging markets were buoyant, the credit markets of high incomecountries including the United States were experiencing trauma. These emerging countries have paid off their external debt and have saved money, so they have extra. Thus, the prices of foreign commodities soar asthey export them-a gain for foreign products as opposed to U.S. products. Many of these countries have

paid off their debts and the United States has accrued debt and that makes it easier for them to

withstand an economic shockwave that is produced by the U.S. It is like the economic mirror has

flipped. What is good for the U.S. is bad for them and vice versa, but the mirror is currently in their

favor. At the same time, the biggest global player, China, has to balance the economic ball. It is making more products than are demanded domestically.

http://www.chinaview.cn/


http://news.xinhuanet.com/english/2008-07/15/content_8551554.htm



http://ezinearticles.com/?Low-US-Economy-Opens-Up-Markets-For-Foreign-Products&id=1270250









Gordon/DunnEcon DA

UQ: Biz Con Low

(_) Business confidence is at its lowest in 28 years

CNBC 6/10 (“Small Business Confidence at Lowest Since 1980”, CNBC/Reuters, June 10, 2008,http://www.cnbc.com/id/25073260/ , accessed 7/5/08)

Small business owner confidence in the U.S. economy deteriorated to its lowest in 28 years, according to a

survey released Tuesday. The National Federation of Independent Business said its index of small business

optimism fell 2.2 points in May to 89.3, the lowest reading since 1980, when the index plunged as a recession

hit.

(_) Small business confidence has hit rock bottom and dropped 35 points since January –

survey cites gloomy economic issues

NDE on June 15 (National Dialogue on Entrepreneurship, “Wells Fargo/Gallup: Small Business Confidence atRecord Lows”, June 9-15, 2008, http://www.publicforuminstitute.org/nde/news/2008/enews-08-06-09.htm

Small business owners, concerned about more immediate needs than long-term national productivity gains,

are feeling increasingly gloomy about the state of the economy. According to the Wells Fargo/Gallup Small

Business Index, their confidence has been dropping for more than a year. But, in April, it struck rock bottomas the quarterly index hit its lowest ever score of 48. This figure is 35 point drop from the January 2008 score

of 83, and 68 points less than the index’s high point in December 2006. A number of factors are scaring small business owners--especially concerns about future cash flow. Despite the gloom, 86% are satisfied as small businessowners.

Biz con low

Chris Crum in 2008 (Chris is a content coordinator and staff writer for SmallBusinessNewz and the iEntry Network , The Death of the American Dream?, Small business news, online at:

http://www.smallbusinessnewz.com/topnews/2008/06/30/small-business-confidence-at-all-time-low )

Unfortunately, small business economic confidence is at an all-time low. In fact, confidence indicators

were down in every single category of the survey. "With prices rising, especially gas and food, just

about everybody is feeling the squeeze," says, Discover business credit card director Ryan Scully. "Peopleare starting to change their habits and cut back. For small business owners who are seeing profits go down

as a result, that means they have less to invest in finding new business ," Scully added. One startling

statistic is that 48% of the 4,000 consumers surveyed, believe that the American Dream is dead. Nearly

half. Quite a grim outlook, although the majority feel that owning a small business is one of the best bets.

Biz con low- many reasons

JAMES WEIR in 2008 (economic analyst, Economic forecasts stay gloomy, online at:http://www.stuff.co.nz/4609617a13.html )

The economy is in recession after five boom years, and the next five years are not looking positive, saysindependent economics group Infometrics. Quarterly economy growth is expected to be "negative or

close to zero" during the first three quarters of the year, Infometrics says. The slump in economic

indicators has come as household budgets have been squeezed by the rising cost of living and falling

consumer confidence, with household spending expected to grow just 0.4 per cent in the year to March

2009. In its latest long-term forecast, Infometrics says the recession has been brought on by high food

and petrol prices, high interest rates and a slumping housing market.

http://www.cnbc.com/id/25073260/

http://www.smallbusinessnewz.com/


http://www.ientry.com/



http://www.smallbusinessnewz.com/topnews/2008/06/30/small-business-confidence-at-all-time-low

http://www.stuff.co.nz/4609617a13.html

http://www.cnbc.com/id/25073260/




http://www.smallbusinessnewz.com/topnews/2008/06/30/small-business-confidence-at-all-time-low

http://www.stuff.co.nz/4609617a13.html




Gordon/DunnEcon DA

UQ: Manufacturing Down

June was the small business’ weakest month in nearly six years, unemployment is growing

rapidly, a full percentage point in the last year alone.

Trading markets, July 3, 2008. (Trading Markets.com, “ECONOMY: DISMAL PICTURE FOR

U.S. WORKERS” http://www.tradingmarkets.com/.site/news/Stock%20News/1734908/)"The U.S. economy is going through a rough period," Treasury Secretary Henry Paulson said in a speech in London. "U.S. foreclosures willremain elevated and we should not be surprised at continued reports of falling home prices."

Mom-and-pop shops and other businesses with fewer than 50 employees provided some cheer, posting a gain of 7,000 jobs in June, ADP said. This compared withlosses of 35,000 jobs for companies with 50-499 workers and 51,000 jobs for those with 500 or more employees.The bad news: This was the small business sector's weakest monthly increase in nearly six years.Mixed news on Wednesday also came from the government, which in a separate release said orders p laced with U.S. factories increased for a third month in May. However, theincrease was due to surging oil prices, which kept refineries busy but did nothing to remedy stagnation in orders for equipment and machinery. These are considered a key barometer of capital spending by businessesOrders for manufactured goods rose 0.6 percent, following a revised 1.3 percent increase in April, the Commerce Department said. Demand for durable goods -- defined as expensiveitems made to last at least three years -- was flat in May, however.Most tellingly, factory orders in May for non-defence capital goods excluding aircraft fell by 0.4 percent, after having risen by 3.1 percent the previous month. Capital goods includemachines and other products used in the manufacture of other products. A dip in capital goods orders is an indication that businesses are paring their spending on plant and productioncapacity.The Commerce Department further reported a 0.5 percent increase in manufacturers' inventories -- or piles of unsold products -- in May.The finding -- coupled with the capital goods figure and a similar picture of swelling inventories from the private sector Institute for Supply Management (ISM) Tuesday -- likely willadd to concerns that such a buildup will force manufacturers to cut back production, and jobs, in the months ahead.

The national unemployment rate already has climbed a full percentage point, to 5.5 percent, over the past

year, according to the Labour Department. The rate likely understates the problem, however, as it excludes people who have given up looking for a job. Also ignored are the underemployed, people involuntarilyknocked out of full-time employment and into part-time jobs.Many economists say the unemployment rate likely will continue to rise well into 2009, topping 6 percentalong the way.

The manufacturing sector failed to grow again this May

Logistics Management Staff in 2008 (U.S. manufacturing sector contracted again in May; Monthly ISM report saysmanufacturers are caught between rising costs and weakening demand; http://www.logisticsmgmt.com/article/CA6567606.html)

Economic activity in the manufacturing sector failed to grow in May , according to a reportreleased by the Institute for Supply Management (ISM). This is the fourth consecutive month of

contraction for U.S. manufacturing.The ISM’s manufacturing index—known as the PMI—registered 49.6% last month. A reading above 50% indicatesthe manufacturing economy is generally expanding; below 50% indicates it is contracting.“Manufacturers

find themselves caught between rising costs and weakening demand in many industries,”says Norbert Ore, chair of the ISM Manufacturing Business Survey Committee. “Exports continue strong due to theweak dollar—without the weak dollar, the story would be much more negative in manufacturing.”New export ordersgrew for the 66th consecutive month in May. ISM’s New Export Orders Index registered 59.5% in May, an increaseof 2 percentage points when compared to April’s index of 57.5%.The Associated Press reported last week , however, that some analysts are predicting slower future

demand for U.S. exports as Europe, Japan and other parts of the world experienceeconomic slowdowns.The one bright spot in today’s ISM report is the Production Index. The index movedabove 50% after declining for two months.

http://www.ism.ws/about/?navItemNumber=4884

http://ap.google.com/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7zAD90VIDKG0


http://www.ism.ws/about/?navItemNumber=4884





Gordon/DunnEcon DA

UQ: Manufacturing Down

Manufacturing sector has been down 19 consecutive months, employment rates are down a

full percentage point in the last year, with no stopping point in sight

Trading markets, July 3, 2008. (Trading Markets.com, “ECONOMY: DISMAL PICTURE FOR

U.S. WORKERS” http://www.tradingmarkets.com/.site/news/Stock%20News/1734908/)Goods-producing companies dominated June's bloodletting with 76,000 workers let go -- the sector'snineteenth consecutive month of decline. The manufacturing sector offloaded 44,000 workers for its twenty-second straight month of job losses, ADP said.Firms that provide services posted their first jobs decline since November 2002, laying off 3,000 workers in a worrying sign for an economy increasingly dependent on the servicessector.The U.S. housing recession, now in its third year, continued to claim livelihoods in the home-building industry and among finance firms specialising in home sales and mortgage

lending."Today's report suggests no lessening of the recent strain on employment in these industries," said Prakken.Builders axed 34,000 jobs in June, ADP found, bringing total terminations to 349,000 s ince construction jobs peaked in August 2006. Home-finance firms cut 3,000 jobs last month.

More pain is to come. Countrywide Financial Corp. said last week 7,500 jobs would be cut as Bank of America Corp., the second-largest U.S. bank, acquires thetroubled mortgage lender.Officials offered scant hope on Wednesday.

"The U.S. economy is going through a rough period," Treasury Secretary Henry Paulson said in a speech in London. "U.S. foreclosures willremain elevated and we should not be surprised at continued reports of falling home prices."Mom-and-pop shops and other businesses with fewer than 50 employees provided some cheer, posting a gain of 7,000 jobs in June, ADP said. This compared with losses of 35,000 jobs for companies with 50-499 workers and 51,000 jobs for those with 500 or more employees.The bad news: This was the small business sector's weakest monthly increase in nearly six years.Mixed news on Wednesday also came from the government, which in a separate release said orders p laced with U.S. factories increased for a third month in May. However, theincrease was due to surging oil prices, which kept refineries busy but did nothing to remedy stagnation in orders for equipment and machinery. These are considered a key barometer of capital spending by businesses.

Orders for manufactured goods rose 0.6 percent, following a revised 1.3 percent increase in April, theCommerce Department said. Demand for durable goods -- defined as expensive items made to last at leastthree years -- was flat in May, however.Most tellingly, factory orders in May for non-defence capital goods excluding aircraft fell by 0.4 percent,after having risen by 3.1 percent the previous month. Capital goods include machines and other productsused in the manufacture of other products. A dip in capital goods orders is an indication that businesses are

paring their spending on plant and production capacity.The Commerce Department further reported a 0.5 percent increase in manufacturers' inventories -- or piles of unsold products -- in May.The finding -- coupled with the capital goods figure and a similar picture of swelling inventories from the

private sector Institute for Supply Management (ISM) Tuesday -- likely will add to concerns that such a buildup will force manufacturers to cut back production, and jobs, in the months ahead.The national unemployment rate already has climbed a full percentage point, to 5.5 percent, over the pastyear, according to the Labour Department. The rate likely understates the problem, however, as it excludes

people who have given up looking for a job. Also ignored are the underemployed, people involuntarilyknocked out of full-time employment and into part-time jobs.Many economists say the unemployment rate likely will continue to rise well into 2009, topping 6 percentalong the way.




Gordon/DunnEcon DA

UQ: Consumer Con Down

Consumer confidence is low- fuel prices

Dave Gardner in 2008 (July 7, Northeast PA Business Journal, “Running On Empty”,http://www.npbj.com/site/news.cfm?newsid=19834879&BRD=2231&PAG=461&dept_id=449419&rfi=6)

An interconnected inflationary spiral for vital commodities such as food is also draining pocketbooks,

as well as the patience of millions of people. Consumer confidence has subsequently dropped like a

stone, indicating a growing pessimism about the future of the American economy. As fingers point inmany directions to assign blame, conditions in the simmering pot continue to swirl.Media's 'top villain' really an innocent bystander? Mark O'Neill, spokesperson for the Pennsylvania FarmBureau, explains that multiple factors are responsible for the recent price increases of agricultural products.He says that one of the media's top villains, ethanol production, is actually a very small part of the picture,creating only 3 percent of corn price rises on a global scale. "Fuel costs are the huge driver, and 44 percent

of the price increases for food are linked to petroleum," says O'Neill. "This includes costs for transport

and packaging. Yet, our farmers can rarely pass on their escalating costs, because the market sets the pricesfor food and not the farmers." O'Neill also mentions that a growing middle class and associated higher fooddemands in countries such as China and India are inflationary. The weak American dollar may encourage

export of food to these countries. Weather related issues, such as the six-year Australian drought, as well as arecent reduction of global food stocks, have also caused grain prices to spike. "Political unrest in certain partsof the world is creating an inability for these countries to maximize agricultural production technology," addsO'Neill. Randy St. John, senior vice president of the Pennsylvania Food Merchants Association, agrees

that multiple reasons exist for today's commodity inflation. He specifically identifies fuel prices ,growing demand for meat in India and China, a global hunger for rice and spiking demand for corn crops thathas been instead channeled to ethanol production.




Gordon/DunnEcon DA


Consumer confidence down, and still fallingKosuke Goto, 7/11/08. (Bloomberg.com, “Dollar Heads for Weekly Loss Versus Euro

Before Confidence Data”

http://www.bloomberg.com/apps/news?pid=20601087&sid=afJ9rLBLBrLk&refer=home)

July 11 (Bloomberg) -- The dollar headed for a weekly loss against the euro on speculation an industry report today will show U.S. consumer confidence fell tothe lowest level in 28 years, adding to concern the economic slowdown will be prolonged.Signs of a weakening economy may deter the Federal Reserve from increasing borrowing costs this year, diminishing the allure of dollar-denominated assets.The currency traded near a 25- year low versus the Australian dollar after Treasury Secretary Henry Paulson told lawmakers financial markets will take ̀ `additional time'' to stabilize.``The dollar is vulnerable,'' said Toru Umemoto, chief currency strategist in Tokyo at Barclays Capital Inc., a unit of the U.K.'s third-biggest bank. ̀ `The markets cannot dispelconcerns over the U.S. financial sector and its negative impact on the economy.''The dollar traded at $1.5791 per euro as of 9:29 a.m. in Tokyo from $1.5788 in New York yesterday, when it fell to $1.5801, the weakest since July 3. It was at $1.5706 at the end of last week. The U.S. currency was at 106.95 yen from 107.07 yen yesterday and 106.80 yen a week ago. The euro traded at 168.88 yen from 169.05 yen yesterday and 167.73 yen onJuly 4.The U.S. currency may fall to $1.60 per euro in a month, Umemoto said.Futures on the Chicago Board of Trade show 86 percent odds policy makers will keep borrowing costs unchanged at 2 percent at their next meeting on Aug. 5, compared with 34 percent odds a month ago.

Seven ReductionsThe dollar has fallen 11 percent against the euro since Sept. 18, when the Fed made the first of seven reductions in its target rate for overnight lending between banks to avert arecession. The Dollar Index traded on ICE futures in New York, which tracks the greenback a gainst the currencies of six U.S. trading partners, fell to 72.489, the lowest level sinceJuly 2.

Fed Chairman Ben S. Bernanke said in testimony before the House Financial Services Committee yesterday that more regulation over securities firms is needed now that ̀ `financialturmoil is ongoing.'' Paulson reiterated a desire for a ``strong dollar,'' saying the currency should reflect the U.S. economy's ̀ `long-term'' fundamentals.``The general tenor and tone o f comments from Bernanke and particularly Paulson have been sober,'' said Alan Ruskin, head of international currency strategy at RBS GreenwichCapital Markets in Greenwich, Connecticut.Fannie Mae fell 14 percent and Freddie Mac s lumped 22 percent in New York trading yesterday after former St. Louis Fed President William Poole said in an interview thegovernment may need to bail out the companies. Paulson said the regulator for Fannie and Freddie, the largest buyers of U.S. home loans, told him they have enough capital.

`Very Weak'``Confidence in the U.S. economy remains very weak,'' Greg Gibbs, a currency strategist at ABN Amro Holding NV in Sydney, wrote in a

research note toda y. ``The appearance of ongoing stress in the financial sector and weak rate sensitive sectors iskeeping the U.S. dollar weak against a number of currencies.''Crude oil traded at $141.61 a barrel after rising 4.6 percent yesterday, the most since June 6, after Iran test-fired more missiles in the Persian Gulf. Prices have risen 94

percent from a year ago, raising concern higher energy costs will reduce consumer spending.The euro-dollar exchange rate and oil have moved in the same direction 90 percent of the time during the past year, according to Bloomberg calculations based on the correlation of their value changes.

Consumer SentimentThe Reuters/University of Michigan preliminary index of consumer sentiment may have fallen to 55.5 in July, from 56.4 the

previous month, according to the median forecast of economists sur veyed by Bloomberg News. The report is due at 10 a.m. in New York.




Gordon/DunnEcon DA


Consumer confidence in the US is at an all time low

Tom Raum in 2008 (July 6, The Associated Press, “The buck doesn't stop here; it just keeps falling”,http://ap.google.com/article/ALeqM5hGypub2sIqfo79XVHhYRgKEwst-QD91OPC48E)

The Federal Reserve could prop up the dollar by increasing interest rates under its control. Increased

yields would make dollar-denominated investments more attractive to foreigners. But that could

undercut the already anemic economic growth in a frail U.S. economy rocked by soaring fuel costs,

falling home prices and rising unemployment — and the lowest reading of consumer confidence in 16

years.

The Fed must do a balancing act between keeping the domestic economy from going into recession andkeeping inflation at bay.Furthermore, no Fed likes to raise rates aggressively in a presidential election year. It seems more inclined tohold interest rates low for now to give financial markets time to recover from the housing meltdown andcredit crunch. It did just that in its meeting on June 25, leaving a key short-term rate at 2 percent. The rate

reached that level in April after a series of aggressive cuts that brought it down 3.25 percentage points

since September. Those cuts helped ease the housing and credit crises — but drove the dollar further

down.

Consumer confidence is at its lowest since 1992

Katie Fretland in 2008 (June 26, The Swamp, “Consumer confidence by party, education”,http://weblogs.baltimoresun.com/news/politics/blog/2008/06/consumer_confidence_by_party_e.html)

The public's confidence in the economy has reached its lowest level since 1992, and the percentage of

people reporting it is getting worse is at a record high, Gallup reports in its tracking of consumer

confidence.

However, two groups that are likely to be less pessimistic about the current economic conditions are collegegraduates and Republicans, Gallup chief economist Dennis Jacobe reports.In mid-June, 47 percent of Americans reported that the economy is "poor," up 4 percent from April and

May.

The percentage of college graduates rating the economy as "poor" increased 16 percent since January,

compared to 21 percent for people who did not earn a college degree.

Consumer confidence is at a 16 year low

San Antonio Business Journal in 2008 (June 24, San Antonio Business Journal, “Consumer confidence hitsnew lows in June”, http://www.bizjournals.com/sanantonio/stories/2008/06/23/daily13.html)

Consumer confidence, which sunk to a 16-year low in May, continued to wither in June, according to

the Conference Board Consumer Confidence Index published Tuesday, June 24.The Index is now at 50.4, down from 58.1 in May. "This month's Consumer Confidence Index is the

fifth-lowest reading ever," says Lynn Franco, director of The Conference Board Consumer Research

Center. "Consumers' assessment of present-day conditions continues to grow more negative and

suggests the economy remains stuck in low gear. Looking ahead, consumers' economic outlook is sobleak that the Expectations Index has reached a new all-time low. Perhaps the silver lining to thisotherwise dismal report is that Consumer Confidence may be nearing a bottom." Those claiming business

conditions are "bad" increased to 32.5 percent from 29.7 percent, while those claiming business

conditions are "good" declined to 11.5 percent from 13 percent in May. Those saying jobs are "hard to

get" increased to 30.5 percent from 28.3 percent in May. Those claiming jobs are "plentiful" declined

to 14.1 percent from 16.1 percent. Damaged consumer confidence is seen as an indication of poor

prospects for spending. Consumer spending accounts for two-thirds of the United States' economic

activity. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.Custom research company TNS conducts the monthly survey for The Conference Board.

http://weblogs.baltimoresun.com/news/politics/blog/2008/06/consumer_confidence_by_party_e.html

http://www.gallup.com/poll/108361/College-Graduates-Less-Pessimistic-About-US-Economy.aspx



http://www.bizjournals.com/sanantonio/gen/Conference_Board%20Consumer%20Research%20Center_FB33A770E3C04BCF85A2D32FC6F3E43A.html




http://weblogs.baltimoresun.com/news/politics/blog/2008/06/consumer_confidence_by_party_e.html








Gordon/DunnEcon DA


Consumer confidence plummetedTim Hanson, 7/11/08. (Small Cap Investing. “Is This the Market Bottom?”

http://www.fool.com/investing/small-cap/2008/07/11/is-this-the-market-bottom.aspx)

Today, the Dow dipped below 11,000 for the first time in two years. Oil spiked to an all-time high of more than $147 a barrel. The dollar remains in the gutter. On top of that, consumer confidence has

plummeted; according to a recent CNN poll, three-quarters of the country now believes we're in a

recession.

Consumer confidence is even lower than during war times.Yousfi ’07 (Managing Editor, Money Morning, Consumer Confidence at Lowest level in two years,

http://www.moneymorning.com/2007/12/10/consumerconfidence/)

Consumer confidence has reached its lowest level since the post- Katrina period, according to the

Reuters/University of Michigan preliminary index of consumer sentiment for November.At 74.5, the index is at its lowest level since October 2005. This is bad news for Wall Street, which hopesthat strong consumer spending will keep the economy from slipping into a recession.“Rising prices for fuel and food had a devastating impact on household budgets, and falling homeprices have diminished consumers’ sense of financial security,” said Richard Curtin, the director of theReuters/University of Michigan Surveys of Consumers. The survey is jointly developed by the university anda unit of Reuters Holdings PLC (RTRSY).Other measures of consumer confidence reported similar results. The Royal Bank of Canada’s (RY) RBCCash [Consumer Attitudes and Spending by Household] Index, also released Friday, was 65.9 for the month.This was a slight increase over October’s reading of 64, but not a large enough increase to indicate asubstantial upswing in consumer confidence.Because consumer spending accounts for as much as 70% of all economic activity in the $13 trillion U.S.economy, consumer confidence is a closely watched indicator. High consumer confidence is considered a

harbinger of future growth, while declining confidence is viewed as a warning that economic activity is

destined to slow. Although the indicator’s current level isn’t low enough to suggest that a recession is

imminent, the Reuters/University of Michigan index has dropped steadily over the past several

months.

http://en.wikipedia.org/wiki/Hurricane_Katrina



http://k/Money%20Morning%20News%20Files%20(Week%20Ending%20Dec.%2010,%202007)/RTRSY


http://finance.google.com/finance?q=NYSE%3ARY



http://finance.google.com/finance?q=NYSE%3ARY




Gordon/DunnEcon DA

UQ: Auto Industry Down

United States auto-industry has been going downhill since 2007.

David R. Butcher October 16, 2007; (ThomasNet Industrial New Room; Auto Industry: Revved Up or

Broke Down?;http://news.thomasnet.com/IMT/archives/2007/10/the_state_of_the_global_automotive_industry_2007_automobiles.html )

As compact Hondas and Toyotas continue to crash onto the scene, U.S. automakers have largely failed to

recognize what today's car consumers need: an auto industry that is fast, flexible and efficient.

Globally, about 53 million new cars have been sold this year, according to Scotiabank Group. United States

vehicle sales have consistently weakened in 2007, falling to an average of 16.1 million units throughSeptember, down from 16.5 million in all of 2006 and a peak of 16.9 million in 2004 and 2005, according toScotia Economics’ latest Global Auto Report, released last week. In September, U.S. auto sales continued

to slip amid an industry slowdown sparked by economic uncertainty and massive production cuts at

struggling U.S. automakers. The Big Three automobile manufacturers (Michigan’s General Motors Corp.,Ford Motor Co. and Chrysler LLC) took a hit from planned reductions in low-margin sales to rental car

companies, as they downsized operations to better cope with a steady loss of market share to rivals. TheDetroit, Mich., companies are under intense competitive pressure from foreign-based firms while enduringhigh labor costs at home. Ford and General Motors (GM) are both struggling to re-engineer all parts of their operations, from design to manufacturing to marketing in order to cut costs and regain market share. While

gas prices moderated during much of this year, they remain high enough to affect consumers’ car-

buying decisions. Sales of heavy, gas-guzzling SUVs, for one, have lagged miserably. As such, Ford andGM have canceled production of some of their massive vehicles.

2008 is predicted to be the worst year for the auto-industry this decade.

Bill Vlasic ; March 20, 2008 (U.S. auto industry facing a grim year;http://www.iht.com/articles/2008/03/20/business/auto.php )

The U.S. auto industry is bracing for what may be its worst year in a decade.Several industry forecasters have sharply cut their projections for new- vehicle sales to less than 15.5 millionthis year and have abandoned rosy predictions for a rebound in the second half. The gloomy outlook,

reflecting credit turmoil, the housing crisis and the softening economy, will probably lead to more

production cuts by car companies. But the good news for buyers is that they can expect better deals to drawthem into the showroom. The broader economic woes prompted the marketing firm J.D. Power & Associatesto cut its annual forecast to 14.95 million vehicles, which would be the lowest sales level since 1995, from15.7 million. "The auto market is entering into a true recessionary phase, which is something we have

not seen in the last 10 years," said Bob Schnorbus, the firm's chief economist.The industry has been selling at an annualized rate of 15.2 million vehicles through the first three months of the year but appears headed for an even worse spring season. Analysts are hedging predictions for a stronger second half of the year despite the U.S. Federal Reserve's continued cuts in interest rates. With consumersshort of cash and deep in debt, many prospective buyers are finding it difficult to secure financing for a newcar.

http://news.thomasnet.com/IMT/archives/2007/10/the_state_of_the_global_automotive_industry_2007_automobiles.html


http://www.scotiabank.com/cda/content/0,1608,CID8339_LIDen,00.html


http://www.scotiacapital.com/English/bns_econ/bns_auto.pdf

http://afp.google.com/article/ALeqM5jhgKwIeUg4gxavODFjbPbjuYFbsw




http://www.iht.com/cgi-bin/search.cgi?query=By%20Bill%20Vlasic&sort=publicationdate&submit=Search




http://www.iht.com/articles/2008/03/20/business/auto.php





http://www.scotiacapital.com/English/bns_econ/bns_auto.pdf








Gordon/DunnEcon DA


Investors have abandoned hope for a recovery in the auto industry.

Soyoung Kim 07.02.08, (4:07 PM ET Analysts see US auto recovery delayed beyond 2009United States;http://www.forbes.com/reuters/feeds/reuters/2008/07/02/2008-07-02T200746Z_01_N02379262_RTRIDST_0_AUTOS-RECOVERY.html )

DETROIT (Reuters) - A deepening slump in U.S. auto sales this year has already forced investors and

automakers to abandon hopes for a second-half recovery. Now some analysts are painting an even

more dire picture for 2009. The world's largest auto market is reeling from an unprecedented combinationof record gas prices, tighter credit and a housing market collapse. Investors will have to wait until 2010 for

signs of a rebound, according to a wave of bearish analyst forecasts issued Wednesday.Merrill Lynch (nyse: MER - news - people ) analyst John Murphy, while cutting his outlook for 2008 U.S.auto sales for the third time this year to 14.3 million units, forecast a further drop to 14 million units in

2009. "We believe that the weakness in demand and deteriorating mix through the first half of 2008 are

just the beginning of what is shaping to be a more severe downturn than even the most bearish industry

observers expected," Murphy said. Through the first half, automakers including General Motors Corp(nyse: GM - news - people ) and Ford Motor Co (nyse: F - news - people ) have struggled for any signs that

the market has hit bottom. Instead, sales deteriorated each month, as the spike in gas prices killed

demand for trucks and SUVs -- America's best-selling vehicles for a decade. U.S. auto sales plunged to13.6 million units on an annualized basis in June, the lowest monthly result in 15 years, compared with 15.2million in January. That has raised concerns that the downturn may deepen for the rest of the year, and

possibly through 2009. "The perfect storm conditions that rippled through the industry in May 2008intensified in June, driven by a combination of worsening consumer conditions and depressed used vehicle

prices," Citigroup (nyse: C - news - people ) analyst Itay Michaeli said in a research note. "With little relief insight," Michaeli said he cut his forecast for 2008 U.S. auto sales to 14.5 million from 15 million. He said themarket would stay depressed at 15 million units next year, with any gains seen only after 2010 or 2011. Justsix months ago, most automakers including GM and Ford as well as Wall Street analysts had predicted aslight decline this year in auto sales from 16.15 million in 2007 before a full-pledged recovery in 2009. "The

economy enters the second half of the year with a notable absence of momentum and a high degree of uncertainty," Ford marketing chief Jim Farley said during a conference call Tuesday following its salesannouncement. In light of weak June sales, Global Insight also lowered its outlook for U.S. light vehicle salesthis year to 14.4 million, while projecting even lower sales of 14.2 million units next year. For more detailson expectations for U.S. auto industry sales in 2008 and 2009, click [ID:N02397253] TRUCKS TAILSPINThe steep drop in auto sales has been led by big trucks and SUVs, the most profitable and highest volumesegment for Detroit-based automakers. Gas prices at more than $4 per gallon have steered a rush towardmore fuel-efficient smaller cars and crossovers, depressing the resale values of used trucks and SUVs. Thelower trade-in values make it harder for large vehicle owners to afford smaller and more fuel efficient cars,dealers say. Trucks, which represented 55 percent of U.S. light vehicle sales in 2004, made up just 44 percentof the market in June. The trend represents a major financial drag for GM, Ford and Chrysler because theymake smaller margins on cars than trucks. In addition, Detroit car makers have historically had to price their

products as much as $5,000 to $7,000 less than a comparably equipped Japanese or Korean vehicle in order to overcome consumer perceptions of differences in quality, Moody's (nyse: MCO - news - people ) InvestorsService said in a note Wednesday. "In order to materially offset the profits foregone by the erosion in thetruck/SUV franchises, the Detroit 3 would have to significantly raise prices. This will be a long-term andhighly challenging undertaking," Moody's said.

http://www.forbes.com/reuters/feeds/reuters/2008/07/02/2008-07-02T200746Z_01_N02379262_RTRIDST_0_AUTOS-RECOVERY.html


http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=MER

http://www.forbes.com/markets/company_news.jhtml?ticker=MER

http://www.forbes.com/peopletracker/results.jhtml?startRow=0&name=&ticker=MER

http://www.forbes.com/feeds/ap/2008/06/27/ap5164064.html?partner=lingospot







http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=F


http://www.forbes.com/markets/company_news.jhtml?ticker=F


http://www.forbes.com/peopletracker/results.jhtml?startRow=0&name=&ticker=F


http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=C


http://www.forbes.com/markets/company_news.jhtml?ticker=C



http://www.forbes.com/peopletracker/results.jhtml?startRow=0&name=&ticker=C


http://www.forbes.com/reuters/feeds/reuters/2008/06/30/2008-06-30T220046Z_01_N30444730_RTRIDST_0_CHRYSLER-PRODUCTION-WINDSOR-UPDATE-1.html?partner=lingospot


http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=MCO


http://www.forbes.com/markets/company_news.jhtml?ticker=MCO

http://www.forbes.com/peopletracker/results.jhtml?startRow=0&name=&ticker=MCO



http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=MER

http://www.forbes.com/markets/company_news.jhtml?ticker=MER

http://www.forbes.com/peopletracker/results.jhtml?startRow=0&name=&ticker=MER













http://www.forbes.com/markets/company_news.jhtml?ticker=MCO

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Gordon/DunnEcon DA


United States auto industry down, America is now relying on other countries.

Judi McLeod, Friday, February 16, 2007 (an award-winning journalist with 30 years experience in the print

media, Canada Free Press editor; http://www.canadafreepress.com/2007/cover021607.htm )

Then there's the $25 million prize to fight global warming that Gore announced with Sir Richard Branson,who is in the process of developing the first privately funded spaceships dedicated to carrying commercial

passengers on space flights. At the same time Daimler-Chrysler, whose car selling capability was killed

off in part by the global warming trend, made Valentine's Day headlines announcing the layoff of some

13,000 workers. Yesterday the automobile giant admitted it is exploring manufacturing cars in China

for import back to the United States. Make way for China's Chery, the same model that Kyoto architectStrong and his business partner George Soros said months ago would be flooding the American automobilemarket beginning in 2007. No mere conspiracy, the takedown of America is a classic textbook case of an

idea whose time has already come. Is it purely coincidental that man made global warming is peaking at

the same time as the decline of America's job-providing automobile industry? Canada Free Presswas raising the alarm five years ago: "The long road paving the way to the obsession of the left against SUVs

started as far back as the Kyoto Protocol circa 1997." (Canada Free Press, True Green Report, The dismalfate of the Minivan, Dec. 2, 2002). Back then freelancer Eric Peters wrote in Knight Ridder/Tribune "A toughglobal warming treaty at Kyoto would shoe-horn us into dangerous mini cars." "If gas-sipping small cars aresuch a great idea, how come no one's buying them?" Peters asked. "We hear endless prattle from various'consumer advocates' that the auto industry is dragging its feet--refusing to provide the buying public

with frugal cars while forcing land-yachts and prolifigate sport-utility vehicles down their throats

instead." A check of the stats at the time of Peter's article showed the EPA's 'Top Ten Most Fuel Efficient' passenger cars (all subcompact economy models with manual transmissions, underpowered engines and noair conditioning) represented collectively just 0.7 percent of all passenger car sales--and a picayune 0.4

percent of total vehicle sales (including light trucks). That year's records represented the worst sales record of the past several years for 'efficient' small cars--models derisively referred to within the industry as 'lossleaders' because not a dime of profit has been squeezed out of them so far. "This is funereal news for the

'consumer advocates' and their uncritical friends in the media whose open contempt for SUVs, larger

passenger cars and consumer choice in general borders on the pathological.

http://www.canadafreepress.com/2007/cover021607.htm







http://www.canadafreepress.com/2002/tgr120202.htm











Gordon/DunnEcon DA


US auto companies are quickly falling, and the government can no longer offer protection.

Robert W. Crandall Clifford Winston May 23, 2005 (Senior Fellow, Economic Studies; Auto Industry on the

Line as it Juggles Efficiency, Profits Regulation, , Senior Fellow, Economic Studies Detroit Free Press — http://www.brookings.edu/opinions/2005/0523_autoindustry_winston.aspx )

The recent downgrade of Ford's and General Motors' long-term debt was but the latest in a series of public

indications that the once-dominant U.S. motor-vehicle companies have failed to turn their operations

around since signs of weakness surfaced in the 1970s. For decades, the U.S. manufacturers have been

able to rely on government protection and robust economic growth to mask their fundamental problem:American consumers increasingly believe that other companies produce better vehicles -- cars and lighttrucks -- for the money. As the Japanese and European automakers expand their production facilities in theUnited States and Canada, trade protection can no longer shield the U.S. producers from this unpleasant

reality. U.S. government policymakers can do little to help them, and as a result DaimlerChrysler, Ford

and GM may find that even a strong economy is not sufficient to keep them profitable. Despite the problems with the relative quality of their vehicles, the U.S. automakers were able to

withstand the competition from the Japanese firms, largely because of the strong U.S. economy since1985, relatively low gas prices, and a shift in consumer preferences to SUVs , vans and pickup trucks thathappened to be shielded from foreign competition because the United States has had a 25% tariff on lighttrucks since the 1960s. Moreover, the Japanese companies were not particularly adroit in developing lighttrucks because their home market consumers had little interest in them. In the last few years, however, theJapanese producers have begun to develop highly competitive trucks, vans and SUVs, and they now producethem in the United States, thereby avoiding the 25% duty. Thus, even this niche is no longer a safe haven for the U.S. companies.American producers now account for only about 56% of U.S. vehicle sales, and their share is falling

steadily. Within the next three or four years, it is possible that foreign companies will produce and sell

more vehicles in the United States and Canada than the American companies do, a result that surelywould have been viewed as inconceivable when the Japanese export restraints were negotiated 20 years ago.If the Japanese and Europeans can produce high-quality vehicles, many in the United States, and can do so

profitably, why are the U.S. companies struggling? In a recent paper, one of us found that the U.S.manufacturers' loss in market share over the past decade can be explained almost entirely by changes in basicvehicle attributes: price, size, power, operating cost and body type. That is, while the U.S. manufacturershave improved their vehicles along these lines, they have not narrowed the gap with the Japanese andEuropean manufacturers. This finding suggests that the American firms face serious problems in productdesign, engineering and management-labor relations that they simply have not been able to solve.

Automobile Industry will collapse before 2010Jack Lifton, 7/10/08. (Resource Investor, “How New Diesel Emission Control Systems

Affect Demand for Rhodium & Platinum”

http://www.resourceinvestor.com/pebble.asp?relid=44280)At this time there is a reasonable chance that the OEM American owned and operated automobilemanufacturing industry may collapse before 2010. This could mean that there will be a year in America

without an American domestic car industry. Even without a bankruptcy of any one American company, muchless of the entire domestic vehicle industry, there is a developing dramatic collapse in new car sales. Thefigure could go down to a low of 10 million units in 2009 or 2010, because even if a foreign car maker wanted to fill the void there is not enough time or productive capacity to do so before 2011 or later .

http://www.brookings.edu/experts/crandallr.aspx



http://www.brookings.edu/experts/winstonc.aspx



http://www.brookings.edu/economics.aspx


http://www.brookings.edu/topics/regulation.aspx




http://www.brookings.edu/opinions/2005/0523_autoindustry_winston.aspx











Gordon/DunnEcon DA

UQ: Investor Con Down

Investor confidence levels are the lowest in five years.

Sacramento Business Journal ’08 (Sacramento Business Journal, Survey: Investor Confidence drops to fiveyear low, June 2, 2008,

http://sacramento.bizjournals.com/sacramento/stories/2008/06/02/daily2.html?surround=lfn)

A Gallup poll that tracks investor optimism shows confidence levels in May dipped to the lowest level in

five years. The Gallup Index of Investor Optimism fell to 15 in May -- down from 22 in March and 95

in May 2007. The May score is the index's lowest level for the month since the survey began in October

1996. The index hit its lowest point in March 2003 with a score of 5. The index hit its all-time high of 178in January 2000. Gallup said investors remain pessimistic about the economic outlook for the year

ahead, with the Economic Dimension of the Index at negative 31. Investors are pessimistic about the

economic outlook as they were in March 2003, at the outset of the Iraq war, when the Economic

Dimension was at negative 30, Gallup noted. The data also indicates the average American investor is a

lot less optimistic than professionals on Wall Street about the current investment outlook . In particular,average investors remain pessimistic about the prospects for the U.S. economy -- not as pessimistic as theywere when the Bear Stearns financial crisis was developing, but still at their pre-2008 pessimistic high,

Gallup said. Many on Wall Street seem to feel the U.S. economy will perform much better in the second half of 2008 and into early 2009. Gallup's Index of Investor Optimism suggests the average U.S. investor is

not nearly so confident that will be the case. For the survey, Gallup did telephone interviews in May with576 investors, aged 18 and older, with at least $10,000 in investable assets.

US investor confidence hit an all time low

London Stock Exchange 2008, (“US investor confidence falls”) onlinehttp://209.85.141.104/search?q=cache:CaX6l7bAhJMJ:www.londonstockexchange.com/en-gb/pricesnews/investnews/article.htm%3FArticleID%3D18401381+%22U.S+investor+confidence%22+low+%222008%22&hl=en&ct=clnk&cd=5&gl=usaccessed July 7, 2008US investors are less confident about the future of the financial markets than ever before, a new study has

revealed. Investment research and trading firm State Street Global found that confidence levels fell to 65.3

points this month, a ten point decrease from last month, reports IFAOnline.co.uk."Our quantitative measure of

global investor confidence established a new low, cementing the evidence that investor risk appetite has been

strongly impacted by the one-two punch of the August and November credit crises," commented the firm.Asianinvestor confidence fell from 86.6 to 85.8 but European investors remained more optimistic, leading to a 1.1 pointincrease to reach 85.0. Globally, confidence levels currently stand at 65.9 points, compared to 75.8 last

month.The Association of Investment Companies' reported that despite the credit crunch, the number of active

investors worried about a stock market crash only increased by two per cent between February and October

http://sacramento.bizjournals.com/sacramento/stories/2008/06/02/daily2.html?surround=lfn

http://sacramento.bizjournals.com/sacramento/gen/Bear_Stearns_4881B425130E4C9AA36C8C2D094175A2.html



http://209.85.141.104/search?q=cache:CaX6l7bAhJMJ:www.londonstockexchange.com/en-gb/pricesnews/investnews/article.htm%3FArticleID%3D18401381+%22U.S+investor+confidence%22+low+%222008%22&hl=en&ct=clnk&cd=5&gl=us



http://sacramento.bizjournals.com/sacramento/stories/2008/06/02/daily2.html?surround=lfn








Gordon/DunnEcon DA

UQ: Investor Con Down

Investor confidence down

Nick Massey. 7/12/08. (Edmond money manager, TMCnet, “No easy answers about stock

market” http://www.tmcnet.com/usubmit/2008/07/12/3543410.htm)

"I used to think we were still in a bull market, and what we were having was a correction," Massey said. "Because of so much damage to the financial markets and the housing

markets, I think it has sped up that scenario. I think we hit the peak of the bull market last October and this is the first leg of thelong-term trip down."Concerns over the debt carried by the nation's largest mortgage financing companies, Fannie Mae and Freddie Mac, sent their stock prices and the overallmarket tumbling early Friday. The well-being of Fannie Mae and Freddie Mac is crucial because they hold or guarantee about $5 trillion worth of mortgages, or about half the outstanding mortgages in the United States.A new high for oil prices above $147 a barrel also weighed on stocks.

Looking for a bottomKeith Geary, president of Capital West Securities in Oklahoma City, said a weekend bailout for Fannie Mae and Freddie Mac could limit losses."We could find a bottom," Geary said. Continuing uncertainty about the finances of major players, he said, could produce volatile conditions at Monday's opening bell.

Kenny Divelbiss, an Oklahoma City financial planner, said stocks generally are well priced, but uncertainty and weakness in specificstocks and sectors are undermining investor confidence.




Gordon/DunnEcon DA

Brink: High Energy Prices

The economy is absorbing current high energy prices well-further increases in energy prices riskcollapseBernanke in 2k8 (Ben, federal reserve board chairman, federal news service, june 4, LN)A good deal of economic research has looked at the question of why the inflation response to the oilshock has been relatively muted in the current instance. One factor, which illustrates my point about the adaptability and

flexibility of the U.S. economy, is the pronounced decline in the energy intensity of the economy since the1970s. Since 1975, the energy required to produce a given amount of output in the United States has fallen by about half. Thisgreat improvement in energy efficiency was less the result of government programs than of steps taken by households andbusinesses in response to higher energy prices, including substantial investments in more energy-efficient equipment and means of transportation. This improvement in energy efficiency is one of the reasons why a given increase in crude oil prices does less

damage to the U.S. economy today than it did in the 1970s. Another reason is the performance of monetary policy.The Federal Reserve and other central banks have learned the lessons of the 1970s. Because monetary policy

works with a lag, the short-term inflationary effects of a sharp increase in oil prices can generally not be fullyoffset. However, since Paul Volcker's time, the Federal Reserve has been firmly committed to maintaining a lowand stable rate of inflation over the longer term. And we recognize that keeping longer- term inflation expectations wellanchored is essential to achieving the goal of low and stable inflation. Maintaining confidence in the Fed's commitment to price

stability remains a top priority as the central bank navigates the current complex situation. Although our economy has thus

far dealt with the current oil price shock comparatively well, the United States and the rest of the world stillface significant challenges in dealing with the rising global demand for energy, especially if continueddemand growth and constrained supplies maintain intense pressure on prices. The silver lining of high energyprices is that they provide a powerful incentive for action--for conservation, including investment in energy-saving technologies; for the investment needed to bring new oil supplies to market; and for the development of alternative conventional and nonconventionalenergy sources. The government, in addition to the market, can usefully address energy concerns, for example, by supporting basicresearch and adopting well-designed regulatory policies to promote important social objectives such as protecting the environment.As we saw after the oil price shock of the 1970s, given some time, the economy can become much more energy-efficient even as itcontinues to grow and living standards improve. Let me turn now to the other economic challenge that I want to highlight today--theproductivity performance of our economy. At this point you may be saying to yourself, "Is it too late to book Ali G?" However, anyonewho stayed awake through EC 10 understands why this issue is so important.7 As Adam Smith pointed out in 1776, in the long run,more than any other factor, the productivity of the workforce determines a nation's standard of living.

High energy prices have put the economy on the brink of collapse-we can’t handle further increases in energy prices

US Fed News in 2k8 (rep fallin reacts to hearing on rising gasoline prices, April 9, LN)"The small business owners and industry experts who testified today made it clear their businesses arefeeling the pinch of rising fuel costs. Soaring energy prices reduce the profit margin for these businessesand can force both wage cuts on employees and price increases on consumers. The implications for our national economy are alarming. "The testimony we heard today reinforces my convictions about the roleof government in relation to American energy. Congress must take action to reduce the United States'dependence on foreign oil by increasing domestic production. Doing so will help to provide consumer relief and alleviate our dangerous dependence on foreign energy sources.

High energy prices have placed the economy on the brink-further increases in consumer costscould cause a global recession

The International Herald Tribune in 2k8 (as us fuel prices soar, households cut spending; impact could spread to global economy , feb 28, LN)Gasoline prices, which for months lagged behind the rapid increase in the price of oil, are suddenly risingquickly, with some experts saying they could reach $4 a gallon in the United States by spring. The cost of diesel is setting records daily, and oil closed at an all-time high of $100.88 a barrel Tuesday. Theincreases could not come at a worse time for the U.S. economy, the world's largest. With growth slowing,high energy prices that were once easily absorbed by consumers are now more likely to drag onhousehold budgets, leaving people with less money to spend elsewhere. These costs could make U.S.economic troubles worse, piling a fresh energy shock on top of the turmoil in credit and housing. Theimpact could ripple across the global economy.




Gordon/DunnEcon DA

Brink: Auto industry

The U.S. auto industry is drastically falling behind, as gas prices spike, and demand for

trucks and SUVs plummet.

Soyoung Kim , Wednesday July 2 2008 ( staff writer, guardin.co.uk; Reuters Analysts see US auto

recovery delayed beyond 2009) http://www.guardian.co.uk/business/feedarticle/7625772

DETROIT, July 2 (Reuters) - A deepening slump in U.S. auto sales this year has already forced investors

and automakers to abandon hopes for a second-half recovery. Now some analysts are painting an even

more dire picture for 2009. The world's largest auto market is reeling from an unprecedented combinationof record gas prices, tighter credit and a housing market collapse. Investors will have to wait until 2010 for

signs of a rebound, according to a wave of bearish analyst forecasts issued on Wednesday. Merrill Lynchanalyst John Murphy, while cutting his outlook for 2008 U.S. auto sales for the third time this year to 14.3million units, forecast a further drop to 14 million units in 2009. "We believe that the weakness in demandand deteriorating mix through the first half of 2008 are just the beginning of what is shaping to be a moresevere downturn than even the most bearish industry observers expected," Murphy said. Through the firsthalf, automakers including General Motors Corp and Ford Motor Co have struggled for any signs that themarket has hit bottom. Instead, sales deteriorated each month, as the spike in gas prices killed demand

for trucks and SUVs -- America's best-selling vehicles for a decade. U.S. auto sales plunged to 13.6million units on an annualized basis in June, the lowest monthly result in 15 years, compared with 15.2

million in January. That has raised concerns that the downturn may deepen for the rest of the year, and possibly through 2009. "The perfect storm conditions that rippled through the industry in May 2008intensified in June, driven by a combination of worsening consumer conditions and depressed used vehicle

prices," Citigroup analyst Itay Michaeli said in a research note. "With little relief in sight," Michaeli said hecut his forecast for 2008 U.S. auto sales to 14.5 million from 15 million. He said the market would staydepressed at 15 million units next year, with any gains seen only after 2010 or 2011. Just six months ago,most automakers including GM and Ford as well as Wall Street analysts had predicted a slight decline thisyear in auto sales from 16.15 million in 2007 before a full-pledged recovery in 2009. "The economy enters

the second half of the year with a notable absence of momentum and a high degree of uncertainty,"

Ford marketing chief Jim Farley said during a conference call on Tuesday following its salesannouncement. In light of weak June sales, Global Insight also lowered its outlook for U.S. light vehicle salesthis year to 14.4 million, while projecting even lower sales of 14.2 million units next year. For more detailson expectations for U.S. auto industry sales in 2008 and 2009, click [ID:N02397253] TRUCKS TAILSPINThe steep drop in auto sales has been led by big trucks and SUVs, the most profitable and highest

volume segment for Detroit-based automakers. Gas prices at more than $4 per gallon have steered a

rush toward more fuel-efficient smaller cars and crossovers, depressing the resale values of used trucks

and SUVs. The lower trade-in values make it harder for large vehicle owners to afford smaller and more fuelefficient cars, dealers say. Trucks, which represented 55 percent of U.S. light vehicle sales in 2004, made up

just 44 percent of the market in June. The trend represents a major financial drag for GM, Ford and Chrysler because they make smaller margins on cars than trucks. In addition, Detroit car makers have historically hadto price their products as much as $5,000 to $7,000 less than a comparably equipped Japanese or Koreanvehicle in order to overcome consumer perceptions of differences in quality, Moody's Investors Service saidin a note on Wednesday. "In order to materially offset the profits foregone by the erosion in the truck/SUVfranchises, the Detroit 3 would have to significantly raise prices. This will be a long-term and highlychallenging undertaking," Moody's said. (Reporting by Soyoung Kim, editing by Richard Chang)

http://www.guardian.co.uk/business/feedarticle/7625772







Gordon/DunnEcon DA

Brink: Small Business

Small businesses are on the brink of collapse, jobs ae dwindling, and small business and

consumer confidence are at all time lows

RAMIT PLUSHNICK-MASTI, Jun 10, 2008. (Associated Press. The Times Tribune,

“Small businesses hurting big-time” http://www.thetimes-tribune.com/site/news.cfm?newsid=19760028&BRD=2185&PAG=461&dept_id=415891

&rfi=6)Costs are rising, profits are shrinking and the ability of the big guys to keep prices relatively lower is drawing away customers. Thingsare so bad that many small enterprises, which account for about 99 percent of the country’s businesses, saythey are hanging by a thread that may soon snap. “We are basically losing money every month, about $1,000a month. It’s been about two, three months now,” said Tom Weisbecker. Mr. Weisbecker owns Isaly’s in westernPennsylvania where patrons sit on green barstools at a Formica countertop and gobble the legendary Slammer, a sandwich stuffed with ahalf-pound of chipped ham and smothered in onions and cheese. Prices for many of those ingredients have skyrocketed in the past year.“We know our customers are already feeling the pinch with the gas prices and when they go to the grocery store. We’re trying tohold out, but we can’t go on much longer,” said Mr. Weisbecker. In barely a year, the cost of pork has jumped by 50 cents a

pound, while beef is up 20 percent; a 5-gallon jug of canola oil that used to cost $15 is at $40; a 50-pound bag of flour jumped from $7to between $20 and $25. And then there are fuel surcharges of between $5 and $9 that have been added to nearly all deliveries during the

past six months. In the meantime, wages haven’t grown and the job market is tepid, at best. On Friday, the Labor Department said the nation’s unemployment rate jumped to 5.5 percent in May — the biggest monthly risesince 1986 — as wary employers cut 49,000 jobs. Average hourly earnings for jobholders rose to $17.94 inMay, up 0.3 percent from the previous month. The feeble employment market may be making consumers lesswilling to spend. Also, paychecks aren’t going as far as they did before food and fuel costs rose.“In a good economy, you can make mistakes. But in a bad economy ... you can’t afford to make a mistake,”said Larry Lagattuta. “I am three very bad decisions away from bankruptcy at any given time,” said Mr. Lagattuta, who has beenrunning Enrico Biscotti Co. on the Pittsburgh Strip for 15 years. Over Christmas, he made hundreds of shipments; 2007 was his bestyear ever. The last quarter was his worst. A National Small Business Association survey of 500 small businessowners in February found that sales and profits had dropped and job growth was at the lowest point in 15years, problems that could have a significant impact on an already shaky U.S. economy. The survey alsofound that 71 percent of business owners have a “negative outlook” on the economy compared to 43 percenta year ago; confidence in their business’ success dropped from a high of 81 percent a year ago to 70 percentnow. A separate survey done by the National Federation of Independent Business found that for the first time in 25 years, small

business owners cited inflation as their single biggest concern, rising from 4 percent a year ago to 14 percent in April. The survey of more than 1,765 businesses showed that for the first time in a decade, skyrocketing insurance costs were not the No. 1 concern. As gasand food prices climb, consumers are bypassing small businesses and seeking out bargains in places like Costco Wholesale Corp., whichreported a 32 percent jump in its fiscal third-quarter profit, surpassing Wall Street expectations. “The bad thing that’s happeningto us, is the economy is driving people to shop at the big-box stores ... They can buy their staples and pick other things up so they don’t have to use gasoline,” said Cindy Baker, who has been a gift shop owner for 20 years, half ather current location, Collage, in Pittsburgh’s bustling Strip District. “This is the first time, even taking 9/11 into consideration, I can sayI’ve really seen a pinch in my business,” she said. Just like airlines and car companies, some small business owners areshrinking and letting people go to survive the squeeze. Last month, the Oklahoma City gas station owned for 22 years by

brothers Harley and Hadley Hintergardt shut its doors for good because of rising gas prices. Harley Hintergardt said the station suffered because unlike big chain gas stations, they didn’t have a convenience store or full-service auto shop to fall back on. “We were the victimof high gas prices,” Mr. Hintergardt said. “Everybody thinks that we were making the money selling at the pump at the gas station. Andtrust me, we were not.” Small businesses, measured by the U.S. Small Business Administration as those with fewer than 500

workers, employ some 58.6 million people, more than half of the total U.S. labor force. In the past decade, theyhave generated between 60 percent to 80 percent of new jobs, and in 2004 all the new jobs. While no data isavailable on how many small businesses have gone under in the past six months, federal officials are reporting a decline in the number of loans they guarantee, a consequence of both lower demand and tighter standards. Experts say the shrinking demand indicates

businesses are reluctant to take on debt and expand. Many would-be entrepreneurs are hesitant to open new businesses. Eric Bradlow, amarketing professor at the University of Pennsylvania’s Wharton School of Business, said that historical data suggest that 90

percent of new small businesses shut down in the first year. Meanwhile, a Small Business Administrationstudy found that one-third of new small businesses close within two years and only 44 percent survive four.“Anecdotally, you hear that this is a very difficult period because of higher gas prices and higher component prices ... definitely in the

past 10 to 15 years,” says Mr. Bradlow, who is also a director in Wharton’s Small Business Development Center. It’s anenvironment that also makes it difficult for small businesses to raise prices to cover their costs. The PittsburghPopcorn Co. is feeling that pain. It opened on March 1, since then, the price of packaging tins has tripled. Other food costs have risen

between 5 percent and 30 percent, the hardest hit being canola oil and chocolate.




Gordon/DunnEcon DA




Gordon/DunnEcon DA

Link: Solar- Elec Prices

Solar electricity is higher priced than present retail energy – even recent improvements

haven’t made it more cost-efficient

Rubin in 2006 (Evelyn is senior editor at Seeking Alpha and holds an MBA in finance from Hebrew University,“Everything You Wanted To Know About Solar Power and Were Afraid To Ask”, Seeking Alpha,http://seekingalpha.com/article/16341-everything-you-wanted-to-know-about-solar-power-and-were-afraid-to-ask)

Decrease cost per watt to customers. The cost of solar electricity is higher than the cost of retail electricity from

the utility network, with solar power systems requiring relatively high up-front costs and relatively low

ongoing operational costs. Government programs and consumer preference have accelerated the use of solar electricity, but product cost remains one of the largest impediments to growth. As solar has become a more

mature technology, yields, cell efficiencies, manufacturing efficiencies and economies of scale have improved,

but continued improvements still need to be made in these areas.

Solar power isn’t economic – geographical limitations and high prices make it less desirable

than present fossil fuelsBradley in 1997 (Robert L. Bradley Jr. is president of the Institute for Energy Research in Houston, Texas, theauthor of the two-volume Oil, Gas, and Government: The U.S. Experience, and an adjunct scholar of the CatoInstitute, Cato Institute, “Renewable Energy: Not Cheap, Not Green, August 27,1997,http://www.cato.org/pubs/pas/pa-280.html)

Solar power is substantially less economic than wind as a central-station power source, although its cost fell

from around 25 cents per kWh in the early 1980s to a claimed 8 cents per kWh a decade later. [163] Unlikewind-power capacity, new solar-power capacity is triple the cost of new gas-generated electricity and

quadruple the cost of surplus power. Solar power, like most other renewables, is geographically limited for the

foreseeable future. In the United States, central-station solar power is limited to the desert Southwest and

other selected locales and often involves transmission investments that custom-sited gas-fired plants can

avoid. States such as California and Nevada are swimming in economy energy at 2 cents per kWh, [164] aninsurmountable barrier for cost-effective central-station solar under any conditions. Greater potential may existabroad where power needs are greater (one-third of the world's population remains without electricity), desert areasare more common, electricity is more scarce, and natural gas is not indigenous. Even then, solar power is only adaytime electricity source, and intermittent at that, unless fossil-fuel generation, pumped storage (very expensive),

battery storage, or nuclear power provides back-up reliability. The environmental problems of solar power center around the production of mirrors and land impacts. Regarding the latter, central-station solar requires between 5 and17 acres per MW (see below), compared with gas-fired plants that a decade ago required 1/3 acre per MW and todaycan average as low as 1/25 acre per MW. [165] The DOE has spent approximately $5.1 billion (in 1996 dollars) on

solar energy since FY78, [166] over $12 million per MW. That investment per unit of capacity is some 20

times greater than today's capital cost of modern gas-fired plants. Looking ahead, post-FY94 DOE funding to

attempt to commercialize photovoltaics and solar thermal is estimated to be $1.050 billion, triple the estimate

for wind power. [167]

http://www.cato.org/pubs/pas/pa-280.html#FOOTNOTE_163



















Gordon/DunnEcon DA


Solar energy is infinitely more expensive than all other energies, individuals pay $50,000 eachCBS July 7, 2008. (CBS Evening News, “Is Solar Power Really Practical? Harnessing The Sun'sEnergy Is Becoming More Popular - But Experts Question Its High Cost”

http://www.cbsnews.com/stories/2008/07/07/eveningnews/main4239590.shtml?source=mostpop _story)

Solar energy is definitely not the magic bullet for high energy costs,” said Borenstein. “Right now, solar photo voltaic power is very, very expensive compared not just to fossil fuels, but compared to the other renewable sources that are out there."And, as Ungerleider says, that’s the biggest downside. She paid $50,000 for her solar power.

Solar power costs 20% more than current electricity, with infinitely less reliabilityEd Shugert, July 9, 2008. (El Paso Times, “Electric bills could rise: Fuel charge to cost

consumers $10 more a month” http://www.elpasotimes.com/business/ci_9822287)"We're trying to do what we can to add renewable (energy)," Wilson said. "The problem is renewable is notready" to provide large enough amounts of power to replace natural gas or coal-fired plants.

Wilson estimated solar-powered electricity now costs about 15 to 20 percent more than power from natural-gas plants and is not as reliable as gas, coal or nuclear."As we invest in renewable, we have to be cautious and pick our spots," said Frank Bates, the company'sinterim chief executive officer.

Solar Power is super expensive, especially in regions with less sun

YULIYA CHERNOVA, June 30, 2008. (reporter in Jersey City, N.J., for Clean

Technology Investor, a newsletter published by Dow Jones & Co., The Wall Street

Journal, “Shedding Light on Solar”

http://online.wsj.com/article/SB121432258309100153.html?mod=googlenews_wsj)The idea of solar power sounds so simple. And it seems like it should be cheap compared to other 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 withenergy based on traditional fuels like coal and natural gas.Why is solar power so expensive? And what's being done to bring down the costs? Here are some answers for the befuddled.Q: Let's start with the basics: How much will it cost to put a solar panel on my home?

A: The average cost of a rooftop solar system, also known as a photovoltaic, or PV, system, is roughly $8.25 per watt installed, based on companies' listed selling prices and conversations with industry executives and analysts. What does that mean in English? Well, depending on the size of the system,the price before government subsidies and reimbursements might range anywhere from $8,250 for a one-kilowatt system to more than$40,000 for a five-kilowatt one.The amount of electricity the system produces also varies, depending on factors such as the placement of the

panels on the roof and the consistency of the sun in the region where the home is located. In sunny California, afour-kilowatt residential solar system -- a typical size for many homes -- would produce about 5,500 to 6,500 kilowatt-

hours of electricity annually, more than 80% of the electricity needs of the average ratepayer there, according to utility PG&E Corp., the utility

serving the San Francisco Bay area. In New Jersey, where the sun is less consistent, it would take a larger, 5.1-kilowattsystem to produce as much electricity.




Gordon/DunnEcon DA


Solar Prices Expensive for next 5 years.

Michael Kanellos, 2007. Cnet Staff Writer. Solar to get more expensive before it gets cheaper.http://news.cnet.com/8301-10784_3-9773313-7.html?hhTest=1

Lyndon Rive, CEO of solar installer Solar City, says that prices for residential solar systems are climbing.

Over time, they will decline. In five to seven years, he predicts solar energy will be on par with regular grid power. (Dick Swanson of SunPower has made the same prediction.) Unfortunately, buyers right now are

caught in a bind. The lingering shortage of silicon continues to keep panel prices high. Meanwhile, thesubsidies are going down. Last year, California offered a rebate of $2.80 per watt, he said. This year, it's$2.20. It will go down to $1.90 next year. Residents typically put a 3-kilowatt panel on their home. Solar City's twist on solar installation lay in group buying. The company canvasses residential neighborhoods.When it gets 50 or so committed customers, it purchases the panels and then sends out teams of five or soinstallers to erect them. Volume discounts and concentrated installation leads to a reduction of about 20

percent in the overall cost, according to Rive. Solar City recently raised $21 million. The company will usethe money to build out its warehouse and hire and train people. The 12-month-old company has gone fromtwo to over 100 employees. It concentrates on California but will expand to Colorado soon.

http://news.cnet.com/8301-10784_3-9773313-7.html?hhTest=1

http://www.solarcity.com/



http://news.cnet.com/8301-10784_3-9773313-7.html?hhTest=1





Gordon/DunnEcon DA

Link: Wind energy- Elec Prices

Wind energy is cost-inefficient – it’s too much money for such scarcity of generation

Bradley in 1997 (Robert L. Bradley Jr. is president of the Institute for Energy Research in Houston, Texas, the

author of the two-volume Oil, Gas, and Government: The U.S. Experience, and an adjunct scholar of the CatoInstitute, Cato Institute, “Renewable Energy: Not Cheap, Not Green, August 27,1997,http://www.cato.org/pubs/pas/pa-280.html)

Relative prices tell us that wind power is more scarce than its primary fossil-fuel competitor for electricity

generation--natural gas, used in modern, state-of-the-art facilities (known in the industry as combined-cycle

plants). [7] That is because wind power's high up-front capital costs and erratic opportunity to convert wind

to electricity (referred to as a low capacity factor in the trade) more than cancel out the fact that there is no

energy cost for naturally blowing wind. [8] Low capacity factors, and still lower dependable on- peak capacityfactors, are a source of wind power's cost problem. In California, for instance, where some 30 percent of the world'scapacity and more than 90 percent of U.S. wind capacity is located, wind power operated at only 23 percent realizedaverage capacity in 1994. [9] That compares with nuclear plants, with about a 75 percent average capacity factor;coal plants, with a 75 to 85 percent design capacity factor; and gas-fired combined-cycle plants, with a 95 percent

average design capacity factor. [10] All those plants produce power around the clock. Wind does not blow aroundthe clock to generate electricity, much less at peak speeds.

Wind power can’t shake a stick at present gas-fired energy – wind’s more expensive and

not as efficient

Bradley in 1997 (Robert L. Bradley Jr. is president of the Institute for Energy Research in Houston, Texas, theauthor of the two-volume Oil, Gas, and Government: The U.S. Experience, and an adjunct scholar of the CatoInstitute, Cato Institute, “Renewable Energy: Not Cheap, Not Green, August 27,1997,http://www.cato.org/pubs/pas/pa-280.html)

Paul Gipe, in his treatise on wind power, estimates that the best technology (as of 1995) could deliver windpower for $1,050 per kW, or for between 7.5 and 8.3 cents per kWh. [31] This estimate, adding the incremental

costs discussed earlier, again confirms the conclusion that as of the mid-1990s wind energy was double the

cost of new gas-fired generation and triple the cost of surplus energy (called economy energy, which refers tothe price of electricity on the spot market). New gas-fired combined-cycle capacity in the same period, the early

to mid-1990s, could generate electricity for between 3 and 5 cents per kWh, according to the Federal EnergyRegulatory Commission (FERC). [32] San Diego Gas & Electric and the Sacramento Municipal Utility Districtestimated the cost of their gas-fired generation alternative at about 4 cents per kWh. [33] This is firm generation

with the flexibility to be located near customer demand; thus it avoids the subtle costs that wind faces.


























Gordon/DunnEcon DA

Link: Wind Energy- Elec Prices

High wind power costs are repugnant – it’s more expensive than any other means of

production at presentBradley in 1997 (Robert L. Bradley Jr. is president of the Institute for Energy Research in Houston, Texas, theauthor of the two-volume Oil, Gas, and Government: The U.S. Experience, and an adjunct scholar of the CatoInstitute, Cato Institute, “Renewable Energy: Not Cheap, Not Green, August 27,1997,http://www.cato.org/pubs/pas/pa-280.html)

The high-cost propensity of wind power is a negative, not a positive, aspect of the industry. Prices reflect

relative scarcity, and the price of wind-power energy is substantially higher than the price of electricity from

other sources. Resources devoted to wind power are thus wasted in an economy where wants are greater than

the resources available to meet them, and better alternatives are forgone. Without subsidies, less renewableenergy infrastructure would have been built and consumers would have had lower cost electricity. The savedresources (land, labor, and capital) would have gone to a more competitive source of electricity or, more likely,given electricity-generation overcapacity, to a different endeavor entirely. Electricity consumers, in turn, would haveincremental savings to spend elsewhere in the economy. The result of wind-power investments in California is theexistence of an uneconomic renewable energy industry and an underused natural gas infrastructure. Consequently, it

has contributed to artificially high rates and a substantial ratepayer surcharge for stranded cost recovery

(jargon for generation facilities and third-party contracts incapable of delivering power at competitive prices

in a restructured market; utility companies argue that the public should compensate them for those now

uneconomic investments) in the restructuring period.

Taxpayer subsidies for wind power have been high since disco, with more increases to come


Ratepayer and taxpayer subsidies to wind power have been substantial for two decades. Ratepayers typically

pay three times more for wind power than they would pay for electricity in today's spot market, [50] and the

premium could be higher. The obligation stems from the Public Utility Regulatory Policies Act of 1978 (PURPA),which requires utilities to purchase power from "qualifying facilities" at the utility's "avoided cost." [51] PURPA,concluded one study, "almost single-handedly created the renewable energy industry." [52] California became the

nation's renewable energy capital when its public utilities commission instructed utilities in the state to enter

into PURPA contracts at avoided costs that soon escalated far above market prices. Standard Offer no. 4contracts, awarded to qualifying facilities in California between 1982 and 1988, in particular, were predicated on oil

prices' approaching $100 per barrel. [53] Thus, the State Utility Commission's avoided-cost guidelines locked in

prices that today are about 12 cents per kWh. [54] With many of the contracts reverting to market prices

(about 2 to 3 cents per kWh) in the 1996-98 period, many renewable projects face retirement without new

government help. [55]
























Gordon/DunnEcon DA

Link: Biofuels- Food Prices

High biofuel costs increases food prices

Valerie Mercer-Blackman, Hossein Samiei, and Kevin Cheng in 2007 (October 17, IMF ResearchDepartment, International Monetary Fund, “Biofuel Demand Pushes Up Food Prices”,

http://www.imf.org/external/pubs/ft/survey/so/2007/RES1017A.htm)

Futures markets indicate that high prices are likely to continue over the medium term, providing

incentives for a surge in biofuel production as a supplement to transportation fuels. This, together with

droughts and animal diseases, has pushed up food prices and inflation across the globe.

The October 2007 World Economic Outlook (WEO) has analyzed these developments in detail, seeking todetermine:• the causes of higher food prices• the effects on global inflation• whether the surge in biofuels production will be beneficialThe rise in food prices reflects a combination of factors. Higher biofuel demand in the United States

and the European Union (EU) has not only led to higher corn and soybean prices, it has also resulted in

price increases on substitution crops and increased the cost of livestock feed by providing incentives to

switch away from other crops.

Biofuel prices have raised corn prices

Reuters in 2008 (July 4, The Star, “World Bank links biofuels, high food prices”,http://www.thestar.com/Business/article/454601)

LONDON – Biofuels have forced global food prices up by 75 percent – far more than previously

estimated – according to a confidential World Bank report published in a British newspaper today.The assessment is based on a detailed analysis by Don Mitchell, an internationally respected economist at theWashington-based global financial body, the Guardian said.The figure contradicts U.S. government estimates that plant-derived fuels have contributed less than 3

percent to food-price increases, the newspaper said.

It will add to pressure on governments in Washington and Europe, which have turned to biofuels toreduce emissions of greenhouse gases and reduce their dependence on imported oil.

Due to today's Independence Day holiday in the United States the Guardian report could not immediately beconfirmed.World Bank President Robert Zoellick has said biofuels are a "significant contributor" to the increase

in food prices.

Recently, he wrote in the Financial Times that the use of corn for ethanol by the United States had

consumed more than 75 percent of global corn production over the past three years , and called on theUnited States and Europe to ease subsidies and tariffs on biofuels derived from corn and oilseeds."The use of corn for ethanol has consumed more than 75 percent of the increase in global corn productionover the past three years," he wrote. "Policymakers should consider 'safety valves' that ease these policieswhen prices are high," he wrote.




Gordon/DunnEcon DA


Demand for biofuel causes food prices to soar.

Morning Edition in 2008 (April 11, NPR, “World Bank Chief: Biofuels Boosting Food Prices”,http://www.npr.org/templates/story/story.php?storyId=89545855 )

Demand for ethanol and other biofuels is a "significant contributor" to soaring food prices around the

world, World Bank President Robert Zoellick says. Droughts, financial market speculators and

increased demand for food have also helped create "a perfect storm" that has boosted those prices, he

says.

The soaring costs of food and fuel led to riots in Haiti and Egypt and a general strike in Burkina Faso thisweek. Skyrocketing food prices are topping the agenda this weekend of the World Bank and

International Monetary Fund annual spring meetings in Washington.

Biofuel is the main reason for increasing food prices

Suzy Khimm in 2008 (July 7, staff of The New Republic “Have Biofuels Raised Food Prices by 75%?”,http://blogs.tnr.com/tnr/blogs/environmentandenergy/archive/2008/07/07/have-biofuels-raised-food-prices-by-

75.aspx)The Guardian says they have a leaked report from the World Bank that biofuels are responsible for 75%

of the recent rise in food prices:

Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably

and price increases due to other factors would have been moderate,” says the report. The basket of

food prices examined in the study rose by 140% between 2002 and this February. The report estimates

that higher energy and fertiliser prices accounted for an increase of only 15%, while biofuels have been

responsible for a 75% jump over that

period. http://blogs.tnr.com/tnr/blogs/environmentandenergy/CORN.jpg The study’s figures contrast sharply with the USDA’s assertion that biofuels only account for some 3% of the

price hikes. But according to the Guardian’s description of the study, biofuels have distorted food markets

by: 1) Diverting grain away from fuel; 2) Incentivizing farmers to devote land for biofuel production;

and 3) Sparking financial speculation in grain markets. But though the report was finalized in April,

the World Bank has yet to release the findings.

Biofuels like ethanol have a direct relationship with corn prices

Eli Clifton in 2007 (July 27, IPS, “ENERGY: Biofuels Pushing Up Food Aid Prices”,http://ipsnews.net/news.asp?idnews=38688)

Perceived by many in Washington as a clean, renewable energy source capable of insulating the U.S.

from rising oil prices and instability in the Middle East, as well as revitalising the lagging agriculturalindustry in the Midwestern United States, policy makers have advocated agro-fuels as an alternative to

imported oil. The increasing rate of ethanol production has predictably led to increases in the cost of corn -- nearly

doubling in the past year -- and policymakers have warned that U.S. demand for biofuels will likely

spread to South American and South East Asian sugar- and palm oil-producing regions which are

capable of producing ethanol more efficiently than with the U.S. corn-based methods.According to World Bank price indexes, worldwide basic food commodities now cost 21 percent more

than in 2005 and important commodities such as grain and oil have gone up in price more than 30

percent.

United Nations World Food Programme (WFP) Executive Director Josette Sheeran pointed to the role of biofuels in driving up food prices during an interview with the Financial Times last week.She acknowledged that rising food prices were "already having an impact on WFP operations." "There is arealisation we are facing a new level of challenges," she added.Food prices have surged for other reasons over the past year, including increased demand from China and

bad weather. However, the growing global demand for biofuels in the U.S. and a proposal by the European

http://www.npr.org/templates/story/story.php?storyId=89545855

http://www.guardian.co.uk/environment/2008/jul/03/biofuels.renewableenergy



http://blogs.tnr.com/tnr/blogs/environmentandenergy/CORN.jpg


http://www.autobloggreen.com/2008/05/21/usda-says-biofuels-are-not-to-blame-for-high-food-prices/


http://www.npr.org/templates/story/story.php?storyId=89545855







Gordon/DunnEcon DA

Commission stipulating that all petrol and diesel in the European Union must contain 10 percent biofuelscould spell serious environmental and economic consequences.




Gordon/DunnEcon DA


Biofuels are not as beneficial as first thought and drives food prices up

Ashley Hall in 2008 (June 25, ABC News, “Biofuel farming accused of driving up food prices”,http://www.abc.net.au/news/stories/2008/06/25/2285446.htm)

Oxfam says the renewable fuels are not as climate-friendly as first thought.

The international aid agency blames the biofuel policies of developed countries for a 30 per cent spike

in food prices which are dragging more than 30 million extra people into poverty.

"As more science has come to light and as people have looked at this issue more carefully, I think our conclusion is that changing to biofuels in transport in countries like Australia, Europe, America is not goodfor the planet," says Oxfam Australia's Jeff Atkinson.In its global report, Another Inconvenient Truth, Oxfam argues the benefits to the climate of using

biofuels have been overstated.

It says many farmers have cleared further into forests and wetlands to accommodate the crops, and

others have moved out of food production to make room for biofuel feedstock.

"Of course changing from petrol to biofuels in one's car is going to reduce greenhouse gas emissions

but to look at the whole picture you have to look at how these biofuels are produced and where they

are produced and many of them are produced in developing countries of course," Mr Atkinson said."But what's happening is that there is competition between fuel and food.""Take the corn crop in the US for example, which would normally be grown for food, a lot of that is

now being grown for fuel instead and factors like this of course are driving up food prices."

That rise is as much as 30 per cent, Oxfam says.

Biofuel prices are only increasing, devastating the economy and especially the poor hit by

the increased food prices

C. Ford Runge and Benjamin Senauer in 2007 (June, Council on Foreign Relations, “How Biofuels CouldStarve the Poor”, http://www.foreignaffairs.org/20070501faessay86305/c-ford-runge-benjamin-senauer/how-

biofuels-could-starve-the-poor.html)

This might sound like nirvana to corn producers, but it is hardly that for consumers, especially in poor

developing countries, who will be hit with a double shock if both food prices and oil prices stay high.The World Bank has estimated that in 2001, 2.7 billion people in the world were living on the

equivalent of less than $2 a day; to them, even marginal increases in the cost of staple grains could be

devastating. Filling the 25-gallon tank of an SUV with pure ethanol requires over 450 pounds of corn --which contains enough calories to feed one person for a year. By putting pressure on global supplies of ediblecrops, the surge in ethanol production will translate into higher prices for both processed and staple foodsaround the world. Biofuels have tied oil and food prices together in ways that could profoundly upset the

relationships between food producers, consumers, and nations in the years ahead, with potentially

devastating implications for both global poverty and food security.In the United States and other large economies, the ethanol industry is artificially buoyed by government

subsidies, minimum production levels, and tax credits. High oil prices over the past few years have

made ethanol naturally competitive, but the U.S. government continues to heavily subsidize corn

farmers and ethanol producers. Direct corn subsidies equaled $8.9 billion in 2005. Although these

payments will fall in 2006 and 2007 because of high corn prices, they may soon be dwarfed by thepanoply of tax credits, grants, and government loans included in energy legislation passed in 2005 and

in a pending farm bill designed to support ethanol producers. The federal government already grants

ethanol blenders a tax allowance of 51 cents per gallon of ethanol they make, and many states pay out

additional subsidies.Consumption of ethanol in the United States was expected to reach over 6 billion gallons in 2006.(Consumption of biodiesel was expected to be about 250 million gallons.) In 2005, the U.S. government

mandated the use of 7.5 billion gallons of biofuels per year by 2012; in early 2007, 37 governors

proposed raising that figure to 12 billion gallons by 2010; and last January, President Bush raised it

further, to 35 billion gallons by 2017. Six billion gallons of ethanol are needed every year to replace the

fuel additive known as MTBE, which is being phased out due to its polluting effects on ground water.

http://www.abc.net.au/news/stories/2008/06/25/2285446.htm

http://www.abc.net.au/news/stories/2008/06/25/2285446.htm




Gordon/DunnEcon DA


Government incentives for biofuels is rising food prices.

Eric Fedewa, 2008 (Vice President, Global Powertrain Forecasts The True Impact of Biofuel Feedstock Production on U.S. and World Food Prices; http://www.csmauto.com/news/csminsights/3rdQtr2008/?a=3 )

Incentives for production of flex-fuel vehicles, along with mandates and incentives for production of feedstocks and blending of biofuels, have helped set the stage for the current controversy over global food

prices. Those who are spreading hysteria over rising food prices in the U.S. and abroad are all too happy to

lay the blame on biofuels, citing the demand on corn and soybean crops used to fuel the rapidly increasingglobal appetite for ethanol and biodiesel. Yes, mandated increases in biofuel use are putting pressure on crop

supplies and prices. Corn and soybeans grown for ethanol and biodiesel have contributed to higher prices for those crops over the past few years. But that's not the whole story. Factors affecting higher global and U.S food

prices Prices for all farm products are up sharply, not just for corn and soybeans. Global food and grain priceswould still be rising, even without corn “diverted” for ethanol production. Here are some key reasons: World

prices of major crops are denominated in U.S. dollars; the dollar's depreciation has itself driven food prices

up, just as it has with oil. Higher oil prices are the single biggest factor behind higher food costs (as we'llsee below).

http://www.csmauto.com/news/csminsights/3rdQtr2008/?a=3






Gordon/DunnEcon DA

Link: Renewables- Elec Prices

Electricity rates will soar when companies turn to alternative energy sources

Roy Innis, 2008 (Grassroots Institute of Hawaii, The truth about “alternative energy”,http://www.grassrootinstitute.org/GrassrootPerspective/AltEnergy032608.shtm)

Every week brings new claims that clean, free, inexhaustible renewable energy will soon replace the “dirty”fuels that sustain our economy today. A healthy dose of reality is needed.Nevertheless, politicians arepromoting initiatives like the Lieberman-Warner bill and Midwestern Governors Association climate pact,which they say will prevent a cataclysm, by slashing CO2 emissions by 60-80 percent and generating

“thousands of megawatts” from wind energy. If these initiatives become law , experts say electricity rateswould soar another 50 percent by 2012. Labor unions predict millions of lost jobs, as companies shift operations to foreign countries.




Gordon/DunnEcon DA


Conversion to renewable energy is a “colossally bad economic investment” – the costs

outnumber the worth two to one


The electricity utility industry is one of America's last bastions of monopoly privilege. Heeding Samuel Insull'scall for politicized electricity near the turn of the century, industry leaders successfully lobbied state legislatures toestablish commissions to implement cost-plus rate regulation and franchise protection. [234] The predictable result

of decades of the "regulatory covenant" is a high-cost, conservative, standardized industry ripe for

restructuring. The investor-owned utilities estimate their collective uneconomic generation costs at between

$50 billion and $300 billion versus a net worth of $175 billion--a colossally bad economic investment. [235]

Switching to alternative energy will cost trillions of dollarsMichael T. Klare, 2008 (professor of peace and world securitystudies,http://www.commondreams.org/archive/2008/04/15/8316/print/)

The expected increase in renewables and biofuels is so slight — a mere 8.1% — as to be virtually

meaningless.In global warming terms, the implications are nothing short of catastrophic: Rising reliance on coal(especially in China, India, and the United States) means that global emissions of carbon dioxide are projected to rise by 59% over the next quarter-century, from 26.9 billion metric

tons to 42.9 billion tons. The meaning of this is simple. If these figures hold, there is no hope of averting the worst effects of climate change.When it comes to global

energy supplies, the implications are nearly as dire. To meet soaring energy demand, we would need a

massive influx of alternative fuels, which would mean equally massive investment — in the trillions of

dollars — to ensure that the newest possibilities move rapidly from laboratory to full-scale commercial

production

The best available renewable generation capacities are 2-3 times as expensive as fossil fuelsBradley in 1997 (Robert L. Bradley Jr. is president of the Institute for Energy Research in Houston, Texas, theauthor of the two-volume Oil, Gas, and Government: The U.S. Experience, and an adjunct scholar of the CatoInstitute, Cato Institute, “Renewable Energy: Not Cheap, Not Green, August 27,1997,http://www.cato.org/pubs/pas/pa-280.html)

A multi-billion-dollar government crusade to promote renewable energy for electricity generation, now in its

third decade, has resulted in major economic costs and unintended environmental consequences. Even

improved new generation renewable capacity is, on average, twice as expensive as new capacity from the most

economical fossil-fuel alternative and triple the cost of surplus electricity. Solar power for bulk generation is

substantially more uneconomic than the average; biomass, hydroelectric power, and geothermal projects are

less uneconomic. Wind power is the closest to the double-triple rule. The uncompetitiveness of renewable

generation explains the emphasis pro-renewable energy lobbyists on both the state and federal levels put on

quota requirements, as well as continued or expanded subsidies. Yet every major renewable energy source hasdrawn criticism from leading environmental groups: hydro for river habitat destruction, wind for avian

mortality, solar for desert overdevelopment, biomass for air emissions, and geothermal for depletion and toxic

discharges. Current state and federal efforts to restructure the electricity industry are being politicized to

foist a new round of involuntary commitments on ratepayers and taxpayers for politically favored

renewables, particularly wind and solar. Yet new government subsidies for favored renewable technologies

are likely to create few environmental benefits; increase electricity-generation overcapacity in most regions of

the United States; raise electricity rates; and create new "environmental pressures," given the extra land and

materials (compared with those needed for traditional technologies) it would take to significantly increase the

capacity of wind and solar generation.










Gordon/DunnEcon DA


Alternative energy polices can have a catastrophic effect on the economy due to the rise in

food prices.Indur Goklany April 17, 2008 (wrote The Improving State of the World (Cato Institute). Added to cato.org onApril 17, 2008 Fuels vs. Food http://www.cato.org/pub_display.php?pub_id=9337 )

President Bush's call yesterday for a dramatic slowdown of green-house-gas emissions reflects growing

concern for the consequences of climate change. But what about the consequences of the world's

response? The fact is, food riots resulting partly from the United States' alternative energy policies

have arrived at our front door. Crowds of hungry demonstrators swarmed the presidential palace in Haitilast week to protest skyrocketing food prices. In recent years, we've heard that climate change could be

catastrophic for nature and humanity. But it's becoming increasingly evident that over the next few

decades, climate-change policies could prove even more catastrophic. Food riots have erupted in Mexico,Morocco, Egypt, Cote d'Ivoire, Guinea, Mauritania, Cameroon, Senegal, Uzbekistan and Yemen. Vietnam,Cambodia, India and Egypt have all placed restrictions on their rice exports to drive down domestic prices.Pakistan has reinstated food rationing, which is also under discussion in Bangladesh and rumored in Sri

Lanka. Climate-change remedies can lead to greater poverty, starvation and disease, as well aswidespread ecological destruction… Supposedly climate-friendly policies in the United States and the

European Union — subsidizing the production and consumption of such renewable biofuels as ethanol

and biodiesel — have diverted such crops as corn, soybeans and palm oil from food to fuel. This, in

turn, has increased prices for food worldwide at a time when the highly populous and newly

prosperous East and South Asian countries are demanding more of it. Together, China and Indiaconstitute 40 percent of the world's population. Not long ago, these countries were on the brink of starvation,

but now they're seeing food demand rise ever higher because of years of near double-digit economic growthrates. Energy — critical for making fertilizers, transporting food and running equipment — is at record

prices. According to World Bank data, by March of this year, grain prices had tripled, fertilizer prices

had quintupled and energy prices were up 21/2-fold since 2000. Since January of this year alone, food prices have increased a staggering 65 percent. These food-price spikes threaten to undo one of the world'ssignal post-World War II achievements. In the '50s and '60s, many feared that famine was inevitable. Instead,

we witnessed a vast reduction in chronic hunger, from 37 percent of the developing world's population in1970 to 17 percent in 2001 — despite an 83 percent increase in population. Increased agricultural productivity, trade in food commodities and aid from the developed world resulted in a 75 percent drop inglobal food prices after 1950, making food available to the bottom-rung billions worldwide. The current

bump-up in food prices threatens to reverse these gains. The conversion of natural habitat land for produce-

cultivation purposes had been the single-largest threat to biodiversity worldwide, but over the last half

century, the global agricultural footprint has nearly stabilized. Now, this achievement is also in

jeopardy. What the US ethanol subsidies do for corn, the European Union's biodiesel subsidies do for palmoil. EU policies stoke an artificial demand for biodiesel, leading to the clearance of high-biodiversity forestsin Malaysia and Indonesia. In both the European Union and the United States, lands previously set aside for nature conservation are once again coming under the plow to meet subsidized biofuel demand. Indur M.Goklany wrote The Improving State of the World (Cato Institute). Agricultural expansion, in turn, increases

pressures on certain animal species and leads to higher releases of carbon, from biomass and soil above and

below ground. Fertilizers used to increase agricultural yields also increase nitrogen discharged intowaters and emissions of nitrous oxide — a greenhouse gas that heats the atmosphere 300 times more

effectively than carbon dioxide. Thus, even if biofuels produce an energy surplus, they would not

necessarily be environmentally sound. Worse, they harm the US economy. Higher energy and food

prices reduce consumers' disposable income more or less equally, meaning they disproportionately

affect poorer people. Higher food prices, alternative energy subsidies and greenhouse-gas-emissionscontrols only make it harder for these people to earn a living or afford better education and health care.Climate-change remedies can lead to greater poverty, starvation and disease, as well as widespread

ecological destruction — some of the very misfortunes that they're supposed to prevent. In our haste to

address global warming, we have yet to think seriously about our policies' unintended effects.




Gordon/DunnEcon DA

Link: RPS- Energy Cost

A federal RPS would drive up energy taxes, thus increasing costs and hurting businesses

and economic growth

U.S. Chamber of Commerce in 2007 (Letter Opposing the “Energy Independence and Security Act of 2007”, U.S. COC, December 5, 2007, http://www.uschamber.com/issues/letters/2007/071206_energy.htm)

The bill is also expected to contain a 15 percent renewable portfolio standard (RPS) for electricity generation to besatisfied only by so-called “renewables,” wind, solar, biomass, geothermal, ocean, tidal, and incrementalhydropower. A federally mandated RPS could raise electricity prices for all consumers, result in a wealth

transfer among states, and impose new burdens on the reliability of our nation’s electric grid. The Energy

Information Administration (EIA) estimates that a 15 percent RPS would require consumers to pay $1 billion

to $2 billion more for electricity. Utilities will be forced to purchase renewable energy credits from the federal

government, which amounts to a tax on electricity used by businesses and other consumers, driving up energy

costs and hurting economic growth. And a mandatory RPS based exclusively on “renewables” chooses energy

winners and losers, excluding good, clean energy sources like nuclear, hydroelectric and clean coal for no

good reason.

RPS will hurt the economy by increasing energy costsLieberman in 2k7 (Ben, Senior Policy Analyst, Energy and Environment, Heritage Foundation web memo1851, 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 regulatoryrestrictions on domestic energy producers. They all failed in the past, but they're all back anyway. TheHouse is about to vote on its latest energy bill, and like the Senate version that passed on June 21, it

offers not even one truly pro-energy provision. Instead, it repeats past mistakes and will likely lead tolower domestic energy supplies and higher costs over the long term.The House seeks a requirement that20 percent of electricity be generated from so-called renewable sources--chiefly wind but also solar andothers. 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 federallymandated 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 substantialtax breaks, a national mandate will cost Americans both as taxpayers and as ratepayers.




Gordon/DunnEcon DA

Link: RPS- Elec Prices

RPS increases electricity prices

Steven F. Greenwald and Jeffrey P. Gray in 2008 (May, partners in the Energy Practice Group, PowerMag,“Why RPS programs may raise renewable energy prices”, http://www.dwt.com/practc/energy/publications/05-

08_RPSPrograms.pdf)

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 eachother 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 pricesrose, 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 itsprice 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 autility’s needs—as well as the benefits that competition can provide consumers. Legislative directives thatartificially increase demand will also increase prices when supply cannot keep pace. The net result is askewed 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 movementsof a market are precipitated by government fiat, they are subject to a visible and very heavy hand.




Gordon/DunnEcon DA

Link: Nuclear Energy- Expensive

Nuclear power is the most expensive alternative energy.

Joseph Romm June 2, 2008 (Nuclear energy, the sequel, is opening to raves by everybody from JohnMcCain to a Greenpeace co-founder. Don't be fooled. It's the "Ishtar" of power generation;

http://www.salon.com/news/feature/2008/06/02/nuclear_power_price/ )

No nuclear power plants have been ordered in this country for three decades. Once touted as "too cheapto meter," nuclear power simply became "too costly to matter," as the Economist put it back in May 2001.Yet growing concern over greenhouse gas emissions from fossil fuel plants has created a surge of newinterest in nuclear. Wired magazine just proclaimed "Go nuclear" on its cover . Environmentalists likeStewart Brand and James Lovelock have begun embracing nukes as a core climate solution. And GOP

presidential nominee John McCain, who has called for building hundreds of new nuclear plants in thiscountry, recently announced he won't bother showing up to vote on his friend Joe Lieberman's climate bill

because of insufficient subsidies (read "pork") for nuclear power.What do they know that scores of utility executives and the Economist don't? Nothing, actually.Nuclear power still has so many problems that unless the federal government shovels tens of billions of

dollars more in subsidies to the industry, and then shoves it down the throat of U.S. utilities and the

public with mandates, it is unlikely to see a significant renaissance in this country. Nor is nuclearpower likely to make up even 10 percent of the solution to the climate problem globally.

Why? In a word, cost. Many other technologies can deliver more low-carbon power at far less cost. As a2003 MIT study, "The Future of Nuclear Energy," concluded: "The prospects for nuclear energy as an

option are limited" by many "unresolved problems," of which "high relative cost" is only one. Othersinclude environment, safety and health issues, nuclear proliferation concerns, and the challenge of long-termwaste management.Since new nuclear power now costs more than double what the MIT report assumed -- three times what

the Economist called "too costly to matter" -- let me focus solely on the unresolved problem of cost.While safety, proliferation and waste issues get most of the publicity, nuclear plants have become soexpensive that cost overwhelms the other problems.Furthermore, after capital costs, wind power and solar power are pretty much free -- nobody charges for the breeze and the sun. Operation is also cheap, compared with nukes, which run on expensive uranium andmust be monitored minute by minute so they don't melt down. Moore is talking about old nuclear plants,which have been paid off. But the price of new nuclear power has risen faster than any other form of

power, as a detailed study of coal, gas, wind and nuclear power capital costs by Cambridge Energy ResearchAssociates concluded.

Bush is already wasting $1.3 billion for nuclear power instead of wind and solar.

Michele Boyd, February 5, 2007, (Legislative Director, Public Citizen’s Energy Program outlined theevidence in "Bush Administration Budget Proposes to Squander More Than a Billion Dollars on Unsafe andPolluting Nuclear Power and Nuclear Waste Programs in FY 2008.";http://www.llrx.com/extras/energy2007.htm )“Just how much taxpayer money does the federal government have to squander before it realizes that

it is chasing a nuclear power mirage? Apparently, more than a billion dollars in Fiscal Year 2008 alone.The Bush administration’s budget request for the U.S. Department of Energy (DOE) proposes to waste

another $1.3 billion for nuclear power programs in pursuit of dangerous policies to revive the nuclear

industry, restart nuclear waste reprocessing in the United States, and resuscitate the failing Yucca

Mountain nuclear waste repository project...

“In comparison to lavish funding for the mature nuclear industry, the administration proposes to keep

solar funding flat, to cut wind and weatherization budgets and to eliminate geothermal funding. Aswith past Bush administration budgets, the real solutions for combating climate change and meeting energyneeds – renewables and efficiency – get the very, very short end of the budget stick.”

http://www.salon.com/news/feature/2008/06/02/nuclear_power_price/

http://www.salon.com/news/feature/2008/06/02/nuclear_power_price/%20http:/www.wired.com/wired/coverbrowser/

http://blog.washingtonpost.com/the-trail/2008/05/29/mccain_to_miss_climate_vote.html



http://web.mit.edu/nuclearpower/


http://energy.ihs.com/News/Press-Releases/2008/North-American-Power-Generation-Construction-Costs-Rise-27-Percent-in-12-Months-to-New-High-IHS-CERA.htm

http://www.citizen.org/pressroom/release.cfm?ID=2376


http://www.llrx.com/extras/energy2007.htm

http://www.salon.com/news/feature/2008/06/02/nuclear_power_price/

http://www.salon.com/news/feature/2008/06/02/nuclear_power_price/%20http:/www.wired.com/wired/coverbrowser/



http://energy.ihs.com/News/Press-Releases/2008/North-American-Power-Generation-Construction-Costs-Rise-27-Percent-in-12-Months-to-New-High-IHS-CERA.htm



http://www.llrx.com/extras/energy2007.htm




Gordon/DunnEcon DA

Link: Nuclear Energy- Elec Prices

Cost of electricity will go up as a result of nuclear power plants.

Mongabay.com April 4, 2007 (Nuclear power plants are financially risky given high costs;

http://news.mongabay.com/2007/0404-nuclear.html )

Nuclear power plants are risky investments given rapidly rising costs of construction of nuclear fuel,

reports a new study by researchers from Georgetown University, Stanford University and UC Berkeley. The paper, published in the April 1 issue of the journal Environmental Science and Technology, warns power companies that nuclear power may not be financially attractive even with generous government

subsidies. "For energy security and carbon emission concerns, nuclear power is very much back on thenational and international agenda," said study co-author Dan Kammen, UC Berkeley professor of energy andresources and of public policy. "To evaluate nuclear power's future, it is critical that we understand what thecosts and the risks of this technology have been. To this point, it has been very difficult to obtain an accurateset of costs from the U. S. fleet of nuclear power plants." Analyzes the costs of electricity from existing U.S.

nuclear reactors, the researchers found that "cost surprises" could significantly increase the cost of new

energy technologies, including next-generation nuclear power.

http://news.mongabay.com/2007/0404-nuclear.html

http://news.mongabay.com/2007/0404-nuclear.html




Gordon/DunnEcon DA

Link: Nuclear Energy- Elec Prices

Nuclear energy increases the cost electricity.

Public Citizen; June 12, 2001 (States Pay the Price for Relying on Nuclear Power;http://www.publiccitizen.org/publications/release.cfm?ID=7073 )

The answer, according to research by Public Citizen, is no. States that rely on nuclear power have

significantly higher electricity rates than states that do not. In fact, our research shows that the higher

the reliance on nuclear power, the higher the electric rates will be. That s because nuclear power is

significantly more expensive than coal or natural gas due to the higher capital, operation and maintenancecosts necessary to protect Americans from radiation releases. In the 20 non-nuclear states, the 1999 averagecost of electricity was 5.52 cents per kilowatt/hour. The average cost of electricity in the 31 states that use

nuclear power was 6.88 cents per kilowatt/hour. In other words, consumers in states that use nuclear

power pay 25% more for their electricity than consumers in states that do not use nuclear power.Furthermore, electricity rates increase in proportion to the states reliance on nuclear power. In the fivestates that get more than half of their electricity from nuclear power, electricity prices were 37% higher than

in non-nuclear states. In the 10 states with the highest reliance on nuclear power, electricity prices were 33%higher than in non-nuclear states. In the 20 states with the highest reliance on nuclear power, electricity rateswere 27% higher than in non-nuclear states. The same pattern is observable even if we limit our sample toresidential consumers. The average residential consumer in a state that uses nuclear power pays 20%

more for electricity than residential consumers in non-nuclear states. In the five states that get more thanhalf of their electricity from nuclear power, residential electricity prices are 36% higher than in non-nuclear states. When capital costs are included with operation, maintenance, and fuel costs which they should be,considering capital costs represent between 60% and 75% of the cost of a nuclear power plant, 25% in coaland 50% in natural gas nuclear power costs $2,080 per kilowatt/hour, compared to $1,200 per kilowatt/hour for coal and $500 per kilowatt/hour for natural gas. These higher costs for nuclear power don t include thevalue of federal government subsidies, such as Price-Anderson (the federal government provides freeinsurance) and waste disposal. Nuclear power is so much more expensive than other forms of generationbecause insuring the safety of nuclear plants is costly. Because public safety and the environment are soegregiously threatened by the release of even minimal amounts of radiation, expensive prevention techniquesare required. But the safety of nuclear power plants is not guaranteed by our current regulatory

framework , as evidenced by accidents such as the Three Mile Island meltdown in 1979, problems at theTurkey Point and Oyster Creek reactors, and the loss of fuel rods at the Millstone reactor. Reliance on nuclear

power is the primary characteristic of the groupings, and not other criteria such as electricity deregulation.That s because this 1999 data predates the deregulation-related price spikes in the northeast, midwest, andwestern United States, since the higher prices in deregulated markets began in the summer of 2000. But sincemost deregulated states are also the highest cost states, 2000 data should produce similar results when it

becomes available. It is important to note that those states that pushed for deregulation did so to get out fromunder the massive debts compiled by utilities for expensive nuclear power plants. New nuclear power plantconstruction projects across the country experienced cost overruns as much as 700 percent in the 1980s.These boondoggles saddled utilities with the majority of their debt. As the deregulation debate raged inAmerica s state legislatures, utilities were able to convince lawmakers to have consumers pay 100% of thesenuclear-related debts, estimated at $86 billion. In exchange, the utilities agreed to allow electric rates charged

to consumers to be frozen until these so-called "stranded cost" debts were paid off. This bailout of the utilitiesnuclear capital costs allowed for the recent fall in electricity prices in the western United States wholesaleelectricity market. Clearly, nuclear power is not as inexpensive as the Bush administration would like us to

believe. Electricity deregulation has already resulted in significantly higher electricity prices across

America. Increasing our reliance on nuclear energy will only make our electricity more expensive.

http://www.publiccitizen.org/publications/release.cfm?ID=7073

http://www.publiccitizen.org/publications/release.cfm?ID=7073




Gordon/DunnEcon DA

Link: Regulations- Biz Con

Regulation creates a hostile business climate.

Consumers' Research Magazine, August 1996, p.L/N. (BLUEOC1600)Who Pays for All This? In general, the cost of regulating is initially expressed as a cost of doing business. Okay, but

who pays this tariff? We all do, in one way or another. Consider a standard situation in which a law requires certain practices to be followed in hiring or procedures to be used to assure product quality. The former will raise costs byforcing employers to expand their job search and fill out forms to prove compliance; the latter will raise costs byrequiring changes in the production process. Sometimes, firms can pass these costs to consumers, making them paymore; sometimes firms can't pass them along at all, so they will have lower profits, which means that owners or shareholders foot the bill. But, often, employers pass these costs down the line with lower wages and salaries. Other times, when costs cannot be directly passed off to employees, employers will respond by either hiring fewer peopleor laying off those already employed. Either way, higher business costs from regulation will result in lower

wages and/or higher unemployment. Excessive regulation also discourages investment in domestic business:

Why plop a factory down on regulated soil when unregulated opportunities beckon abroad? Moreover, the

threat of regulatory changes creates uncertainty, which scares investors, who then demand higher returns,

and tends to make planning horizons more short term. Further, regulation stymies innovation. This has beenespecially true in the drug and medical-device industry. Long approval periods shorten the effective patent time for

the results of expensive research and development and thus diminish returns on discoveries without lowering risk. Alarger gap between risk and return renders many research and development projects too unprofitable to under take.And last, all of the above make it harder for domestic firms to compete in international markets in which manyforeign-based firms do not have to contend with the effects of excessive regulation.

Regulations undermine business confidence and investment

Wayne Gray, Dept of Economics, Clark Univ, 1993, National Bureau of Economic Research, Working Paper Series, No. 4321, p.4 (BLUEOC1601)Regulations may also increase the uncertainty faced by firms, affecting their decisions in a variety of ways.Viscum (1983) discusses the role of uncertainty about future regulations (and hence about the future profitabilityof the firms) is reducing a firm's investment, or at least is postponing the investment until the uncertainty is resolved. Hoerger, Beamer, and Hascoe (1983) point out that new product development could be

affected by uncertainty about future regulations of new products. Development of new production processescould also be hindered by uncertainty about future regulations, as current regulatory requirements are

generally designed with existing production processes in mind. blue-chip average now is up only 1.8% since

the year began."

Regulations discourage investment in business.

Doug Ose, Republican representative from California, April 8, 2003,http://bulk.resource.org/gpo.gov/hearings/108h/87231.txt We need to keep in mind that it takes years to propose, site, and build a power plant.Up and down the State, power plant construction is being delayed and companies are

scrapping plans to build more generation. Energy companies cite political and regulatory uncertainty as the principal obstacle to new energy supply. Wall Street refuses to invest in such an unstable

environment. Yet, experts predict that California will experience shortages again in a few short years. It is,therefore, essential that we get on with the reform process in order to encourage investments in energygeneration and transmission. A stable marketplace, with clear, rational rules, is the only way tosupply the lowest cost, most environmentally clean energy that Californians deserve. We simply cannot afford to wait any longer.




Gordon/DunnEcon DA

Link: Regulations- General

Any drastic attempt to decrease greenhouse gases will wreck the economy without the

proper technology.

Patrick J. Michaels April 20, 2008 (senior fellow in environmental studies and author of Meltdown: The

Predictable Distortion of Global Warming by Scientists, Politicians, and the Media. Doing Little Is Doing Right,or You'll Wreck Economy Added to cato.org on April 21, 2008)http://www.cato.org/pub_display.php?pub_id=9344

In a much-anticipated statement on global warming, President Bush on Thursday announced a national

goal to stabilize our emissions of greenhouse gases - mainly carbon dioxide - by 2025. To reach this

goal, he proposed new fuel-economy standards for autos by 2020, and lower emissions from electricity

production in the next 10 to 15 years. The president called for new technologies to further reduceemissions after 2025. If every nation of the world met the president's goal, there would be no detectablereduction of global warming from a "business as usual" scenario for at least 50 years. We currently flail

from one politically correct technology to another. If we want to significantly slow warming, emissions

have to be cut by more than 60 percent. Pending legislation in the Senate, sponsored by Sens. JoeLieberman, a Connecticut independent, and John Warner, a Virginia Republican, drops them 66 percent by2050. The only problem is that no one knows how to do this. The fact is that we simply don't have - and

can't realistically imagine - the suite of technologies that would bring about such a sweeping change,nationally or globally. Instead, lawmakers propose schemes to make carbon-based energy so expensive

that people will use very little of it. Has anyone noticed that gasoline consumption has gone down only

a half of 1 percent at current prices? How expensive does it have to be to go down 66 percent? The

president is being keel-hauled for being realistic, if ineffective. One can't simply wave a legislative

magic wand and wreck the economy in a futile attempt to halt the growth of atmospheric carbon

dioxide. China has already passed the United States as the world's largest emitter, and will be far ahead of us by 2025. India won't be far behind us for long. They are both industrializing largely with coal-firedelectricity. What are the technologies that can accomplish reductions in emissions that will have a major effect on global warming? Don't ask me - or anyone, for that matter. In a telling commentary earlier thismonth in Nature magazine, Roger Pielke Jr., director of the Center for Science and Technology PolicyResearch at University of Colorado, wrote that "enormous advances in energy technology will be needed

to stabilize atmospheric carbon-dioxide concentrations at acceptable levels." What they are remainedunspecified. We currently flail from one politically correct technology to another. A few years back itwas hydrogen, until people discovered that more energy would be expended in isolating and transporting itthan would be saved. Then along came (dare I say in Iowa) corn-based ethanol. Scientists have been warningfor years that it, too, would save little if any energy, as was forcefully acknowledged in Science magazineearlier this year. President Bush says "celluosic" ethanol (produced from fiber rather than grain) is justaround the corner. Sure. We're working on it. For 50 years. Will there be some breakthrough technology?Maybe. But we won't get it without investment, which means we won't get there without a vibrant

economy. The president is right about that one.

Regulations on fossil fuels snowball.

Gannett News Service May 28 2004In contrast, conservatives charge, Kerry supports costly environmental regulations that could shut down

power plants and cost jobs. Kerry's support for reductions in the carbon dioxide emissions that causeglobal warming is especially dangerous, said Marlo Lewis, a senior fellow for the Competitive EnterpriseInstitute, a free-market think tank that opposes most federal environmental regulation. Regulating carbon

dioxide would be disastrous for the U.S. economy, Lewis said. "All our major fuels -- oil, coal or

natural gas -- are carbon based," he said. "So once you start regulating energy production based on

carbon, there's no logical stopping point short of total suppression of these fuels."




Gordon/DunnEcon DA

Link: Regulations- General

Command and control regulations shut down the economy

Phil Kerpin, 7/11/08. (policy director for Americans for Prosperity. NRO, “The EPA’s

Blueprint for Disaster”

http://article.nationalreview.com/?q=ZmEwNmFmNTllMDU2NTBkOGY2YWZkMTFlNjUxZDZmZTQ=)

The EPA also hopes to regulate stationary-source emissions by instituting a cap-and-trade scheme much like the massive, multi-trillion-dollar, hidden-tax-hike scam the U.S. Senate

rejected last month. If unable to do that, the EPA will deliver something even worse: old-style, command-and-control regulation of carbon dioxide and other greenhouse gases.The worst excess here is the Prevention of Significant Deterioration (PSD) program. This would require permitting for businesses and structures that emit as little as 100 tons of

greenhouse gases per year. That threshold may make sense for some air pollutants. But for carbon dioxide it’s frighteningly low, and

would subject millions of never-before-regulated entities to an expensive and lengthy EPA permitting process. Any building over 100,000 square feet would be pulled in, as would numerous smaller buildings that produce carbon dioxide. Small businesses, restaurants, schools, and hospitals that have commercial kitchenswith gas burners would all be affected.This permitting process would debilitate businesses across the country. It also would grind stateenvironmental agencies and the EPA to a standstill; inundated with permit filings, they would unable to

pursue many legitimate environmental protections. Meanwhile, as the permit backlog grows, all new-

construction activity across the country would draw to a halt.The EPA blueprint includes a lengthy discussion of how to avoid these outcomes. For one, the agency suggests that it can establish its own threshold for permitting. It can’t. WhileCongress can design a regime with thresholds that it considers appropriate, the EPA can only stretch the 1970 Clean Air Act so far. (For the record, the act’s author, John Dingell, hasstated that the act should not be forced into service to regulate greenhouse gases.) Even if the major environmental groups agree to look the other way while more reasonable rules are

implemented, all it takes is one environmentalist to file a lawsuit and point out how statutory language establishes thresholds for PSD regulation. That’s when theeconomy stops moving.The EPA is out of control. A radical multi-trillion-dollar reordering of our economy deserves at least the participation of democratically elected legislators and accountable branches of

government. Whether or not Congress chooses to establish a regime for greenhouse-gas regulation, it must immediately pass legislation to stop the EPA from implementing itsdevastating vision for the U.S. economy.




Gordon/DunnEcon DA

Link: Regulations- Small Business

Regulations are devastating to small businesses.

FDCH Congressional Testimony, Raymond J. Keating, Chief Economist for the Small Business SurvivalCommittee. 4/20/2004

Unfortunately, regulatory costs - including tax compliance - hit small businesses hardest. That wasillustrated in a 2001 report by economists W. Mark Crain and Thomas D. Hopkins for the U.S. SmallBusiness Administration's Office of Advocacy. The authors found that the total costs of federal regulations

hit $843 billion in 2000, or about 8 percent of GDP.The per employee cost of federal regulations

registered $6,975 for firms with fewer than 20 employees, compared to $4,722 for all firms . Taxcompliance per employee costs came in at $1,202 for firms with fewer than 20 employees, which was almostdouble the $665 per employee cost for all businesses.

Regulations hurt small businesses which are key to the economy.

Christopher Kenton (President of Cymic) June 18 2003 FDCH Congressional TestimonyFinally, with the creation of any regulations, I think we need to explore the differences between large and small

businesses, and how regulations may cause unintended consequences. Small businesses provide much of the

energy in our economy, driving innovation, and pushing larger businesses to evolve. Small businesses like

mine also play important roles in the success of larger businesses by providing critical support services andexpertise. While I can see problems--and indeed some abuses-- among large businesses pursuing ever lower costsand higher margins, I think any policies designed to mitigate those abuses should be examined for their impact onsmall businesses. While larger companies use reduced development costs in global labor markets to improve

margins, small companies use the opportunity to innovate in ways that would otherwise require increasingly

costly investment capital. If history is any guide, the next major innovation that creates new jobs and a spark

in the economy will come from a small business, and it may be one that is able to innovate faster and moreeffectively by using the global communications infrastructure we've just created




Gordon/DunnEcon DA

Link: Regulations- Elec Prices

Reductions would shrink the economy, hamper living standards, crush consumer

confidence, and raise electricity prices.

Oil & Gas Journal, Margo Thorning, American Council for Capital Formation, Center for Policy Research.

December 13, 1999 US consumers suffer declines in wage growth, and the distribution of income worsens under CO[2]

stabilization policies. Yohe estimates that reducing emissions to 1990 levels (President Clinton's pre-Kyototarget) would reduce wage growth by 5-10%/year, and the lowest quintile of the population would see

its share of the economic "pie" shrink by about 10% (Yohe 1997). Texas A&M University Prof. JohnMoroney estimates that US living standards would fall by 15% under the Kyoto Protocol compared withthe base-case energy forecast (Moroney 1999). US households also face much higher prices for energy

under near-term stabilization. A range of estimates by various analysts concludes that prices for gasolinewould rise by anywhere from almost 30% to over 50% and that electricity prices would go up by

anywhere from 50% to over 80% (Fig. 3). The CEA predictions (a 2.7% increase in gasoline prices and 3.4%higher prices for electricity) are far below those of widely respected climate policy modelers.

Regulations would raise electricity prices, hurting consumers and crushing the job market.

Margo Thorning, Ph.D Senior VP and Chief Economist for American Council for Capital Formation. Federal News Service March 31, 2000.

Cutting back emissions requires raising energy prices in order to reduce demand. According to mostmodels, U.S. households and businesses would face sharply higher costs for gasoline and electricity.

Prices for gasoline under the Kyoto emissions target would increase by as much as 53 percent and

electricity prices would increase by 86 percent in the EIA projection (see Figure 5). When Annex I tradingis allowed, prices go up a bit less sharply, according to other policy experts. For example, the DRI estimatesshow a 29 percent price increase for gasoline and a 54 percent increase for electricity prices. Again, theAdministration's estimates of cost increases for energy (2.7 percent for gasoline and 3.4 percent for electricity) are far below those of other models, including those of EIA. Impact on Employment,Consumption, Income Distribution, and Living Standards Policies to curb emissions to meet the Kyototarget would have a significant impact on U.S. households' economic well-being and living standards, as

well as negatively affect the distribution of income. For example, estimates of job losses range from 1.3

million (Brinner/DRI) to 2.4 million (Novak/WEFA) by 2010. Consumption by U.S. households falls byover 2 percent under the Kyoto emissions target, according to DRI.

Regulations on emissions would lead to a great depression.

Thomas Gale Moore, “Global Warming: More Than Hot Air?” June 24, 1998, http://www.cato.org/dailys/6-24-98.html, accessed 2/1/03

The Clinton administration had difficulty deciding what it could accept at Kyoto. Its quandary was magnified by the projected failure of the United States to reduce emissions to 1990 levels by the year 2000. Rather thancutting them, a booming economy appears likely to boost emissions of carbon dioxide by at least 15 percentin this decade. Cutting emissions enough to prevent climate change, which might require slashing emissions

by some 60 percent, seems out of reach. Avoiding a warmer world would require a radical curbing of

emissions by all countries, which in turn would lead to a worldwide slowdown in growth, perhaps even a

depression that might make the 1930s look like Disneyland on a good day . The Kyoto agreement is futile.Even Bert Bolin, the former chairman of the United Nations' body of experts on global warming, says thatthe present plan would, if fully implemented, cut warming a quarter century from now "by less than 0.1degree C, which would not be detectable." We are plunging into a treaty that creates gigantic obligationswithout examining its costs and benefits. Congress has demanded that the Clinton administration provideestimates of the costs, but none have been forthcoming.




Gordon/DunnEcon DA

Link: Carbon Reduction- Elec Prices

Laws regulating carbon emissions drive up electricity prices

Anthony Depalma , 2007 (Journalist, New York Times, High goals for reducing emissions in New

Jersey http://www.nytimes.com/2007/06/22/nyregion/22warming.html?_r=1&sq=&pagewanted=print)

The New Jersey Legislature passed a bill yesterday that set ambitious goals for reducingemissions of greenhouse gases from power plants, refineries, motor vehicles and other sources that contribute to global warming. Businessleaders expressed concerns about the bill’s effect on energy costs and the state’scompetitiveness, but environmental advocates hailed it as pathbreaking, and Gov. Jon S. Corzine said he was ready to sign it into law. Under the new law,

greenhouse gas emissions generated by every aspect of the state’s economy, not just electricity-generating stations, will have to drop about 13 percent, to 1990 levels, by 2020.The bill further requires that emissions be capped at 80 percent of 2006’s levels by 2050. A few other states have set emissions reduction goals, but none go as far into thefuture as New Jersey’s. California, which passed a similar law earlier this year that was wi dely considered the toughest in the country, extends only to 2020. While the legislationsets reduction goals, it does not specify how they will be met. Instead, it instructs the Department of Environmental Protection to work with other state agencies, including theBoard of Public Utilities and the Department of Transportation, over the next year to recommend ways of meeting the 2020 emission reduction targets. The same agencies haveuntil June 30, 2010, to develop recommendations for reaching the reduction goals for 2050.This is a vital step i n protecting our state’s environmental resources and the health of New Jerseyans,” said Assemblyman John F. McKeon, an Essex County Democrat who was one of several sponsors of the bill. “New Jersey’s aggressive protection of itsresources will help set a national tone.” The bill also establishes a statewide greenhouse-gas monitoring program that will include pollution emitted by out-of-state power plantsthat export electricity to New Jersey. A plan to collect fees from every company that emits greenhouse gases — chiefly carbon dioxide — to support the monitoring program wasdropped after industry opposed it. The lack of specifics about how emissions would be cut has been a concern of New Jersey’s business leaders. “For a state trying to hold on to

manufacturing and high-paying jobs, we’re worried about the effect those regulations would have on electricity

rates and our competitiveness,” said Sara Bluhm, assistant vice president for energy affairs at the New Jersey Business and Industry Association. In aletter to legislators last month, the association said the bill “drives up the cost of electricity, and does so with no globalenvironmental benefit.” It also called the bill premature because other major initiatives have not been put into practice.




Gordon/DunnEcon DA

Link: Carbon Reduction- Electricity

Carbon taxes would only increase the cost of energy

Jason Fekete in 2008 (5/30, writer for the Canwest news Service, Winnipeg Free Press, “Oil-Rich Premiers Warn

About Evils Of Carbon Tax”, http://www.winnipegfreepress.com/canada/story/4179846p-4769135c.html)Premier Ed Stelmach and Saskatchewan's Brad Wall said at the western premiers' conference that a

federal carbon tax or national cap-and-trade emissions program would inflict pain on the West's

resource-based economies, which are creating jobs and wealth for the entire country.

Stelmach said a national, consumer-based carbon tax similar to one already introduced in BritishColumbia -- and being promoted by the federal Liberals -- would increase the cost of energy, reduce

Alberta's competitiveness around the world and have a negative, trickle-down effect across Canada."The western provinces are really supporting Canada's economy right now, so why would we want to movefurther and diminish our competitiveness and hurt the Canadian economy?" Stelmach said Thursday.Saskatchewan's premier echoed Stelmach's concerns, saying workers in Central Canada who've fallen onhard times -- due to battered automobile and manufacturing sectors -- are looking West for hope and jobs.Wall said a national carbon tax would "kneecap" Saskatchewan's economy, because the province

produces nine per cent of Canada's greenhouse-gas emissions, but only has three per cent of the

population.

That would mean there wouldn't be enough benefit from income-tax cuts to offset the crippling effects

of a carbon levy.

A carbon tax could increase electricity prices

Beth Gorczyca Ryan in 2007 (February 23, senior staff writer, The State Journal, “Uncertain Future”,http://www.statejournal.com/story.cfm?func=viewstory&storyid=20382)

Cal Kent, vice president for Marshall University's Center for Business and Economic Research, said

the impact depends entirely on how carbon emissions are regulated. If Congress demands that powerplants immediately begin using the best available technology to make electricity, many coal-fired plantscould shut down, he said. A carbon tax also may be detrimental to the state's economy because it might

increase coal and power prices. Regular West Virginians wouldn't feel that price increase as much asresidents in other states because state regulations control electric prices customers pay. But higher coal

prices would make the energy source less attractive, which may result in an economic downturn.




Gordon/DunnEcon DA

Link: Carbon Reduction- General

Carbon taxes hurt the economy

Spencer Reiss in 2008 (5/19, contributing editor, Wired Magazine, “Carbon Credits Were a Great Idea, But theBenefits Are Illusory”, http://www.wired.com/science/planetearth/magazine/16-06/ff_heresies_07trading)

Not so fast. Carbon offsets — and emissions-trading schemes, their industrial-scale siblings — are the

environmental version of subprime mortgages. They both started from some admirable premises. Developingcountries like China and India need to be recruited into the fight against greenhouse gases. And markets are

a better mechanism for change than command and control. But when those big ideas collide with the real

world, the result is hand-waving at best, outright scams at wo rst. Moreover, they give the illusion that

something constructive is being done.A few fun facts: All the so-called clean development mechanisms authorized by the Kyoto Protocol, designed to keep 175 million tons of CO2out of the atmosphere by 2012, will slow the rise of carbon emissions by ... 6.5 days. (That's according to Roger Pielke at the University of Colorado.) Depressed yet? Kyoto also forces companies in developed countries to pay China for destroying HFC-23 gas, even though Westernmanufacturers have been scrubbing this industrial byproduct for years without compensation. And where's the guarantee that the tree planted inBolivia to offset $10 worth of air travel, for instance, won't be chopped down long before it absorbs the requisite carbon? Nationallymanaged emissions-trading schemes could do a better job than Kyoto's we-are-the-world approach by adding legalenforcement and serious oversight. But many economists favor a simpler way: a tax on fossil fuels. A carbon tax

would eliminate three classes of parasites that have evolved to fill niches created by the global climateprotocol: cynical marketers intent on greenwashing, blinkered bureaucrats shoveling indulgences to powerful

incumbents, and deal-happy Wall Streeters looking for a shiny new billion-dollar trading toy. Back to the

drawing board, please.

http://www.wired.com/science/planetearth/magazine/16-06/ff_heresies_07trading


http://sciencepolicy.colorado.edu/prometheus/archives/climate_change/0013676_days_in_2012_effe.html



http://carbonfinance.org/docs/HFC23_q-and-a_12-18-05.pdf


http://www.washingtonpost.com/wp-dyn/content/article/2007/03/31/AR2007033101040.html










Gordon/DunnEcon DA

Link: Carbon Reduction- Poor

Carbon taxes only hurt the poor

Joanna Smith in 2008 (5/23, Ottawa Bureau, The Star, ” Carbon tax would hurt poor, NDP says”,

http://www.thestar.com/News/Canada/article/429174)Ottawa–A carbon tax would place an unfair burden on low-income Canadians , Jack Layton saidyesterday. "Those advocating a carbon tax suggest that by making the costs for certain things more

expensive, people will make different choices," Layton said. "But Canada is a cold place and heating your home really isn't a choice." The New Democratic Party leader was at a fundraiser for an Ottawa homelessshelter to talk about poverty but used the platform to criticize a Liberal climate change plan that has not even

been introduced. He also plugged his own global warming solution. Layton said the most effective way tocombat climate change would be a cap-and-trade system that penalizes industrial polluters whose emissionssurpass a certain level. He also supports a national program that would retrofit homes and buildings to makethem more energy efficient. "Instead of making it more expensive to heat your home while consuming the

same amount of energy and emitting the same amount of pollution, I want to help make it more

affordable to heat your home – by helping to make it more energy efficient and pollute less," he said.




Gordon/DunnEcon DA

Link: Carbon Reduction- Econ growth

Carbon taxes kill long-term economic growth growth

Kenneth Green, Director of the Environmental Program at the Reason Public Policy Institute, Richard McCann, partner at MCubed, an environmental policy and regulatory consulting firm, Steve Moss, frequent consultant to the

Reason Public Policy Institute on climate change, and Roy Cordato, professor of business at Campbell, 1999(RPPI Policy Study 252, February, http://www.rppi.org/3chpclim.html)

The subjective nature of opportunity costs is one of several "calculation" obstacles that one faces in

constructing a social welfare-enhancing carbon tax. Determining the costs of global warming would be anecessary, albeit impossible, first step. Architects of a carbon tax would also have to show that abating thosecosts (the benefits of the tax) are worth the costs of abatement (the losses due to the tax). This simple-sounding project involves the use of information that only omniscience could provide, since the probleminvolves intergenerational comparisons of costs and benefits. Yet opportunity costs and benefits all relate tosubjective evaluations made by specific individuals at a particular time and under particular circumstances.Thus, adding and subtracting costs and benefits across aggregated future individuals to come up with ameasurement of "net social benefit" is highly problematic. The task is further complicated when oneacknowledges that reductions in present output imply reductions in future output. As one analyst has warned,

"Losses in real output from current [carbon] taxes are irreversible." This assertion means that, before

any intergenerational cost-benefit analysis could be undertaken (assuming such an analysis could be mademeaningful), it must be determined whether or not future generations will, on net, benefit from the carbontax, even if the global warming costs are in fact reduced. The cumulative effect of the tax implies a

reduction in output for both current and future generations. The higher tax today will mean less

investment and saving to fund future production activities. It would also mean that fewer resources in

the present will be available for current research and development and for the funding of new

entrepreneurial insights. All of this would reduce future growth over what it otherwise would be and,therefore, could make future generations materially worse off.




Gordon/DunnEcon DA

Link: Carbon Reduction- Emissions

US stand alone action on carbon tax means companies move offshore, increasing emissions

Jim Manzi, American Scence, April, 30, 2008, http://www.theamericanscene.com/2008/04/30/can-the-optimum-carbon-tax-possibly-be-zero

Unless we eliminate some other major class of taxation, there will likely be non-trivial pure compliancecosts. As a starting point recognize that if you only taxed carbon, you’d create all kinds of perverse incentivesto convert some existing production to processes that create non-CO2 greenhouse gases, so you’d actuallyhave to make this a multi-substance GHG tax (I’ll continue to refer to it as a “carbon tax” since this is thecommon terminology). Second, if the US imposes such a tax and some other countries do not, some

production of GHG-sensitive goods will move offshore. In general these production facilities will

consume more energy per unit output, and therefore more GHG emissions per unit output that the US

production it was designed to displace. This will reduce the net benefits of the tax and/or require some

kind of tracking and import duty system to reduce this “leakage”.




Gordon/DunnEcon DA

Link: Carbon Reduction- Reg demands

Carbon Caps would pave the way to more reductions locking the US into other countries’

regulatory demands.

Margo Thorning (Senior VP for the American Council for Capitol Formation) June 5 2003 FDCH

Congressional Testimony Proponents of carbon emission caps for the utility sector argue that eventually the U.S. will decide to

impose carbon caps and that utilities would feel that "safer" about investing if they were told now whatthe carbon reduction target would be. The argument has several weaknesses. First, imposing carbon caps

such as those proposed by Senator Jeffords, which requires a reduction in CO2 in the range of the cutrequired by the Kyoto Protocol would be just the first step in a series of ever more severe emission

reductions (see Figure 1). This agenda was clearly understood by the architects of Kyoto in 1997. For example, Tim Wirth, the former Clinton Administration climate policy negotiator, testified in 1997 thatcarbon emissions had to be cut by up 10 times the Kyoto target (a 70 percent reduction). The UK has recentlyannounced a target of a 60 perecent reduction by 2050. Adopting a proposal such as S. 366, which requires

cuts almost as large as the Kyoto Protocol would increase the pressure on the U.S. from the EuropeanUnion to adopt the EU's next emission reduction target for the second commitment period. The EU isexpected to push for a 60 percent reduction from 1990 emission levels by the year 2050 at the COP 9

meeting later this year in Italy. Thus, even if the U.S. imposes a carbon cap like that in S.366, there can beno certainty those caps will hold in the future and that the goal posts will not be moved back in

response to pressure from the EU.




Gordon/DunnEcon DA

Link: AE Incentives- Business

Competitive markets are good: Businesses do not need tax incentives; they are already

improving their energy efficiency.Chris Edwards, Director of Tax Policy Studies, Cato Institute May 24 , 2007 Energy Efficiency: CanTax Incentives Reduce Consumption? http://www.cato.org/testimony/ct-ce05242007.html The Congressional Research Service noted that the "Reagan administration believed that the responsibilityfor commercializing conservation and alternative energy technologies rested with the private sector and thathigh oil prices ... would be ample encouragement for the development of alternative energy resources."11 Ithink Reagan got it right. Competitive markets have made a huge contribution toward America's energy

security and conservation. Businesses, for example, have powerful market incentives to reduce energy

consumption. They are relentless in cutting costs—labor costs, tax costs, production costs, fuel costs,

heating costs, cooling costs, and lighting costs. Lower costs mean higher profits. That's why businesses

strive continually to improve efficiency, including energy efficiency, particularly in today's competitive

global economy. Market forces are behind huge improvements in U.S. energy efficiency in recent

decades. The amount of energy consumed for each unit of gross domestic product has fallen dramatically

since the 1970s. Economist Gilbert Metcalf found that if U.S. energy intensity were still at the level of 1970,the nation would be consuming 187 quadrillion BTUs annually.12 Instead, the United States consumes just 98quadrillion BTUs annually, and thus we have cut our energy intensity almost in half since 1970. Some of

this improvement stemmed from the changing structure of the U.S. economy. But Metcalf calculates

that at least two-thirds of the improvements since 1970 came from rising energy efficiency. And much,

perhaps most, of that I think is due to the natural competitive processes in the economy, not

government policy. Consider the rising energy efficiency of household appliances. Federal efficiency

standards for appliances went into effect in 1990, and appliance efficiency has improved since then. Butappliance efficiency also improved markedly between the early 1970s and 1990, apparently as a marketresponse to rising electricity prices.13 The average energy consumption of U.S. refrigerators fell from 1,800kWh per year in 1974 to just 800 kWh by 1990.

http://www.cato.org/testimony/ct-ce05242007.html















Gordon/DunnEcon DA

Link: AE Incentives- Business and Investor

Incentives make the tax system more complex, hurting business and investor climates

needed for smooth economic growth

Chris Edwards, Director of Tax Policy Studies, Cato Institute May 24 , 2007 Rising Tax Complexity

http://www.cato.org/testimony/ct-ce05242007.htmlThe federal tax system has become enormously complicated in recent years. The anti-investment biasand high tax rates under the current system have encouraged the proliferation of narrow loopholes andspecial preferences. There seems to be more interest on Capitol Hill these days in creating new tax creditsthan in simplifying the tax code to provide fair and equal treatment of all taxpayers. By contrast, during the1980s there was bipartisan agreement that the tax code should be reformed to have a broad and neutral basewith low rates. One congressional leader on tax reform at the time, Richard Gephardt (D-MO), noted in1985: The main argument for tax reform, I believe, is to achieve greater efficiency in the way the tax codeworks. When Congress gets into the business of figuring out $370 billion of tax breaks a year, the HouseWays and Means Committee and the Senate Finance Committee really are put in the business of trying, atleast partially, to plan the American economy. ... I confess that I am not qualified to act as a central planner and I do not know anybody on either committee who is.2 The Reagan administration held similar views abouttax reform. The Congressional Research Service noted that the administration opposed using the tax

law to promote oil and gas development, energy conservation, or the supply of alternative fuels. Theidea was to have a more neutral and less distortionary energy tax policy, which economic theory

predicts would make energy markets work more efficiently and generate benefits to the general

economy. 3 The two parties came together and agreed on the landmark Tax Reform Act of 1986, which endedmany narrow tax breaks and reduced rates.4 Unfortunately, "central planning" through the tax code has come

back into vogue since then. The number of pages in the federal tax code, regulations, and related rules hasincreased from 40,500 in 1995 to 67,204 in 2007, an increase of two-thirds.5 The number of narrow

provisions, or loopholes, in the tax code is rising. The number of tax expenditures for energy jumped from 11to 23 between 1996 and 2006. The total number of tax expenditures increased from 121 in 1996 to 161 in2006. There are problems with these measures of tax expenditures. Some items, such as accelerateddepreciation, are counted as loopholes under the income tax. But such pro-investment provisions would not

be considered loopholes under a consumption tax. Nonetheless, the OMB's tally of tax expenditures shows

that Congress is moving away from the ideal of a neutral tax base toward micromanagement of the

economy. The rising number of narrow provisions in the tax code reduces economic efficiency. Such

provisions distort market price and profit signals, which redirects capital and labor into less

productive uses. That's why a tax code with a neutral base and low rates is preferable to one with

narrow carve-outs and high rates. The economic cost of today's Swiss cheese tax base is large. U.S. outputwould be substantially higher if the tax base were reformed and effective tax rates across industries wereequalized and reduced.7



















Gordon/DunnEcon DA

Link: AE Incentives- Investors

Federal tax incentives for energy only hurt investor opportunities by making the tax code

more complex and filled with loopholes

Chris Edwards, Director of Tax Policy Studies, Cato Institute May 24 , 2007 Pandora's Boxhttp://www.cato.org/testimony/ct-ce05242007.htmlCurrent federal tax incentives for energy and conservation are not large. Total income tax expendituresfor 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 highfederal 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 Congressmicromanages 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. Many interest groups, such as those

promoting education, housing, and scientific research, argue that their favored activities are subject toexternalities that need special tax code treatment. But, in theory, there are an endless number of externalitiesthat governments could meddle in. At the risk of promoting bad ideas, tax lobbyists could champion taxcredits for Obesity. This is a serious and growing problem that imposes negative externalities on nonobeseAmericans through the health system and elsewhere. How about a tax credit for membership costs at Gold'sGym? Neighborhood Beautification. Neat lawns and abundant greenery create positive externalities for neighborhoods. How about a tax credit for tree planting? Guns. Some analysts say that if more householdsowned guns it would reduce crime through deterrence. How about a tax credit for gun ownership because of this safety externality? I'm not advocating these tax credits, but they illustrate the slippery slope of

social engineering if Congress wanted to fix every externality through the tax code. Just this year, the

CRS finds that more than 150 bills on energy efficiency and renewable energy have been introduced,

with many proposing narrow tax breaks. I hope Congress resists the temptation to create more tax

loopholes.

Federal subsidies for energy will increase consumer cost and fail to spur economic growthLieberman in 2k7 (Ben, Senior Policy Analyst, Energy and Environment, Heritage Foundation web memo1851, the house energy bill: as anti-energy as the senate version,http://www.heritage.org/Research/EnergyandEnvironment/wm1581.cfm)Much of the extra revenues generated from the energy bill's new taxes would be used to subsidizepolitically correct alternatives like ethanol, wind, and solar energy. The bill includes both tax incentives tobuild the plants that generate alternative energy and tax credits on the energy sold. These policies havebeen tried before, with dismal results. The 30-plus-year history of federal attempts to encouragealternative energy technologies contains numerous failures--such as electric cars and solar energy--and

few, if any, successes. Congress never seems to learn that these alternatives have serious economic andtechnological shortcomings, which is why they need special treatment in the first place. The bottom linefor consumers is that federal attempts to pick winners and losers among energy sources leads to higher costs.









Gordon/DunnEcon DA

Link: Cap and trade- General

A cap on emissions would decrease the GDP, consumer spending, costing millions of jobs andover a trillion dollars in US economic growthSmith in 2k7 (Anne, PHD, Hearing for the Committee on Environment and Public Works, prepared statement , nov 8,http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=80bc79be-c338-4a76-b438-205eb79da3d5)As Figure 1 reveals, marginal costs of controls are projected to be in the range of $32 to $55 per short ton of CO2 by 2015. Although our projections show prices rising to levels that are much higher after 2015, even the 2015 pricesare “high” in an absolute sense. The 2015 projected price levels, if injected into the economy in a periodof only a few years, would be disruptive to the economy, and cause a painful transition. Our modeling effort

considers only long-run equilibrium outcomes, and does not in any way capture short-term transitional costs, that canbe much larger. It is my assessment, looking at these initial prices levels, that the first few years of a cap such asprescribed in S.2191 would be a time of substantial market turmoil that is not reflected in any of theimpact estimates that I report next. MRN-NEEM is a model that optimizes economic welfare. Thus, the change in economicwelfare that will result from a policy is its key output, and it is stated as a present value over the full time period analyzed, which is

2010-2050 in the current case. Our scenarios imply that S.2191 would decrease US average economic welfare

by 1.1% to 1.7%. This impact varies by region, and the degree of regional impact can be varied by the formulas for allocatingthe allowances. Our analyses included a representation of the allocation formulas in the draft version of S.2191 (i.e., the August“Annotated Table of Contents”). Using that set of allocations and formulas for recycling of auction revenues, we find that New York,New England states, and California would experience welfare impacts substantially less than the US average, while regions heavilyreliant on fossil fuel energy sources would face impacts somewhat greater than the US average. Figure 2 presents these economicwelfare impacts restated in terms of changes in the annual value of all goods and services consumed by the average US household.

This measure is very similar to an estimate of the change in real disposable income. Our scenarios imply that real annualspending per household would be reduced by an average of $800 to $1300 in 2015. If the percentageconsumption impacts projected for each future year were to be stated in terms of current real spendingpower (we use 2010 spending as the proxy for “current” here), these spending impacts would increase to levels of $1500 to over $2500 by the end of our modeled time period, 2050. The costs shown in Figure 2 reflect the netimpact on consumption due to more than just higher household energy bills. These costs also capture thenet effect of increased costs of all goods and services, which require energy to produce. Another commonly used metric of economic impact is gross domestic product (GDP). This declines as consumers

demand fewer goods and services, and it also declines if US businesses close down due to competitionfrom international suppliers. Offsetting these declines are increases as new investments are made in advanced energy

technologies. Our scenarios find a net reduction in 2015 GDP of 1.0% to 1.6% relative to the GDP that wouldoccur but for S.2191. The impact rises to the range of 2% to 2.5% thereafter. Figure 3 shows the associateddollar amount by which GDP would be reduced in each year, stated in real 2007 dollars. (Inflation will make the dollar amounts

larger over time.) GDP would be lower in 2015 by about $160 billion to $250 billion. Eventually, the annualloss in GDP would increase to the range of $800 billion to $1 trillion (stated in real, 2007 dollars). (To provide some

context, current annual outlays for Social Security are about $600 billion.) Naturally, with reductions in GDP comereductions in real wages and job losses. We have estimated 1.2 million to 2.3 million net job losses by2015 over our set of scenarios. By 2020, our scenarios project between 1.5 million and 3.4 million net joblosses. There is a substantial implied increase in jobs associated with “green” businesses (e.g., toproduce renewable generation technologies), but even accounting for these there is a projected net lossin jobs due to the generalized macroeconomic impacts of the Bill.




Gordon/DunnEcon DA


A cap on emissions would cause industry flight as it becomes too expensive to do business in theUSSmith in 2k7 (Anne, PHD, Hearing for the Committee on Environment and Public Works, prepared statement , nov 8,http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=80bc79be-c338-4a76-b438-205eb79da3d5)A generous allocation could increase the shareholder value of a company that is unable to increase itsprices due to competition in international markets (i.e., a “trade exposed” industry). However, it will do thisin a perverse way that policymakers need to be aware of. As the price of allowances rises, a companythat cannot raise its product prices will experience falling margins. If that company is also granted freeallocations, it can use them to offset some of the costs, and thus maintain profitability. However, this willonly be true for a range of lower allowance prices. At some allowance price point, however, the profitmargins will be negative and the company will cease production. There will be premature retirement of theexisting productive assets in our tradeexposed sector, and reductions in the economic activitiesassociated with those sectors. Given that the cause of the closures is international competition, these lostUS manufacturing activities would be replaced by foreign manufacturing: global emissions will not fall butthe US economy will still pay the price.

CO2 cap uniquely hurts the entire economy-all sectors of the economy rely on fossil fuels tooperateSmith in 2k7 (Anne, PHD, Hearing for the Committee on Environment and Public Works, prepared statement , nov 8,http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=80bc79be-c338-4a76-b438-205eb79da3d5)Prices in all previous and existing cap-and-trade programs have exhibited substantial volatility, and thiscan be expected of GHGs as well.9 Price volatility, however, is likely to have much greater generalizedeconomic impacts with a CO2 cap than for caps on SO2 and NOx. CO2 is a chemical that is an essentialproduct during the extraction of energy from any fossil fuel. As long as fossil fuels are a key element of

our energy system (which they are now, and will remain for many years even under very stringent caps),any change in the price placed on GHG emissions will alter the cost of doing business throughout theeconomy. This is because all parts of the economy require use of energy to one degree or another.

A cap and trade policy would deal a devastating blow to the manufacturing sector of the USeconomy, hurting overall growthLieberman in 2k7 (Ben, Senior Policy Analyst, Energy and Environment, web memo #1723, beware of cap and trade climate bills, http://www.heritage.org/Research/Economy/wm1723.cfm)By limiting the supply of fossil fuels, S. 2191 would raise the cost of energy. For consumers, cap andtrade means more expensive gasoline and electricity as well as net job losses in energy-dependentsectors. Senator Lieberman himself concedes costs into the hundreds of billions of dollars. And as theCongressional Budget Office has noted, such energy cost increases act as a regressive tax on thepoor.[8] Lost Jobs The net job losses from S. 2191 are estimated by Charles River Associates to be 1.2million to 2.3 million by 2015.[9] Some of these jobs will be lost for good, due to the impact of higher energy costs on economic activity. Others, chiefly in the manufacturing sector, will be sent overseas. Inthe very likely event that S. 2191 significantly raises domestic manufacturing costs and that developingnations refuse to impose similar restrictions, the American economy could experience a substantialoutsourcing of manufacturing jobs to those nations with lower energy costs.

http://www.heritage.org/Research/Economy/wm1723.cfm

http://www.heritage.org/Research/Economy/wm1723.cfm#_ftn8










Gordon/DunnEcon DA


A cap on CO2 ensures economic downturn because of increased costs on the consumer-thisdisproportionately affects the poor

Thorning in 2k7 (Margo, PHD, senior vice president and chief economist American council for capitalformation, Testimony before the committee on environment and public works, the impact of america’sclimate security act of 2007 on the us economy and global greenhouse gas emissions,http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=132d40b2-ff1d-4dcc-a58d-022c80aa824d)Regardless of how the allowances were distributed (unless they were all auctioned and the proceedsrebated to low income households), most of the cost of meeting a cap on CO2 emissions would be borneby consumers, who would face persistently higher prices for products such as electricity and gasoline.Those price increases would be regressive in that poorer households would bear a larger burden relativeto their income than wealthier households would. In addition, workers and investors in parts of the energysector—such as the coal industry—and in various energy-intensive industries would be likely toexperience losses as the economy adjusted to the emission cap and production of those industries’ goodsdeclined. (Congressional Budge Office, Economic and Budget Issue Brief, April 25, 2007.) In contrast,carbon tax revenues could be rebated to low income individuals to offset the impact of higher energyprices caused by the tax on fossil fuels.




Gordon/DunnEcon DA

Link: Cap and Trade- Biz Con

Cap and trade regulations are bad for small businesses and the US economy overall

Ryan Balis in 2005 (June 21, National Center for Public Policy Research, “Cap-and-Trade is More Pain ThanGain”, http://www.nationalcenter.org/PRClimateChange605.html )

Efforts to encourage corporations to curb "greenhouse gas" emissions through a mandatory "cap-and-

trade" scheme imposes a hidden tax on small businesses and amounts to a Kyoto-style rationing of

energy use, says the National Center for Public Policy Research.

Early crediting legislation proposed by Senator Jeff Bingaman to encourage U.S. utility companies to slowthe intensity of "greenhouse emissions" by 2.4 percent starting in 2010 would hurt small business whileaiding a select few corporations.However, small businesses and family farms lack the political contacts and financial resources to

negotiate credit deals with the mammoth bureaucracy of regulators, inspectors and lawyers needed to

administer the regulations. As a result, large utilities would likely get the biggest share of early credits

while small businesses would be saddled with a disproportionate share of the regulatory burden.

"Forcing a Kyoto-style energy rationing on the American people would result in more pain than gain,"

said Amy Ridenour, president of the National Center for Public Policy Research. "The economic costs -

estimated at $331 billion between 2010 and 2025 by the Department of Energy - are staggering and willonly increase as companies make the cheapest cuts now and develop clever attempts to game the

system."

Ridenour also warned that once a rationing regime is in place, special interests will be encouraged to push for steeper energy caps. "As more money can be made from the limits and high energy prices, well placed

special-interest groups and corporations will pressure Congress to lower the caps further, thus limiting

energy consumption and leading to higher energy prices for consumers."

Cap and trade regulations would be detrimental to the US economyEnergy Resource in 2007 (September 18, BNET, “Economist Says Cap-and-Trade System Would Hurt U.S.Economy”, http://findarticles.com/p/articles/mi_m5CNK/is_2007_Sept_18/ai_n25012034)

Economist Arthur Laffer contends in a new report released today that a cap-and-trade scheme for

controlling greenhouse gas emissions (GHGs) would impose "significant" economic costs on the U.S.

economy and is not a sound policy response to current concerns about global warming.

Laffer's analysis, "The Adverse Economic Impacts of Cap-and-Trade," concludes that cap-and-trade

may reduce U.S. economic growth by 4.2 percent -- even to achieve the comparatively modest GHG

reductions of the Kyoto Protocol (GHG emissions 7 percent below 1990 levels by 2008-2012).Laffer also says the cost to reach the ultimate goal of some GHG control proponents (such as reducing GHGemissions to 80 percent below 1990 levels by 2050) would be "significantly greater." Moreover, theseestimates may underestimate the actual cost as they assume the government would auction the rights to emit

greenhouse gases -- as opposed to simply giving them away, which is the approach often discussed in theCongress, Laffer added.

http://www.nationalcenter.org/PRClimateChange605.html

http://findarticles.com/p/articles/mi_m5CNK


http://www.nationalcenter.org/PRClimateChange605.html





Gordon/DunnEcon DA

Link: Cap and Trade- Biz Con

Cap and trade policies will hurt business confidence, consumer spending, and short-terminvestment. This would tank economic growthLieberman in 2k7 (Ben, Senior Policy Analyst, Energy and Environment, web memo #1723, beware of cap and trade climate bills, http://www.heritage.org/Research/Economy/wm1723.cfm)America's Climate Security Act of 2007 (S. 2191), sponsored by Senators Joseph Lieberman (I-CT) and

John Warner (R-VA), is the latest and fastest-moving "cap and trade" bill introduced in Congress this year. All such climate

change measures warrant careful scrutiny, as they would likely increase energy costs and do considerably

more economic harm than environmental good. A Costly Proposition These measures would set a limit, or cap,on carbon dioxide emissions from fossil fuel use. The effect of such a cap would be to impose rationing of

coal, oil, and natural gas on the American economy. Each covered utility, oil company, and manufacturing facility would begiven allowances based on past emissions or some other formula. Those companies that emit less carbon dioxide than permitted by

their allowances could sell the excess to those that do not; this is the trade part of cap and trade. Over time, the cap wouldbe ratcheted down, requiring greater cuts in emissions. Each proposal differs from the others on specifics:the stringency of the cap, the number and type of companies covered, the ground rules for allocating and trading allowances, andother details. S. 2191 is, in several respects, more stringent than other cap and trade bills. Its requirement that emissions decline to15 percent below 2005 levels by 2020--even in the face of a growing population and rising energy demand--sets a very difficult

target.[1] Measures like S. 2191 that target carbon emissions aggressively will be costlier than those that givethe economy more time to adjust to the energy constraints. For example, over the long term, energy

companies may find ways to capture and store carbon dioxide emissions underground, rather than emit them into the

air, or switch to lower-emitting alternative energy sources as they are developed. But most experts see these advances astaking decades--much longer than the initial targets in S. 2191 allow. In fact, these targets may actuallycomplicate the development of longer-term innovations, as they will divert resources to near-term fixes.Carbon dioxide is the unavoidable byproduct of fossil fuel combustion, which currently provides 85percent of America's energy. Thus, it will be very costly to move away from this preferred energy source,and especially doing so as expeditiously as S. 2191 requires. A study by Charles River Associates puts the cost (interms of reduced household spending per year) of S. 2191 at $800 to $1,300 per household by 2015, risingto $1,500 to $2,500 by 2050.[2] Electricity prices could jump by 36 to 65 percent by 2015 and 80 to 125percent by 2050.[3] No analysis has been done on the impact of S. 2191 on gasoline prices, but an EnvironmentalProtection Agency study of a less stringent cap and trade bill estimates impacts of 26 cents per gallon by2030 and 68 cents by 2050.[4] Even these cost projections may underestimate the true costs, becausethey assume no unpleasant surprises. But the world has already witnessed many unpleasant surprises with Europe's

ongoing efforts to impose a cap and trade program under the Kyoto Protocol, the international climate treaty to reduce greenhousegas emissions. In fact, European efforts have racked up significant costs while failing to reduce emissions.[5] Nearly everyEuropean country participating has higher emissions today than when the treaty was first signed in 1997. Further, despite ongoingcriticism of the United States from Kyoto parties for failing to ratify the treaty, emissions in many of these nations are actually risingfaster than in the United States. The European experience also shows the problem of cap and trade fraud.[6] None other thanEnron's Ken Lay was a strong supporter of carbon cap and trade when the idea was first floated in the 1990s, saying that it could"do more to promote Enron's business than almost any other regulatory initiative." These carbon allowances that will be bought andsold have a value estimated at $50 billion to $300 billion annually, and the trade in them would be a huge new business.[7] Enron

may be gone, but others ready to take advantage of cap and trade--often at public expense--are not. The actual cost of S.2191 is difficult to estimate--as America has never had to deal with such severe energy constraints--butwould likely be very high.


http://www.heritage.org/Research/EnergyandEnvironment/bg2075.cfm



































Gordon/DunnEcon DA

Link: CAFE- General

CAFE program hurt the U.S economy

NCPPR The National Center for Public Policy Research in 2005 (think tank and policy institute coveringCongress, insider political information, global warming and the environment, Regulations Grill Small Business,

Online http://www.nationalcenter.org/TPRegulations.html )Since 1978 auto manufacturers have been required, through the Corporate Average Fuel Economy

(CAFE) program, to maintain minimum fuel economy averages. In 1978 the requirement was 18 MPG;today it is 27.5 MPG. Some in Congress seek an increase to 40 MPG or more. But both current and

proposed CAFE regulations have dire consequences: * CAFE regulations kill Americans. Passengers

in small cars die at twice the rate of those in large cars when accidents occur. Studies demonstrate thatregulations mandating a 27.5 MPG standard have caused a 14-27% fatality increase. If the standard becomes40 MPG, fatalities will increase by 30-60%: 75,000-149,000 people will die needlessly during the firstdecade following implementation. * CAFE regulations kill jobs. The standard of 27.5 MPG has cost over 200,000 American jobs (many transferred to Japan). The Federal Trade Commission estimates that raising thestandard from 27.5 MPG would result in a loss of 100,200 more U.S. jobs; higher standards still more. *CAFE regulations raise prices. At 27.5 MPG there is a "shadow tax" of $1,026 per MPG on Ford

automobiles and $657 per MPG for GM cars. At a 28.5 MPG standard, the shadow tax rises

dramatically to $2050 per MPG on Ford cars and $1962 on GM cars . * CAFE regulations hurt families,the elderly, and the disabled. Mile-per-gallon standards dramatically raise the cost of large cars needed

by families and by those who have difficulty getting in and out of small vehicles. Because of CAFEstandards, for example, the price of Ford's large Crown Victoria sedan rose at a 53% higher rate than Ford'ssmall Escort sedan. * CAFE regulations hurt the U.S. economy. The Federal Trade Commission says

CAFE costs the U.S. economy $4 for every gallon of gasoline saved. * CAFE regulations fail to deliver promised benefits. Proponents of mileage standards insist that regulations reduce oil consumptionsignificantly. According to Energy Secretary James Watkins, even if standards were raised to 40 MPG,domestic oil consumption would be reduced by only 3%.

http://www.nationalcenter.org/TPRegulations.html






Gordon/DunnEcon DA

Link: CAFE- Auto Industry

Car Industries will require $47 billion to comply with CAFE, making vehicles too expensive

for consumers, leaving no way for the auto manufacturers with no way to recuperate the

money.

Motor Authority 25 April 2008 (New U.S. CAFÉ rules means more expensive cars, fewer saleshttp://www.motorauthority.com/news/industry/new-us-cafe-rules-mean-more-expensive-cars-fewer-sales/)

The U.S. Secretary of Transportation couched the new CAFE plan as saving billions of gallons of fuel,

but the industry sees it as one that will costs billions in research, development and manufacturing costs

over the next five years. Secretary of Transportation Mary Peters noted in the announcement of the new regulations that theDepartment of Transportation (DOT) estimates a savings of 55 billion gallons of fuel and cut 521 million metric tons of carbon dioxideemissions. Automakers will foot the bill - though it will certainly be passed on to the consumer - for the savings, however . Over the

next five years, at least $47 billion will be spent to comply with the CAFE standard, the vast majority

being spent on pickup trucks - $31 billion. General Motors will be hardest hit - despite its Saturn Aura and

Chevrolet Malibu hybrids - shouldering $17 billion worth of the burden, with Ford and Chrysler next at $7 billion and

$6.3 billion, respectively, reports The Detroit News. Still, all of the United States’ major auto makers are confident

they can achieve the CAFE requirements, but also caution that it will result in more expensive vehicles.

Increased prices will almost certainly mean fewer sales, as some consumers will simply be priced out of

the market, likely resorting to used car purchases instead. The lower volume of sales will make it evenharder to recuperate the massive investment, and the cycle could potentially become a vicious one. The

NHTSA thinks sales will fall by almost 150,000 units in model year 2011, and as many as 550,000 fewer sales by 2015 - a decrease of nearly 5% based on current sales figures.

Higher CAFE standards hurt automakers, and the low classes of America.

Deneen Borelli July 2007(Initiative of The National Center for Public Policy Research, a national public policygroup based in Washington, D.C; CAFE Tab too Expensive for America)http://www.nationalcenter.org/P21NVBorelliCAFE90707.html

Proposed legislation to increase Corporate Average Fuel Economy (CAFE) standards - the federally-mandated fuel

efficiency rules for cars, light trucks and SUVs - will likely cause more harm to the American people than good.

Our nation's dependency on foreign oil and reducing so-called "greenhouse gases" are the stated motivationfor empowering 535 people on Capitol Hill and the President with the ability to set arbitrary demands on the automotive industry. Itcomes, however, at the expense of consumer choice, safety and economic stability - especially for poor

households and the already ailing domestic auto industry. Legislation that was recently passed in the Senate and is now under consideration in the House of Representatives would increase CAFE standards from the current standard of 27 miles per gallon for carsand 22 mpg for light trucks to 35 miles per gallon for both by 2020. Automakers face the challenge of meeting these

steep demands without pricing themselves out of the market competitively or going bankrupt due to

the estimated $114 billion necessary to retool assembly lines. The tradeoff - higher gas mileage for

increased costs - is not a fair trade because consumers as well as workers and retirees in the auto

industry and related businesses will absorb the brunt of increased costs. First of all, increased CAFE standardsadversely affect what vehicles people can buy. Automakers will most likely reduce vehicle weights to meet the new mandates, makingthem lighter and smaller. Families with small children who have a preference or need for larger vehicles will be among the first victims.Additionally, increased CAFE standards will make driving more dangerous. Lighter and smaller vehicles

increase the severity of injuries and decrease survival rates in crashes. According to a 2002 study by the National Academy of Sciences, current CAFE standards cause an estimated 1,300 to 2,600 additional accident-related deaths per year.Low-income families stand to suffer the greatest harm from increased CAFE mandates. These families may be unable to afford

a new vehicle because of CAFE's added production costs. For that reason, low-income families may forego a new

vehicle in favor of older, unreliable vehicles that may already require constant repairs. If they get something new, it would inevitably beamong the cheapest and therefore probably the smallest and most dangerous to drive. Unfortunately, it seems our elected officials arenot concerned about the consequences of their actions. Not surprisingly, details of the potential harm revised CAFE standards couldimpose have, thus far, not slowed Big Government's aggressive political pursuit of inflexible fuel economy standards. This

insensitivity to the plight of low-income families in particular is found in another scheme designed to

address the theory of man-made global warming. The idea, which was endorsed by the corporate

criminals at Enron, would limit carbon dioxide through an international "cap and trade" emissions

program. According to a April 25, 2007 critique of the policy by the nonpartisan Congressional Budget Office: "[M]ost of the

cost of meeting a cap on [carbon dioxide] emissions would be borne by consumers, who would face

persistently higher prices for products such as electricity and gasoline. Those price increases would be

regressive in that poorer households would bear a larger burden relative to their income than wealthier

households would." In a free market, any manufacturer or service provider should have the flexibility to give customers what

http://www.motorauthority.com/news/industry/new-us-cafe-rules-mean-more-expensive-cars-fewer-sales/















Gordon/DunnEcon DA

they want - choice, quality, affordability and convenience. And the market works, as manufacturers have already produced a number of smaller, more fuel-efficient vehicles for those consumers who prefer them. Big Government intervention, especially in the instance of

fuel economy standards, is harmful to both the consumer and the auto industry. It puts safety and

preferences in the backseat. Drivers should beware and proceed with caution - an increased CAFE standard would move thegovernment into the driver's seat, leaving the American people with no control and few alternatives.




Gordon/DunnEcon DA

Link: OTEC- Investor Con

Investors unwilling to invest in OTEC because it is not proven reliableDr. Al Binger, 2004. (Visiting Professor, Saga University Institute of Ocean Energy, Saga,

Japan. He is Director of the University of the West Indies Centre for Environment and

Development, Kingston, Jamaica. SIDS, “Potential and Future Prospects for OceanThermal Energy Conversion (OTEC) In Small Islands Developing States”

http://www.sidsnet.org/docshare/energy/20040428105917_OTEC_UN.pdf)However, for the other two components, there is no evidence of successful operations atcommercial scale, at present. Consequently, there is a valid question of technical viability of the entiresystem. Addressing this will require the commissioning of a commercial scale facility; the soon to be

commissioned 1 MW capacity OTEC barge10 will provide critical confirmation of technical viability at close to commercial scale. The 1 MW facility will,

however, not address economic viability, financing mechanism, or env ironmental impact of shore based OTEC plants.The first issue of economic viability arises from the high level of initial investment. This is themost easily understood in the context of energy efficient lighting in poor households. It is well known that poor households pay the highest cost of electricity per unit of servicereceived, be it cooling, heating, lighting or refrigeration. This is a result of limited income, which serves as an obstacle to the acquisition of energy efficient and use app liances. Let usconsider the case of light bulbs. It is generally accepted that a 70-75 watt incandescent light bulb will give as much lighting as a 20-25 watt compact fluorescent bulb, while using lessthan a third of the electricity, and also has a much longer life time, and use of the compact fluorescent bulb would bring about significant saving on electricity bills, making it a much better bulb to purchase, despite being more costly. However, with very limited disposable income, the poor household has no option but to purchase the cheaper bulb and pay thehigher electricity bill.An Innovative electric company, recognizing the economic benefits of end user efficiency develops a partnership with the household, and finances the cost of the efficient light bulb,and recovers the cost in the monthly utility bill. In that way, both the utility and the household realize economic benefits from the reduction in the amount of energy that is wasted bythe bulb. Overcoming the obstacle of high initial investment required for an OTEC plant will require innovative financing partnerships similar to that used to finance efficient lighting.Such partnerships are tried by the US-based OTEC Company Sea Solar Power.

The second challenge is the relatively high degree of variability of overall initial cost estimation

compared to petroleum-based systems. While a conventional energy developer can say very early whatwill be the cost per megawatt of diesel or fuel oil power plant at any location in SIDS with a significantdegree of certainty, this is not yet possible with OTEC. This does not, howe ver, represent a technical weakness, but rather a reflection of the s ite-specific nature of the most renewable energy technologies. As discussed earlier, the environmental considerations are very important in SIDS and will become e ven more so in thfuture because future survival is directly linked to environmental preservation. While the OTEC system is potentially the most environmentally friendly developmenttechnology, there in no experience of the environmental impact assessment of the system.The primary concern raised by environmentalist and also the Science and Technology Advisory Panel of the United Nations Environmental Programme (UNEP) in the January 2000,on the assessment of OTEC technology, is the management of the outflow water streams. As discussed earlier, rather than being a problem, the cold water outflows from the OTEC plant show potential for new commercial ventures like Mari-culture and horticulture, as demonstrated in Hawaii, USA, the extensive coastal-based fisheries and a potentially uniquemeans to protect critical ecosystems from the negative consequences of increased ocean temperatures.However, this potential will most likely be realized in the medium to long-term, after OTEC has proven its commercial scale as an energy system. There is need to show that thesystem can be used without the negative environmental impact. Based on deep-water simulation research at the IOES, the wa y to prevent negative environmental impacts will be todesign the pipeline system that will return the outflow from the OTEC plant to the appropriate ocean depth that coincided with the temperature of the combined water outlet from the plant. For example, in the case of a 10-megawatt plant using the Uehara cycle, such a plant would have an output of about 29 tons per second of water at about 23 degrees Celsius,and about 30 tons per second at about 10 degrees Celsius. The combined outflow would be about 59 tons and at a

temperature of about 16 degrees Celsius. Based on its temperature and depth profile shown in the island of Jamaica in Figure.7, the return pipe would be placed at a depth of between350 and 400 meters. However, this has to be demonstrated before OTEC will be given a positive Environmental Impact Assessment. While there is great interest at the policy leveland among the sus tainable development

community in SIDS regarding OTEC, there is not the same degree of interest by the leadership of electricutilities. The leadership of the electric utilities are highly sceptical about endorsing new technologies, and unlikely toendorse any technology until it has been proven and they can get hard performance reliabilityand cost data. If the new energy technology is to be considered as the base load capacity, then theleadership become even more demanding about the data . The best way to convince this critical segment of the SIDS professionals is by havingan OTEC plant on commercial scale, operating under conditions similar those in their country.




Gordon/DunnEcon DA

Link: OTEC- Investor Con

Investor confidence is so low the government is being forced to step in

Alternative Energy Staff in 2006 (Renewable Ocean Energy: Tides, Currents, and Waves; Alternative Energy

News; http://www.alternative-energy-news.info/renewable-ocean-energy-tides-currents-and-waves)

Private developers have borne the costs of bringing the ocean energy technology forward for the

past thirty years, but they need government support. Government funding will also give confidence

to private investors and help attract private capital.

Developers will refuse to invest until new government plants are builtAlicia Altagracia Aponte in 2005(Ocean Thermal Energy Conversion:Possible Applications in Circum Pacific Island Nations; Powering the Rim; http://www.poweringtherim.org/casestudies/alicia.html)For the near term, OTEC should focus its efforts on progressing past the experimental testing phase by developing

small pilot sized commercial plants in order to show the technologies economic feasibility. As a UN DevelopmentProgram study determined, "the confidence to build commercial-sized OTEC plants will not develop until

investors have the demonstration of a 5-megawatt pilot plant operating for 5 years. This demonstration will

require a significant investment with little potential near-term return" (iii). As such, these pilot projects should be constructed in those isolated niche markets, such as the Circum Pacific island nations, that have highconventional energy costs. This, in addition to the financial gain from its byproducts, will enable OTEC to becomemore financially competitive and may enable it to penetrate the broader power market.




Gordon/DunnEcon DA

I/L: Regulations Spillover

Even small plans targeted at one industry can spillover and effect others

Thomas G. Marx (manager in the Public Policy Center for the Global Climate Issue for General Motors Corp) July

1999 The Role of Technology In Responding to Concerns About Global Climate Change, www.accf.org/marx.pdf ,accessed 8/27/02While manufacturing’s dominance of total energy use suggests a reason to focus on that subsector of industry,

it is important to note that energy and technology policies directed at one area could have a spillover effect

that negatively affects other lower energy-consuming subsectors. While some industries may not consume asmuch energy or emit as much carbon, policies affecting energy prices and availability may have a disproportionatelylarge effect on them. Some of these smaller energy users can be significant players in economic terms. Thus, well-

meaning energy policies with potentially modest economic impacts in one industrial area could have

unintended devastating economic impacts in another. The potential for crosssectoral problems and the difficultyin easily identifying them is inherent in the complexity of the industrial sector

http://www.accf.org/marx.pdf

http://www.accf.org/marx.pdf




Gordon/DunnEcon DA

I/L: High Electricity Prices Hurt Econ

America is not ready to handle high energy prices.Energy Tech Stocks ’08 (EnergyTechStocks.com, U.S power industry warns high electricity prices could

plague America for years to come. http://energytechstocks.com/wp/?p=1396 )

America’s federal power agency has warned that high power prices could plague the nation “for yearsto come.”

Citing high commodity prices for natural gas and coal, which were the fuel sources for 18% and 50%,

respectively, of U.S. electricity generation in 2007, the Federal Energy Regulatory Commission (FERC)

said this “may be the beginning of significantly higher power prices that will last for years to come.”

The agency didn’t say exactly how high it thinks prices could rise, but EnergyTechStocks.com has learnedthat one major U.S. electric utility is now assuming in its internal forecasts that power prices in its

region will double within five years or less. The FERC assessment, rendered on June 19, is particularlyworrisome since sky-high electric rates would appear to represent an even greater threat to the U.S. economythan high gasoline prices. That’s because electricity is an even more pervasive aspect of American

economic life than gasoline. Indeed, after the oil shocks of the 1970s, all American business essentially became electrified in order to improve efficiency, meet new environmental regulations, and minimizeexposure to another oil shock.

With U.S. presidential candidate John McCain now leading the charge for cars and trucks that run onelectricity, the prospect of sharply higher electric rates for years to come could put a dent in this

promising alternative approach to personal transportation.

In discussing the future of power on June 19, FERC chairman Joseph Kelliher outlined what might be

described as a “no-win” situation that the U.S. finds itself in . He reportedly said, “The United States

cannot simultaneously make the massive investments necessary to assure our electricity supply, make

additional large investments to confront climate change, and lower electricity prices. Doing so wouldlikely result in failure.”For a U.S. energy official to make such a dour public statement is extraordinary – and a clear warning toinvestors that, as much as inflationary pressures are starting to hit the U.S. economy, worse lies ahead.

High energy prices cause a crisis in Massachusetts.

Gavin in ’08 (Global Staff Writer, The Boston Globe, Soaring Electricity Prices Leave State’s manufacturersstruggling.http://www.boston.com/business/articles/2008/01/18/soaring_electricity_prices_leave_states_manufacturers_st

ruggling/)State lawmakers will soon finalize energy legislation that aims to promote efficiency and alternatives to fossilfuels. But as legislators iron out differences between recently passed House and Senate bills, businesses say

they need to pay closer attention to what many firms consider the real energy crisis: spiraling

electricity costs.

more stories like this

Massachusetts manufacturers pay the highest electricity prices in the continental United States, and

the gap between their costs and those of competitors in other states is widening, according to the EnergyDepartment. In 2006, the most recent annual data available, industrial users in Massachusetts paid more

than double the average US rate, compared to 60 percent more in 2005. Only Hawaii has higher industrial rates.As a result, Massachusetts manufacturers are struggling to stay in business. Electricity costs have

contributed to the shutdown of several plants with the loss of an estimated 2,000 jobs, according to

Associated Industries of Massachusetts, the state's largest employer group.

Among them: a 200-year-old paper mill in Lee. The mill's owner, Schweitzer-Mauduit International Inc. of Alpharetta, Ga., said electricity played a role in the decision to shutter the plant later this year and lay off about 160 workers. Power costs at the Lee mill jumped nearly 30 percent, or $2.8 million, over the past twoyears, with electricity accounting for 17 percent of manufacturing costs, said Bill Foust, vice president of administration.

http://energytechstocks.com/wp/?p=1396

http://www.boston.com/business/articles/2008/01/18/soaring_electricity_prices_leave_states_manufacturers_struggling/


http://energytechstocks.com/wp/?p=1396






Gordon/DunnEcon DA

I/L: Small Business key

Small businesses are key to the US economy

Derek Leebaert in 2006 (January, professor of government at Georgetown University, eJournal USA,“How Small Businesses Contribute to U.S. Economic Expansion”,

http://usinfo.state.gov/journals/ites/0106/ijee/leebaert.htm)Small and large businesses are not distinct segments of the U.S. economy: They buy each other'sproducts and build on each other's innovations to generate economic growth. The smaller businesses are frequently younger ones created by self-employed entrepreneurs. Suchactivity contributes further to economic growth by challenging traditional technologies andpractices. In turn, economic growth promotes entrepreneurial activity by providing marketsand financing for men and women bold enough to venture alone into the stormy seas of aconsistently expanding economy. Because of this widespread drive to start and build businesses, the UnitedStates benefits more from such a growth cycle than do other industrial economies. Tovarying degrees, entrepreneurship is apparent in every American neighborhood, and it is byno means limited to the high technology that is often chronicled by the press. Nor must asmall business necessarily be a new one—but to sustain it requires the agility of anentrepreneur merely to avoid falling prey to the advantages of cash, reach, and buyingpower enjoyed by big corporations. A small business is not defined solely by revenue or number of employees,

let alone by how long it has been open, but by its function in the economy. For example, a "small" manufacturing companyis one with fewer than 500 employees, whereas a "small" wholesale trading company may have no more than 100employees. Because of the different costs to the owner of his or her materials, a carpet cleaning business, for instance, isconsidered "small" if its annual revenue is less than $4 million, while a "small" construction company can have revenue assizable as $30 million. Such precision is required by statisticians in order to align these businesses with governmentprograms designed to provide loans, training, and tax relief to these sources of growth. Indeed, there are "micro-businesses" that have annual revenues under $1 million—relatively insignificant in the business world, one might think, until

we consider that such microenterprises represent as much as 15 percent of the U.S. economy. At the other extremeof our definition, we can find those "small manufacturers" with up to 500 workers, thoughmost are still family-owned—and include about 330,000 separate companies employingroughly 7 million workers.

Small businesses are the driving force behind the US economy

US Senate Committee in 2007 (April 26, “Kerry, Snowe Honor Entrepreneurs During NationalSmall Business Week”, http://sbc.senate.gov/press/record.cfm?id=273188)

"Small business owners are the driving force behind new innovations, technologies andideas," said Kerry. "They represent 99 percent of all employers and create more than two-thirds of all new jobs in the United States. Today we honor their hard work,accomplishments, contributions to our economy, and role in keeping America competitive.""Small businesses are the driving force behind our nation's economic growth, creatingnearly three-quarters of all net new jobs and employing nearly 51 percent of the privatesector workforce," said Senator Snowe. "While National Small Business Week provides uswith a perfect opportunity to recognize the immense value small businesses bring to thisnation's economy, it is essential that we in Congress use all 52 weeks of the year to supportsmall businesses' ability to thrive and create more jobs."

http://usinfo.state.gov/journals/ites/0106/ijee/leebaert.htm

http://usinfo.state.gov/journals/ites/0106/ijee/leebaert.htm




Gordon/DunnEcon DA


Small businesses are vital to the United States economy due to employment and

manufacturing.

Swindoll in ’04 (staff writer, Ink.com- Entrepreneur News, Small Business Vital to Growth says Study,http://www.inc.com/news/articles/200404/smallbiz.html)When it comes to job growth, small businesses are a vital part of the U.S. economy.

According to a recent study by the Yankee Group, small businesses hire 54% of all U.S. workers. Of

more than 120 million working people in America, 66 million are employed by small and medium

businesses-companies with less than 1,000 employees. Most of these companies are very small, the studyfound. Of the 5.6 million small businesses operating in the U.S., 89% have less than 20 employees. Of theremaining 11%, 9% employ less than 99 people, and just 2% employ between 100 and 1000. Still, this

makes the nearly 600,000 small to medium businesses formed each year an important consideration for

the many U.S. residents currently in search of work. The Yankee Group study showed that

construction, manufacturing and healthcare were the industry sectors currently experiencing the most

growth. And interestingly enough, the study also showed that small and medium businesses make up

99.8% of all employer firms in the United States. Small businesses aren't always a stable source of

employment, however. Though half of all small businesses formed survive over four years, forming anentrepreneurial small business can take a great deal of risk, which means smaller companies are more likelyto fail than larger, more traditional ones. There are almost as many small businesses are dissolved each year as there are formed. The Information Technology Solution Providers Alliance (ITSPA) says high technologycosts may be a factor in the failure rate of small businesses. The ITSPA says that getting a return on their technology investments is often decisive in whether or not a new, small company is successful. "Small andmedium business decision makers have learned they must be very economical when they invest intechnology to run their businesses," said Mike Lauricella, program manager of the Yankee Group's Small andMedium Business Strategies Advisory Service, in a recent press release.

Small businesses dominate economic growth for reasons.

U.S Department of Commerce in ’07 (U.S Department of Commerce, America’s Small Business

Development Center Network,Small business is the engine of economic growth. There are currently over 22 million small businesses

in America - and the number is growing rapidly, with over 800,000 started last year, alone. Small

business accounts for 99% of all U.S. businesses. It employs 53% of the private work force and

contributes over half of the nation's private gross domestic product. Small firms:Represent 99.7 percent of all employer firms. Employ about half of all private sector employees.Pay more than 45 percent of total U.S. private payroll. Have generated 60 to 80 percent of net new jobs

annually over the last decade. Create more than half of non-farm private gross domestic product (GDP).Supplied 22.8 percent of the total value of federal prime contracts in FY 2006. Hire 40 percent of high tech

workers (such as scientists, engineers, and computer workers). Are 52 percent home-based and 2 percentfranchises. Made up 97 percent of all identified exporters and produced 28.6 percent of the known exportvalue in FY 2004. Small innovative firms produce 13 times more patents per employee than large

patenting firms, and their patents are twice as likely as large firm patents to be among the one percent

most cited. In 2006, there were 26.8 million businesses in the United States, according to Office of Advocacy estimates. Census data show that there were 5.9 million firms with employees and 19.5 millionwithout employees in 2004. Applying the sole proprietorship growth rates to the non-employer figures andsimilar Department of Labor growth rates to the employer figures produces the 26.8 million figure. Smallfirms with fewer than 500 employees represent 99.9 percent of the 26.8 million businesses (including bothemployers and non-employers), as the most recent data show there were more than 17,000 large businesses in2004.




Gordon/DunnEcon DA


Small businesses key to economy.

NEWSDAY, February 5, 2002, p. A32. (MHDRG/D355)But nowhere in his almost hour-long speech did he mention the single most important factor in helping to pull

our nation out of recession - small businesses. They are the engine of this economy. Small businesses accountfor half of the gross domestic product. They create more than three-quarters of all new jobs. And they usually

lead the country out of difficult economic times. Many of the world's largest businesses - including Disney,

Hewlett-Packard and Microsoft - all got their start as small businesses in the midst of economic recessions.

Small businesses did it before and they can do it again - if given a little help from their friends.

The economy hinges on small businesses

JOURNAL OF SMALL & EMERGING BUSINESS LAW, 2002 (Fall, p. 607-8) (PDOCSS612)In recognition of the contribution of small businesses to the United States economy, President Bush recentlyannounced the commemoration of Small Business Week, commencing May 5, 2002. This acknowledgment by theWhite House is well-deserved. Small businesses are a driving force in the U.S. economy, employing roughly 68

million of the private sector's 118 million person workforce. deed, in the 1990s, small businesses generated

more than 75% of the nation's job growth and accounted for 90% of the new business entries. The fate of theeconomy and of small businesses are, as one federal report put it, "inevitably linked to each other."

Small businesses create jobs and prevent outsourcing – they’ve been critical to post Great

Depression growth in the U.S.

Asheville Citizen-Times – 4/20/04 (http://www.citizen-times.com/apps/pbcs.dll/section?Category=archives) The loans benefit the community in three important ways. First, many of the small businesses they help to launchcreate jobs, eventually even if not right away. "You don't get as much press when you start 50 businesses that

have one to five employees as you do when you bring in a plant that has 200 people, but it's the same amount

of jobs," said Greg Walker-Wilson, head of an Asheville nonprofit organization that helps entrepreneurs launch businesses. Second,real wealth is generally created from ownership, not from working for someone else. By

helping to establish and expand locally owned businesses, wealth is kept in the community while the profits

accrued to large corporations are dispersed among stockholders all over the country and even the world.

Moreover, jobs created by locally owned businesses are far less likely to be moved off-shore . And third,small businesses are where creativity and innovation occur. They are the real engine that drives an

entrepreneurial economy. Loans made through the SBA's loan program generally come from a bank, not theSBA. The SBA simply guarantees repayment of the loan in case the borrower cannot keep up the payments. TheSBA's participation does not reduce the borrower's obligation to repay the loans, so the program is by no means atax giveaway. The loans generally go to people who would not qualify for a typical bank loan either because theydon't have enough money to contribute to the deal initially or they don't have enough of a history in the business tomeet a bank's standards. "For the small-business man that wants to get ahead but nobody wants to take the risk with them, it's a great program to get them off the ground," said Rick Bussey, a commercial lending officer atAsheville-based Blue Ridge Savings Bank. The Small Business Administration was created in 1953, in part due

to the pressures arising from the Great Depression and World War II. In the Small Business Act of July 30, 1953,Congress made its function to "aid, counsel, assist and protect, insofar as is possible, the interests of small businessconcerns.




Gordon/DunnEcon DA

I/L: Small business key

Small business is the backbone of the American economy.

Abrams in ’08 (publisher of books for entrepreneurs, USA Today, Strategies: Stimulate Small Business,http://www.usatoday.com/money/smallbusiness/columnist/abrams/2008-01-25-stimulus_N.htm)

Politicians of both parties are unanimous in calling for action to help improve economic conditions in theUnited States. Well, I've got a better answer. If you want to stimulate the economy, stimulate small

business. If we strengthen small business, we strengthen America . Here's my simple proposal: Givesmall businesses a tax credit for hiring their first employee or, for companies with fewer than 25 employees,adding new employees. First, recognize that small business is the backbone of the U.S. economy. While

news reports focus on Wall Street and Dow Jones averages, in most small and midsize communities in

the U.S., small business is the only business. More than half of all employees in the United States are

employed by small firms. Proposals to give cash rebates to individuals are only the shortest of short-termmeasures, designed more to improve politicians' poll numbers than the numbers on businesses' balancesheets. And tax incentives for huge corporations won't reach Main Street. What we need is to put moneydirectly in the bank accounts of small companies when they hire more employees. Consider these statistics,all from the U.S. Census Bureau: Of the nearly 27 million businesses in the United States, what's the totalnumber of companies with more than 100 employees? Only slightly more than 100,000. Small businesses

make up 99.7% of all employer firms. The majority of the nation's businesses actually have NO employees(think of all those self-employed consultants, hairdressers, attorneys, plumbers, graphic designers). In 2005,there were more than 20 million non-employer businesses in the United States, with total revenues closing inon a trillion dollars. Those numbers are probably higher now. What would happen if we could stimulate even1% of these non-employer businesses to hire their first employee? We'd create 200,000 new jobs. That's ahuge number — 20% of all jobs created in 2007. (According to the Bureau of Labor Statistics, 1,054,000non-farm, private-sector jobs were created in 2007.) On top of that, it's likely that many other new jobs

would be created once these one-person businesses started to grow, now that they have doubled their

person power. Not to mention the boost to the economy from all those businesses buying new

equipment, software, office furniture and renting office space. But it's hard to hire your first employee. Ittook me years before I was willing to face the burden of added paperwork, paying payroll taxes, providinghealth insurance. Not to mention getting used to having someone else around. But my company could never have grown if I was still working out of my dining room, all by myself. Tax incentives could encourage one-

person businesses to overcome those hurdles. If 2008 were the year they could get a one-time tax credit for hiring an employee, the small business community would be sizzling with suggestions, advice andencouragement to those who are on the brink of growth. Let's also encourage small companies that alreadyemploy a few workers to expand by giving them a tax credit for adding new jobs. With talk of a recession,most small employers are hesitant to expand their payroll. Small-business owners, even more than hugecorporations, hate laying anyone off. Instead, they put off hiring until there's a very good reason. Ameaningful tax credit could be just that incentive.It's important to recognize that small companies need tax credits as a stimulus, not merely new deductions.(A tax credit is an amount directly applied to reduce your tax liability or becomes a tax rebate if you do nothave a liability; a deduction is less beneficial.)




Gordon/DunnEcon DA

I/L: Small business key

Small businesses drive the United States economy in terms of innovations, technology,

employment, and manufacturing.

Kerry and Snowe in ’07 (U.S. Senator, Chairman of Small Businesses and entrepreneur ships. U.S.

Senate Committee on Small Business and Entrepreneurships. Kerry, Snowe Honor, Entrepeneurs During National Small Business Week. http://sbc.senate.gov/press/record.cfm?id=273188)

WASHINGTON – Today Senators John Kerry (D-Mass.) and Olympia J. Snowe (R-Maine), Chairman andRanking Member of the Committee on Small Business and Entrepreneurship, introduced a Senate resolutionto honor the entrepreneurial spirit of small businesses in the United States and celebrate this year's NationalSmall Business Week. The resolution, cosponsored by Senators Joe Lieberman (I/D-Conn.), Mary Landrieu(D-La.), Evan Bayh (D-Ind.), Maria Cantwell (D-Wash.), Norm Coleman (R-Minn.), David Vitter (R-La.),and Ben Cardin (D-Md.), is expected to pass the Senate later today. "Small business owners are the driving

force behind new innovations, technologies and ideas," said Kerry. "They represent 99 percent of all

employers and create more than two-thirds of all new jobs in the United States. Today we honor their

hard work, accomplishments, contributions to our economy, and role in keeping America competitive."

"Small businesses are the driving force behind our nation's economic growth, creating nearly three-

quarters of all net new jobs and employing nearly 51 percent of the private sector workforce," saidSenator Snowe. "While National Small Business Week provides us with a perfect opportunity to recognizethe immense value small businesses bring to this nation's economy, it is essential that we in Congress use all52 weeks of the year to support small businesses' ability to thrive and create more jobs." President Bushdesignated the week beginning April 22, 2007, as National Small Business Week. The joint Senate resolutionurges the President to take the necessary steps to ensure the success of start-up and growing small businesseswith respect to procurement goals, guaranteed loans, management assistance programs, and disaster loans.Small businesses generate more than 50 percent of our country's non-farm gross domestic product,

represent 97 percent of all exporters and produce more than 28 percent of exported goods.

Small businesses are key to the US economy

Scott McClellan in 2006 (January 18, White House press secretary, GlobalSecurity.org, “White House Briefing”,http://www.globalsecurity.org/military/library/news/2006/01/mil-060118-usia01.htm)

In the last two months we've seen 400,000 new jobs created, 4.6 million jobs created in the past three years.The unemployment rate is down to 4.9 percent, lower than the '70s -- average of the '70s, '80s, and '90s. InLoudon County, where the President is going, the unemployment rate is 2 percent. Small businesses are the

backbone of our economy and the number one job creator in the United States. Many of these small

businesses pay taxes at the top rate, so it's important that we make the tax cuts permanent. Otherwise,

we're going to hurt job growth and hurt our economy. In 2006, 25 million small business owners will

get nearly $93 billion in tax relief. Entrepreneurship and small business growth is flourishing in

America like never before, and we must keep our economy strong by pursuing pro-growth policies.




Gordon/DunnEcon DA

I/L: Consumer Key

Low consumer confidence is directly related to consumption and the rate of inflation.

McKenna in 08 (Staff Writer, Reporton Business.com, Consumer Expectations can be more Dangerous thanInflation, http://www.theglobeandmail.com/servlet/story/LAC.20080701.IBWORLD01/TPStory/Business)

Ben Bernanke is among a shrinking pool of people who still believe inflation is ebbing.He and his colleagues on the U.S. Federal Reserve Board's interest-rate-setting open market committee saidas much last week. As they left the central bank's key interest rate unchanged at 2 per cent - again - thecommittee said it "expects inflation to moderate later this year and next year."Really? It's hard to see that scenario playing out. As the price of oil flirts with new highs above $143

(U.S.) a barrel and food prices continue to spike, consumers are braced for just about everything to

cost more in the months ahead. It's what economists call inflation expectations. And the anticipation of

higher prices can be as dangerous as inflation itself. When people feel threatened by inflation, they

react by demanding higher wages, which push up employer costs, perpetuating the problem . InEurope, for example, one recent survey of European consumers cites a perceived rate of inflation at 12 per cent. The official inflation rate is in fact running at 3 per cent. There have been protests throughout Europe byfishermen and truckers about soaring fuel costs. In the United States, the "expected" rate of inflation is

running at more than 5 per cent in the year ahead - the highest rate since the 1980s, according to the

University of Michigan's survey of consumer confidence. Actual inflation is at roughly 4 per cent.Consumers may be overreacting to the price of items they purchase most often: groceries and gas. Mr.

Bernanke apparently believes the spike in food and fuel prices is transitory and won't affect prices

more broadly. He's betting workers and companies won't push wages and prices of other items higher,exacerbating inflation. Food and fuel prices make up just a quarter of the consumer price index. So whyworry? Instead, the Fed is focused on the downside: the housing crunch, the credit crisis and a slowingeconomy. If there's inflation, it will be cured by slow growth, Mr. Bernanke has apparently concluded. So,for now, he keeps the federal funds rate at a historically low level of just 2 per cent - half the rate of inflation.There is another, more worrying scenario. Speaking in Basel, Switzerland, yesterday, a top official of theBank for International Settlements urged central banks around the world to keep inflation expectations at bay.Malcolm Knight, the bank's general manager and a former deputy governor of the Bank of Canada, said itwould be wrong to assume the recent spike in inflation is just a "blip" that will recede next year."We cannot

be entirely confident about this reassuring assessment," Mr. Knight told reporters. He warned of a "clear and present danger" of rising global inflation and inflationary expectations. In its annual report, releasedyesterday, the BIS warned that inflation may be the trigger for a much more serious problem: a prolonged

period of deflation. The central bank for central banks warned that rising food and fuel prices, coupled withhigh household debt levels, could send the global economy into a tailspin.The bank ominously suggested thecooling economy could easily drown inflation, causing "much greater and longer-lasting" economic

problems. Kevin Hassett, an economist at the American Enterprise Institute and a key economic adviser toRepublican presidential hopeful John McCain, is among those who worry the Fed has become toocomplacent about inflation. He frets about a reprise of the devastating double-digit inflation of the1980s."The inflation outlook right now is as scary as it has been since Paul Volcker grabbed his lance andimpaled the dragon in 1979," Mr. Hassett wrote in a commentary posted on the institute's website.Mr.Volcker was Fed chairman from 1979-1987. Inflation hit 14 per cent as he took the job, and his relentlesseffort to tame it over the next few years pushed the U.S., and much of the world, into a deep recession. Let'shope Mr. Bernanke and his colleagues have not forgotten just how painfully high inflation can go - and whatit takes to get it under control again.




Gordon/DunnEcon DA

I/L: Consumer key

Consumer confidence is directly related to the economy

Keith Bradsher in 1995 (June 10, New York Times, “Investors See Trouble; Fed Doesn't”,

http://query.nytimes.com/gst/fullpage.html?res=990CEEDD1138F933A25755C0A963958260&sec=&spon=&pagewanted=all)The markets may batter finance ministers into accepting big changes in currency values, but chairmen of theFederal Reserve are more insulated, thanks to the power they have over the money supply. The danger of

the disagreement between Mr. Greenspan and the markets is that a flight from stocks and bonds could

erode confidence, stifle consumer spending and turn economic stagnation into a recession. Indeed, Fed

optimism is partly based on the expectations that this year's rising stock market and lower interest

rates would help overcome the effects of the Fed's yearlong escalation of short-term interest rates,

which finally stopped on Feb. 1.

Consumer spending and confidence is key to the US economyCombined Wire Services in 2001 (September 17, Courant Online, “U.S. Braces For A Fall AsMarkets Reopen”, http://www.courant.com/features/custom/hc-attack-a1stox-0917,0,7666769.story)

Consumer spending remains key to the economy's prospects, and it's unclear how much consumer

confidence will be shaken. Oil prices rose last week , sparking fears that heightened tensions withMiddle East countries could push up energy costs, cutting into other spending byconsumers. Vice President Dick Cheney, speaking Sunday on NBC's ``Meet the Press,'' acknowledged that the economy may be in recession, but expressed confidence that the economy will bounceback later this year. ``I would hope the American people would, in effect, stick their thumb in the eye of the

terrorists and say that they've got great confidence in the country, great confidence in our economy, and not let what's happened here in any way throw off their normal level of economic activity,'' he said. Many analysts now expect the Federal Reserve to try to boost thenation's economy by cutting its key short-term interest rate from 3.5 percent to 3 percent

possibly as soon as this week. The attack also darkened the global economic picture, withfears growing that the world's already weakening economy could skid into a recession. Andin an increasingly globalized market, the ties of trade and finance binding companies andcountries could transmit the economic pain more widely than ever before.

Consumer confidence directly effects the U.S. economy.

Thomson Financial News in ’08 (Hong Kong shares close lower, led by Cathay after saying profit maydisappoint. http://www.forbes.com/afxnewslimited/feeds/afx/2008/07/02/afx5175961.html)

A separate report showing consumer confidence in the United States was at its lowest in 16 years added

to the bearish sentiment. Sagging confidence among American consumers may signal a decline in

consumer spending, which accounts for more than two-thirds of the U.S. economic output. 'Theoutlook is grim. The local stock market may decline further. After the profit warning from Cathay Pacific,

other airlines and Chinese companies will follow. It's shaping up to be a bad year,' said Francis Lun, generalmanager at Fulbright Securities. The Hang Seng Index lost 397.56 points or 1.8 percent to 2,704.45 , itslowest closing level since March 20. Cathay Pacific tumbled 5.9 percent to HK$13.98, reversing a 1.1

percent gain this morning. The stock fell to as low as HK$13.70 earlier in the session. The airline issued the profit warning after the close of morning trade. Speculation that China may raise interest rates followingmedia reports quoting Bank of China Governor Zhou Xiaochuan as saying he is not ruling out any rate hiketo bring down inflation also kept investors at bay.




Gordon/DunnEcon DA

I/L: Auto industry key

The auto industry is in danger and as a result thousands of jobs were lost.

House Committee on Ways and Means 2007 (Statement of Executive Intelligence Review)http://waysandmeans.house.gov/hearings.asp?formmode=view&id=5593

These are the purposes of the Economic Recovery Act of 2006 (ERA), proposed by the Lyndon LaRouchePolitical Action Committee (LPAC). The idea of this legislation has been circulated by LPAC for two years,endorsed and lobbied for by scores of union locals and leaders, and by many state and city elected officialsand several state legislatures (see below, supporters of ads calling for adoption of an ERA in The Hill and

Roll Call on June 8, 2005). It focuses on the urgency of Congressional intervention to stop the collapse of

the American auto industrial sector--by “retooling” considerable capacity in that sector for the

purposes of building a new national economic infrastructure.

When the 109th Congress did not act, manufacturing job loss resumed through 2005 and 2006; 90,000

jobs were lost in auto and auto supply industries alone, which have lost 285,000 since 2000. Scores of

plants closed in the auto sector, and literally hundreds of plants are now slated for closure or sell-off by

the three major automakers and six largest auto-supply firms

Manufacturing jobs are key to sustaining the economy.House Committee on Ways and Means 2007 (Statement of Executive Intelligence Review)http://waysandmeans.house.gov/hearings.asp?formmode=view&id=5593While pointing to real dangers, both ignore the central, 35-year poisoning and destruction of our economy byglobalization and deregulated international trade and financial markets: the lowering of productivity. The

absolute loss of 5.5 million U.S. manufacturing jobs since 1979--including the elimination of nearly half

the employment in the aerospace and auto industries, the two major machine-tool reservoirs of the

economy—lowers the productivity of the entire world economy.

With the sinking of the housing price/mortgage bubble and threatened plunge of the dollar, we have now

reached the trigger-point at which the characteristics of this trend could be expressed as a general

breakdown-crisis of the economy, in the United States and internationally.

If the U.S. auto industry collapses, the rest of the U.S. economy will follow overnight.House Committee on Ways and Means 2007 (Statement of Executive Intelligence Review)http://waysandmeans.house.gov/hearings.asp?formmode=view&id=5593Worst, the destruction of the machine-tool capacity of industries such as aerospace and auto which areour machine-tool reservoirs--entire plants of machine-tools either destroyed or auctioned over the Internet to

primarily overseas buyers--threatens to eliminate the nation's industrial capabilities for the future.Without a deep and versatile machine-tool capacity, U.S. industry will no longer be capable of building

the new economic infrastructure the economy requires to recover--as, for example, U.S. industry already

has no capacity to build nuclear power plants, and already lacks the aerospace-industrial capabilities for Apollo Moon-landings we could make 40 years ago.The machine-tool sector is the core of an industrial economy where scientific and technological ideas areturned into new economy reality. If the U.S. auto-manufacturing industry is destroyed, the U.S.A.

becomes a virtual Third World nation overnight. The nation's machine-tool design capability, most of

which is tied up in the auto-manufacturing and supply firms, is lost. The loss of the tool-making andclosely related capabilities of that sector of industry would cause incalculable, chain-reaction

consequences, within our nation, and also the world at large.

The loss of employment of that machine-tool design segment of that part of the labor-force, means

many times that number of skilled employees out of jobs. Sixty million square feet of aerospace-defensecapacity are closed and machinery auctioned off since 1990. Eighty-one hundred million square feet of

auto capacity are being closed and machinery auctioned off over 2006-08, more capacity lost than in thelast 30 Years combined. The United States' economy's consumption of machine tools is only 60% of the1980 level, and 60-70% of that consumption is imported machine tools.




Gordon/DunnEcon DA

Nothing less than the nationwide “retooling” and recreation of advanced industrial capability, carried

out to prepare for the war production of World War II , is the model for what the Congress must do nowto build a new national infrastructure.




Gordon/DunnEcon DA

I/L: Biz Con key

Business confidence key to econKirchhoff and Hegenbaugh 07(“What's worrying business? Confidence erodes across industries” Sue Kirchhoff

and Barbara Hegenbaugh, USA TODAY http://www.usatoday.com/educate/college/careers/news12.htm 2004)Business investment and hiring are key to sustained economic growth, as consumer spending growth

slows from its heady pace. While corporate profits and spending have ramped up, economists are

nervous about one key element -- confidence. Business confidence has eroded since spring, according to severalsurveys. On Monday, economic consulting firm Economy.com said its weekly survey of business owners showeddeclines were widespread, both geographically and across industries. The U.S. index is off 25% from its peak earlier this summer. How business executives see the world is key for the economy because it can influence decisions

on hiring and investing. Nervousness is likely one reason hiring has been patchy this year, spiking in March butgrowing less rapidly since then.

The collapse of business confidence would cause recession – dependence on it is a gambleBrathwaite in 2004 (John is an Australian Research Council Federation fellow at Australian NationalUniversity, and chair of the Regulatory Institutions Network, March 2004, The Annals of The American Academy of Political and Social Science, 592 Annals 79, “Emancipation and Hope”, JSTOR)

The challenge of designing institutions that simultaneously engender emancipation and hope is

addressed within the assumption of economic institutions that are fundamentally capitalist. This

contemporary global context gives more force to the hope nexus because we know capitalism thrives on

hope. When business confidence collapses, capitalist economies head for recession. This dependence on

hope is of quite general import; business leaders must have hope for the future before they will build

new factories; consumers need confidence before they will buy what the factories make; investors need

confidence before they will buy shares in the company that builds the factory; bankers need confidence

to lend money to build the factory; scientists need confidence to innovate with new technologies in the

hope that a capitalist will come along and market their invention . Keynes's ([1936]1981) General Theoryof Employment, Interest and Money lamented the theoretical neglect of "animal spirits" of hope("spontaneous optimism rather than . . . mathematical expectation" (p. 161) in the discipline of economics, aneglect that continues to this day (see also Barbalet 1993).

http://www.usatoday.com/educate/college/careers/news12.htm%202004

http://www.usatoday.com/educate/college/careers/news12.htm%202004




Gordon/DunnEcon DA

I/L: Investor key

Investor confidence is key to the US economy.

PR Newswire – 8/6/02 edition. “American Stock Exchange Chairman Salvatore Sodano Addresses SeventhOil And Gas Conference” http://www.prnewswire.com/

"Wall Street and Congress have already begun to respond to the growing crisis of confidence, including theAmex," said Mr. Sodano. "It is critical that we restore investor confidence in the markets. The Amex hasestablished a framework for the development of new corporate governance rules. It is our goal to establish rulesthat ensure accountability, transparency and oversight while also recognizing the importance of diversity andcritical needs of companies at different stages of development." "The global economy is changing rapidly and

it is increasingly more important that the rules governing our nation' s capital markets are on a

competitive and level playing field with the rest of the world. We live in an age of delicate economic

equilibrium. Bound together in a global economy -- every action we take can result in reverberations in

the far corners of the earth. As a nation, we need to accelerate our efforts to reach agreement on a set of common global accounting standards. Restoring investor confidence is paramount," concluded Mr. Soda




Gordon/DunnEcon DA

I/L: High Food Prices hurt the economy

Food prices cause lowest economy in 28 years

ANTON TROIANOVSKI, 7/12/08. (The Wall Street Journal, “U.S. May Trade Gap

Shrinks; Import Prices Surged in June”

http://online.wsj.com/article/SB121577803584045725.html?mod=googlenews_wsj)Import prices rose 2.6% in the month of June, making for a 20.5% increase in the last year. The Labor Department figures stoked fears that inflation in food and energy prices could start passing through the rest of the economy.A survey by Reuters/University of Michigan showed that consumers' outlook for the future continues to getgloomier. The Michigan consumer sentiment index ticked up slightly, to 56.6 from 56.4, in the first twoweeks of July, remaining near the lowest level in a generation. Economic expectations fell for the sixthstraight month to 48.3, a 28-year low for the survey and hinting at a slowdown in consumer spending ahead.One-year inflation expectations rose to 5.3%, the highest level since 1981.The Federal Reserve is closely watching inflation expectations as it grapples with how to combat inflationwithout exacerbating the economic slowdown. Next week, consumer- and producer-price indexes will shedfurther light on how higher food and fuel prices are affecting the rest of the economy..

Food prices hurt financial sectorTom Petruno, 7/12/08. (Tom Petruno is the markets columnist for The Times. LA Times,

“When faith is frayed” http://www.latimes.com/news/columnists/la-fi-petrunocol12-

2008jul12,0,7222987.column)Record energy costs, coupled with surging food prices, raise the risk that more beleaguered consumers couldfall behind on their mortgage payments."These prices for oil and food, in an economy 70% driven by consumers, are just adding more strains to thefinancial system," said Tom Atteberry, a fund manager at First Pacific Advisors in Los Angeles.




Gordon/DunnEcon DA

I/L: US key to global econ

US Econ Key to Global EconFreedomyou 07 (“USA's Future Economic Collapse” Freedomyou February 19, 2007 acessed 07/03/07http://www.freedomyou.com/prophecy/USA_economic_colapse.htm)

America's unquenchable materialistic appetite is the machine that fuels a global economy. Japan's economy

would collapse if it were not for the billions of dollars per year gained in trading with America. When

America goes into a recession, the world follows. When America's economy is booming, the world's economy

strengthens. America devours, yet, is never satisfied. Running out of money, she tells the waiter to put iton her tab. He gladly complies making a tidy profit from the interest. He cannot serve her quick enough.The more she eats, the hungrier she becomes. As time passes, less goes to paying for food and more isneeded to pay for the huge debt she is accumulating. Finally, all of her resources are used up in payingfor the interest she owes. America falls crashing to the ground in economic ruin, so suddenly, it sends shock

waves throughout the world. She is incapable of paying for her massive imports. Merchant ships sit offshore,

heavy laden with cargo, weeping and wailing in horror for Babylon has fallen.

http://www.freedomyou.com/prophecy/USA_economic_colapse.htm

http://www.freedomyou.com/prophecy/USA_economic_colapse.htm




Gordon/DunnEcon DA

I/L: US key to global econ

The US economy has important effects on the international economy.Board of Governors of the Federal Reserve System, 2005 (The Federal Reserve System:Purposes and Functions, pg. 51)

The U.S. economy and the world economy are linked in many ways. Economic developments in thiscountry have a major influence on production, employment, and prices beyond our borders; at the sametime, developments abroad significantly affect our economy. The U.S. dollar, which is the currency most used ininternational transactions, constitutes more than half of other countries’ official foreign exchange reserves. U.S.

banks abroad and foreign banks in the United States are important actors in international financial

markets. The activities of the Federal Reserve and the international economy influ ence each other.Therefore, when deciding on the appropriate monetary policy for achieving basic economic goals, the Board of Governors and the FOMC consider the record of U.S. international transactions, movements in foreign exchangerates, and other international economic developments. And in the area of bank supervision and regulation,innovations in international banking require continual assessments of, and occasional modifications in, theFederal Reserve’s procedures and regulations. The Federal Reserve formulates policies that shape, and areshaped by, international developments. It also participates directly in international affairs. For example, theFederal Reserve occasionally undertakes foreign exchange transactions aimed at influencing the value of the

dollar in relation to foreign currencies, primarily with the goal of stabilizing disorderly market conditions. Thesetransactions are undertaken in close and continuous consultation and cooperation with the U.S. Treasury. TheFederal Reserve also works with the Treasury and other government agencies on various aspects of internationalfinancial policy. It participates in a num ber of international organizations and forums and is in almost

continuous contact with other central banks on subjects of mutual concern.

The US economy affects inflation and economic growth abroad.Board of Governors of the Federal Reserve System, 2005 (The Federal Reserve System:Purposes and Functions, pg. 52-53)The Federal Reserve’s actions to adjust U.S. monetary policy are designed to attain basic objectives for theU.S. economy. But any policy move also inf luences, and is inf luenced by, international developments.For example, monetary policy actions inf luence exchange rates. The dollar’s exchange value in terms of other currencies is therefore one of the channels through which U.S. monetary policy affects the U.S.

economy. If Federal Reserve actions raised U.S. interest rates, for instance, the foreign exchange value of thedollar generally would rise. An increase in the foreign exchange value of the dollar , in turn, would raise

the price in foreign currency of U.S. goods traded on world markets and lower the dollar price of goods

imported into the United States. By restraining exports and boosting imports, these developments couldlower output and price levels in the economy. In contrast, an increase in interest rates in aforeign country could raise worldwide demand for assets denominated in thatcountry’s currency and thereby reduce the dollar’s value in terms of that currency.Other things being equal, U.S. output and price levels would tend to increase—just theopposite of what happens when U.S. interest rates rise. Therefore, when formulatingmonetary policy, the Board of Governors and the FOMC draw upon information aboutand analysis of international as well as U.S. domestic inf luences. Changes in publicpolicies or in economic conditions abroad and movements in international variablesthat affect the U.S. economy, such as exchange rates, must be factored into the

determination of U.S. monetary policy. Conversely, economic developments in the UnitedStates, including U.S. monetary policy actions, have significant effects on growth and inf lation in

foreign economies. Although the Federal Reserve’s policy objectives are limited toeconomic outcomes in the United States, it is mutually beneficial for macroeconomic andfinancial policy makers in the United States and other countries to maintain a continuous dialogue.

This dia logue enables the Federal Reserve to better understand and anticipate inf luences on the U.S.

economy that emanate from abroad. The increasing complexity of global financial markets—combined with ever-increasing linkages between national markets through trade,finance, and direct investment—have led to a proliferation of forums in which policymakers from different countries can meet and discuss topics of mutual interest.




Gordon/DunnEcon DA

I/L: Cheap Electricity key to econ

The electricity industry is one of the most important industries to the US economy.John Podesta (former Chief of Staff for Clinton) July/August 2003 Foreign Affairs LN

The electricity distribution system in the United States is perhaps the most underappreciated

and vulnerable part of the country's national infrastructure. In this digital age, the need for high-quality, reliable electricity makes the transmission grid almost as vast and as important asthe highway system. The electricity business now generates $224 billion a year in revenues,accounting for about four percent of the U.S. GDP. Its value to the economy is multiples of its cost.

Cheap electricity is key to the economyMcMahon in 2k4 (Richard, Pipeline and Gas Journal, Power producers say natural gas situationdemands short and long term actions, April 1, LN)

Electricity is the backbone of the nation's economy. Advancements in technology haveincreased U.S. productivity and driven growth, but the technology depends on ever increasingamounts of electricity. As a result, the use of electricity has grown dramatically over the last twodecades and mirrors the equally robust growth in gross domestic product (GDP), the gaugeof economic health in the United States.

Competitively priced electricity key to the economyBusiness Wire October 20 2003 SAVVIS Wins Managed IP VPN Network Services Contract FromBabcock Power Inc , LN

"As recent news events have shown, the power generation industry is a critical lifeline for the U.S.economy. Just as businesses rely on power companies to provide reliable, competitivelypriced electricity, those companies serving the power generation industry rely on scalable,failsafe communications for their operations," SAVVIS President & COO Jack Finlayson said. "WithBabcock Power's selection of SAVVIS, Babcock can concentrate on delivering its products and services to its

power generation customers while they rely on SAVVIS to manage their communications infrastructure tostringent performance metrics."




Gordon/DunnEcon DA

I/L: Cheap Electricity key to econ

Cheap electricity is vital to the economyPolicy Papers in 2k2 (Lessons learned from electricity restructuring: Transition to competitive marketsunderway, but full benefits will take time and effort to achieve, December, LN)

The electricity industry is an important and complex sector of our economy that is central tothe lives of Americans. Historically, the U.S. electricity industry developed into a structure of localizedmonopoly utilities. Each of these monopoly utilities generated electricity to serve consumers in its local area.Within this localized structure, there was limited interaction among different utilities across wide geographicregions. Because of the complex nature of the electricity industry and its historical development, both federaland state entities are involved in overseeing and regulating the industry. Throughout the 1970s and 1980s, anumber of events occurred in the electricity industry that began to encourage a shift toward more competitiveelectricity markets. The Electricity Industry Is An Important and Complex Sector of the U.S. EconomyElectricity is central to the lives and livelihoods of all Americans. Annual expenditures on electricityamount to about $224 billion, and electricity is an important input to production in manyindustries. For example, industrial customers--including companies engaged in manufacturingand assembling products--rely on electricity to power computers, tools, and machinery, aswell as for lighting, heating, and cooling their plants and buildings. Similarly, commercialcustomers--including shopping malls, office buildings, individual stores, and financial and stock markets--also depend heavily on electricity for their day-to-day operations. In addition, residential customersrely on electricity for heating and cooling, lighting, cooking, and cleaning. Finally, with the expansion of Internet usage and the importance of information technologies for commerce, electricity has assumed an evengreater role in the daily lives of Americans. As a result, the cost and availability of electricity haveimplications for the entire economy.




Gordon/DunnEcon DA

!- Extinction

ECONOMIC COLLAPSE WILL CAUSE A MASSIVE WAR THAT CULMINATES IN EXTINCTION

Thomas E. Bearden, Retired US Army Lieutenant Colonel and director of the Association of

Distinguished American Scientists, CEO of CTEC Inc., Fellow Emeritus at the Alpha Foundation's Institutefor Advanced Study, 6/24/2K, "The Unnecessary Energy Crisis: How to Solve It Quickly",http://www.seaspower.com/EnergyCrisis-Bearden.htm (Victor)History bears out that desperate nations take desperate actions. Prior to the final economic collapse, 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 astarving North Korea {[7]} launches nuclear weapons upon Japan and South Korea, including U.S. forces there, in a spasmodicsuicidal response. Or suppose a desperate China -- whose long-range nuclear missiles (some) can reach the United States --

attacks Taiwan. In addition to immediate responses, the mutual treaties involved in such scenarios will quickly drawother 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 thencompelled to launch on perception of preparations by one's adversary. The real legacy of the MAD concept is this sideof the MAD coin that is almost never discussed. Without effective defense, the only chance a nation has to survive at all is tolaunch immediate full-bore pre-emptive strikes and try to take out its perceived foes as rapidly and massively as possible. As the

studies showed, rapid escalation to full WMD exchange occurs. Today, a great percent of the WMD arsenals that willbe unleashed, are already on site within the United States itself {[8]}. The resulting great Armageddon will destroycivilization as we know it, and perhaps most of the biosphere, at least for many decades.

http://www.seaspower.com/EnergyCrisis-Bearden.htm






Gordon/DunnEcon DA

!- Laundry List

Global recession will cause ethnic wars, famine, protectionism, reversal of globalization trade andtech, and arms traffickingBernardo V. Lopez, freelance journalist and frequent author on international issues, 9/10/98, “Global

recession phase two: catastrophic”, BusinessWorld [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 dwindlingfood stocks as in India-Pakistan-Afghanistan, Yugoslavia, Ethiopia-Eritrea, Indonesia. Regional conflictsin key flashpoints can easily erupt such as in the Middle East, Korea, and Taiwan. In the Philippines, as insome Latin American countries, splintered insurgency forces may take advantage of the economicdrought 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 Africancountries as first candidates. Food riots and the breakdown of law and order are possibilities. Globalrecession will see the deferment of globalization, the shrinking of international trade - especially of high-technology commodities such as in the computer, telecommunications, electronic and automotiveindustries. There will be a return to basics with food security being a prime concern of all governments,over industrialization and trade expansions. Protectionism will reemerge and trade liberalization will suffer

a big setback. The WTO-GATT may have to redefine its provisions to adjust to the changing times. Eventhe World Bank-IMF consortium will experience continued crisis in dealing with financial hemorrhages.There will not be enough funds to rescue ailing economies. A few will get a windfall from the disaster withthe erratic movement in world prices of basic goods. But the majority, especially the small and mediumenterprises (SMEs), will suffer serious shrinkage. Mega-mergers and acquisitions will rock the corporatelandscape. Capital markets will shrink and credit crisis and spiralling interest rates will spreadinternationally. And environmental advocacy will be shelved in the name of survival. Domestic markets willflourish but only on basic commodities. The focus of enterprise will shift into basic goods in the mediumterm. Agrarian economies are at an advantage since they are the food producers. Highly industrializednations will be more affected by the recession. Technologies will concentrate on servicing domesticmarkets and the agrarian economy will be the first to regrow. The setback on research and developmentand high-end technologies will be compensated in its eventual focus on agrarian activity. A return to therural areas will decongest the big cities and the ensuing real estate glut will send prices tumbling down.

Tourism and travel will regress by a decade and airlines worldwide will need rescue. Among theindigenous communities and agrarian peasantry, many will shift back to prehistoric subsistence economy.But there will be a more crowded upland situation as lowlanders seek more lands for production. Thecurrent crisis for land of indigenous communities will worsen. Land conflicts will increase with theindigenous communities who have nowhere else to go either being massacred in armed conflicts or dyingof starvation. Backyard gardens will be precious and home-based food production will flourish. Asunemployment expands, labor will shift to self-reliant microenterprises if the little capital available can besourced. In the past, the US could afford amnesty for millions of illegal migrants because of its resilienteconomy. But with unemployment increasing, the US will be forced to clamp down on a reemerging illegalmigration which will increase rapidly. Unemployment in the US will be the hardest to cope with since itmay have very little capability for subsistence economy and its agrarian base is automated and controlledby a few. The riots and looting of stores in New York City in the late '70s because of a state-widebrownout hint of the type of anarchy in the cities. Such looting in this most affluent nation is notimpossible. 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 weaponsexports to nurse its economy back to health. This will further induce wars and conflicts which willaggravate US recession rather than solve it. The US may depend more and more on the use of force andits superiority to get its ways internationally.




Gordon/DunnEcon DA

!- Turns Case

Economic growth is vital to decrease US energy intensity-this is the only way to solve for CO2Thorning in 2k7 (Margo, PHD, senior vice president and chief economist American council for capitalformation, Testimony before the committee on environment and public works, the impact of america’sclimate security act of 2007 on the us economy and global greenhouse gas emissions,http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=132d40b2-ff1d-4dcc-a58d-022c80aa824d)Many policymakers overlook the positive impact that economic growth can have on GHG emissionreductions. For example, in 2006, while the U.S. economy grew at 3.3 percent, CO2 emissions fell to5,877 MMTCO2, down from 5,955 MMTCO2 in 2005, a 1.3 percent decrease. Overall energy use onlydeclined by 0.9 percent, indicating the U.S economy is becoming less carbon intensive even withoutmandatory emission caps or carbon taxes.Internationally, the U.S. compares well in terms of reducing its energy intensity (the amount of energyused to produce a dollar of output). The U.S., with its voluntary approach to emission reductions, has cutits energy intensity by 20 percent over the 1992-2004 period compared to only 11.5 percent in the EU ]with its mandatory approach (see Figure 6). Strong U.S. economic growth, which averaged over 3 percentper year from 1992 to 2005 compared to about 1 percent in the EU, is responsible for the U.S.’s more

rapid reduction in energy intensity in recent years.




Gordon/DunnEcon DA

!- Power Wars

Economic stagnation kills hegemony and causes massive power wars

Jeffrey Nyquist, regular geopolitical columnist for Financial Sense and WorldNetDaily and expert in foreign policy and geopolitics, 2/4/05, “The Political Consequences of a Financial Crash”, Financial Sense,http://www.financialsense.com/stormwatch/geo/pastanalysis/2005/0204.html (Victor)

Should the United States experience a severe economic contraction during the second term of President Bush, the American people willlikely support politicians who advocate further restrictions and controls on our market economy – guaranteeing its strangulation and thesteady pauperization of the country. In Congress today, Sen. Edward Kennedy supports nearly all the economic dogmas listed above. Itis easy to see, therefore, that the coming economic contraction, due in part to a policy of massive credit expansion, will have serious

political consequences for the Republican Party (to the benefit of the Democrats). Furthermore, an economic contraction willencourage the formation of anti-capitalist majorities and a turning away from the free market system. Thedanger here is not merely economic. The political left openly favors the collapse of America’s strategic position abroad. Thewithdrawal of the United States from the Middle East, the Far East and Europe would catastrophically impactan international system that presently allows 6 billion people to live on the earth’s surface in relative peace.Should anti-capitalist dogmas overwhelm the global market and trading system that evolved under Americanleadership, the planet’s economy would contract and untold millions would die of starvation. Nationalistic

totalitarianism, fueled by a politics of blame, would once again bring war to Asia and Europe. But this time the war would bewaged with mass destruction weapons and the United States would be blamed because it is the center of global capitalism. Furthermore, if the anti-capitalist party gains power in Washington, we can expect to see

policies of appeasement and unilateral disarmament enacted. American appeasement and disarmament, in this

context, would be an admission of guilt before the court of world opinion. Russia and China, above all, would exploit thisadmission to justify aggressive wars, invasions and mass destruction attacks. A future financial crash, therefore, must

be prevented at all costs.

http://www.financialsense.com/stormwatch/geo/pastanalysis/2005/0204.html

http://www.financialsense.com/stormwatch/geo/pastanalysis/2005/0204.html




Gordon/DunnEcon DA

A/T: Renewables solve econ

Losing the renewables market doesn’t matter – Denmark proves

Graeme Haycroft (founder and General Secretary of the Small Business Union) , July 22 2002 The Courier The Small Business Union, which now competes directly with Commerce Queensland to provide services to

other small business employer associations and professional groups, is all about protecting Queensland small business from adverse influences, wherever they may be. Andrew Craig bleats: "Our environmental andrenewable energy industries clearly will suffer if excluded from the international scene." Compared to

Queensland's mighty coal industry, solar energy is a toy, and, moreover a very expensive toy. Even in

draughty Denmark, much-touted wind energy is still unprofitable, according to Herbert Inhabler (TechCentralStation of 11 July 2002), who points out that Denmark remains heavily dependent on coal.

Renewables will never be efficient or a useful market

Jack Kemp (Distinguished Fellow at the Competitive Enterprise Institute) July 15 1999 FNSTo make that case we have to strike boldly. To leapfrog over the green-eyeshade issue of what theadministration is spending "on Kyoto" versus "on idiotic energy policies" we should decisively go after thelatter. Over two decades after the Carter administration's costly and failed policies to promote energy

sources that have no prospect of market viability (solar, wind, synfuels, biomass, ethanol, etc.), why do

we still have programs on the books to subsidize what we know doesn't work? Our policy as a nationshould be to encourage technological innovation in the broadest and most sweeping sense, whether in thefield of energy or beyond. We don't need corporate welfare programs, public-private partnerships, special-interest tax breaks, or propaganda campaigns to fight what the market tells us: the people want clean,efficient, reliable sources of energy at a reasonable cost. The free market has given them that, and willcontinue to do so with minimum, prudent regulation. Our energy future is freedom--it's as simple as that.Furthermore, we must pursue a pro-growth, pro-innovation, pro- entrepreneur tax policy that will liberate theimagination of our people to find ways to create jobs, improve productivity, and generate wealth in ways thatare even greener, cleaner, and more energy- efficient. That means lower tax rates, reducing the cost of capital,and removing tax considerations wherever possible from the economic decision-making equation, whether it

be investment in new equipment, raising venture capital, or a personal decision to invest in stocks as a steptowards retirement security. That kind of tax policy has everything to do with Kyoto, because it

enthusiastically embraces America's overwhelming competitive advantage: the ingenuity of our people

and our business leaders in bringing economic abundance, lower- cost energy, and more efficient energyto the world. Compared with that, the Clinton administration's elitist policy of offering miniscule tax breaksto politically-favored energy producers (like the so-called renewables) looks primitive indeed, whether motivated by Kyoto or not.




Gordon/DunnEcon DA

AFF

A/T: Consumer Con key to econ

Consumer confidence doesn’t reflect actual consumer spending behavior

Don Dahler in 2008 (July 3, WCBSTV, “As Economic Pains Grow, Retailers Offer Huge Sales”,http://wcbstv.com/seenon/consumers.business.retailers.2.763428.html)

The U.S. may have been created by the blood and sweat of brave Americans some 232 years ago, but the

U.S. economy survives on the shoulders of the American consumer. And even though consumer

confidence is down in light of the credit crunch, Wall Street jitters, the mortgage crisis and increases in

the prices of gasoline and food, people are, at least for now, still buying things.

Sales in May for some merchants were up. Victoria's Secret saw a 9 percent increase. Neiman Marcus

saw a 3.6 percent increase and Abercrombie and Fitch was up 8 percent.

Although retail figures in general, nationwide, are down over last year, Abrams says our area has so far

been relatively immune.

Other factors are more important to the economy than consumer spending.Christian Science Monitor, 2007 ( Mark Skousen, csmonitor.com, accessed Jul. 13 2008)Many factors are far more significant than consumer spending in stimulating the economy: business

spending on capital goods, tax cuts, lower interest rates, and productivity. In the business cycle,

production and investment are what lead the economy into and out of a recession . All the while, retailspending is relatively stable. In fact, retail sales are so stable that they cannot be used to predict the nextrecession or bear market on Wall Street. Inflation-adjusted retail sales actually rose during the 2001-03recession and bear market, as industrial production fell. As Larry Kudlow of the news television show"Kudlow and Company" puts it: "Though not one in a thousand recognizes it, it is business, not consumers,

that is the heart of the economy. When businesses produce profitably, they create income-paying jobs andthen consumers spend. Profitable firms also purchase new equipment because they need to modernize andupdate all their tools, structures, and software." Granted, personal consumption expenditures represent 70

percent of gross domestic product, but GDP only measures the value of final output. It leaves out a big chunk of the economy – intermediate production and goods-in-process at the commodity, manufacturing, andwholesale stages. I calculated total spending in the economy at all stages to be more than double GDP (basedon gross revenue figures from the Internal Revenue Service). By this measure, which I have dubbed GrossDomestic Expenditures, or GDE, consumption represents only about 30 percent of the economy. Businessinvestment, including intermediate output, represents more than 50 percent of the economy. Thus, the truth isthe opposite of the conventional wisdom: Consumer spending is the effect, not the cause, of a productive

healthy economy. This truth prevails in the marketplace: It's supply – not demand – that drives the

economy. Productivity and saving are the keys to economic growth.




Gordon/DunnEcon DA

A/T: Consumer Con key to econ

Consumer Confidence not KeyWhalen 07(“Consumer Confidence Is No Crystal Ball” Charles J. Whalen economics writer for businessweek March 19, 2001 http://www.businessweek.com/magazine/content/01_12/b3724095.htm)

Beware the fragile consumer! That, it seems, was the message of Federal Reserve Board Chairman Alan

Greenspan's testimony before Congress on Feb. 28, when he warned of the need to keep a sharp eye on the recent plunge in consumer confidence. But there's much less to fear from that drop than Greenspan's remarks

suggest. In fact, using confidence as an economic predictor brings to mind the quip about the economist who

correctly forecast nine of the past three recessions. Conventional wisdom holds that declines in consumer

confidence and expectations about the economic future mean big trouble ahead for the economy. But the data

show that's not true: Consumer confidence and expectations are poor predictors of an economic contraction.

In the past decade, consumer confidence fell by 25% or more four times--and only once, in 1990, did it herald

a downturn. ANOMALY? That 1990-91 recession, when the Iraqi invasion of Kuwait triggered a collapse of consumer confidence and spending, may have been a historical anomaly. Notes David A. Wyss, chief economist atStandard & Poor's Corp.: It "was the only recession in post-World War II history where consumption was the leadingsector." There's no question that the Consumer Confidence Index, as measured by the Conference Board, is a reliablegauge of how consumers feel. It tracks their moods with a questionnaire mailed to 5,000 households each

month that asks about business conditions, employment, and family income as they exist now and as they areexpected to be six months ahead. Results of this index, which is down 26% from May, 2000, closely match those of the other main indicator of consumer thinking, the University of Michigan's Consumer Sentiment Index, which usesa phone survey and a sample size of 500. But a fall in confidence isn't even a sure sign that consumers will cut

back on spending (table). Despite the 14% decline in confidence in 1998, for example, overall consumer

spending rose 4.9%, and spending on durable goods jumped 23.9%. The conclusion: Spending is much more

responsive to the tangible influence of jobs and incomes than to the ups and downs of confidence and

expectations, which are affected by a slew of often temporary factors.

Consumer Confidence not KeyWhalen 07(“Consumer Confidence Is No Crystal Ball” Charles J. Whalen economics writer for businessweek March 19, 2001 http://www.businessweek.com/magazine/content/01_12/b3724095.htm)

Instead of the confidence index, some economists prefer to focus more narrowly on consumer

expectations about the economy's future performance. Indeed, the Conference Board's ExpectationsIndex, a component of their broader confidence measure, does yield slightly better economic forecasts,according to research by Federal Reserve Bank of New York economists Jason Bram and Sydney Ludvigson. Butthat measure also comes up short: Consumer expectations are unreliable in forecasting recessions. WRONGAGAIN. Forecasters argue that a fall in the expectations index below the level of 80 is "usually indicative of a

recession," says Lynn Franco, director of the Conference Board's Consumer Research Center. Yet after the recession induced by the Iraqi war, that threshold was breached three

times--and consumer spending and the economy continued to expand. In fact, four of the past five

major declines in expectations--drops of roughly 25% or more--didn't even cause real consumerspending to fall. That suggests that there's no reason to panic over the expectations level of 68.7 found in the latestConference Board survey. The recent solid showing of retail sales, autos, and housing also indicates that spending

can stay buoyant as expectations drop. Confidence and expectations may swing with reports of layoffs and

talk of recession. But as long as unemployment stays tame, consumers are unlikely to throw in the towel.

http://www.businessweek.com/magazine/content/01_12/b3724095.htm







Gordon/DunnEcon DA

A/T: US key to global econ

In 2008, developing economies will be more important to the world economy than the US.

Lee, 2008 (Brian, the Strait Times (Singapore), Jan. 10)DEVELOPING nations will be key in helping the global economy mitigate the drag from a slowing

United States. With their domestic economies coming into their own, poor countries will be the world'sbiggest growth driver this year, the World Bank said in a report yesterday. And Singapore is especiallywell-poised to take advantage of this as it is located amid the hottest of the world's emerging economies. 'I do

believe that there is an impact from whatever happens in the US economy on the developing regions,'World Bank lead economist Hans Timmer said at a press conference to present the bank's outlook for theworld economy. 'But the result is not that the world economy will be on its knees.' The bank is predictingglobal economic growth will moderate to 3.3 per cent this year, due mainly to a slowdown in the US, theworld's biggest economy. The US, mired in a severe housing market downturn that has caused much financialturmoil worldwide, is widely expected to decelerate further this year. While the World Bank has estimatedthat the US should manage a modest 1.9 per cent expansion this year, fears of a recession appear to be rising,

prompted by recent economic data. 'We can certainly smell a US recession although we can't taste one yet,'said United Overseas Bank economist Thomas Lam. Against this ominous backdrop, developing economiesare emerging as a bright spot for the year. They are expected to grow 7.1 per cent this year, with East Asia's

growth stars clocking in at an average of 9.7 per cent. 'Singapore benefits from its location in Asia, which hasshown the strongest dynamism in the world,' said Mr Timmers, who cited the region's red-hot economies of China and Vietnam. He pointed out that developing nations have become much more resilient to external

demand shocks in the past few years. The US housing slowdown, for instance, began two years ago andhas been hurting US imports of goods made in poorer countries. But that has not derailed the developing

world from its growth path as its robust domestic economies - bolstered by better economic policies,

open borders and stronger supply-side structures - have been picking up the slack . Many emergingeconomies have also been largely unscathed by financial problems caused by the US subprime crisis astheir direct exposure to the crisis has been limited. 'With that resilience, with their strong performance,developing countries are now mitigating the slowdown that is occurring in the US,' said Mr Timmers. Henoted that the developing economies together equal the US economy in size. 'But they are growing more

than three times as fast. That means their contribution to global demand is more than three times as

important as the contribution of the United States.'




Gordon/DunnEcon DA

A/T: US key to global econ

The world economy can now withstand US downturn – empirically proven

Xinhua, 2006 (“Yearender: World economy booms amid perils,” Xinhua General News Service, 23 December 2006, accessed 7/14/08 lexis)

The world economy witnessed a strong boom in 2006 despite growing dangers posed by the economicdownturn in the United States, soaring oil prices and rising inflationary pressure. Most economists have

high expectations for the economic growth next year, though some variables remain.The International Monetary Fund (IMF) predicted a growth of 5.1 percent for 2006's world economy in its twice-yearly World EconomicOutlook which was published in September. If the forecast is materialized, it will indicate the 2003-2006 period is the fastest-growingfour-year one since the 1970s. The growth rates for 2003 to 2005 were 4 percent, 5.3 percent and 4.9 percent, respectively.This year, economies of the United States, the euro zone and Japan have experienced a balanced growth which have facilitated asustainable and stable increase of the world economy. Meanwhile, such emerging markets as China and India have kept the momentumof fast growing, making them a strong drive for world economic growth.

Although the U.S. economy has cooled down since the second quarter this year due to the slump

housing and automobiles sectors, such a weakness has not spread to the rest of the world , RaghuramRajan, IMF Chief Economist, told Xinhua in a recent interview.The strong up-trend of such economies as China and India have largely offset the negative influence

posed by the United States, noted Rajan.

European economies can drive the global economy even when the US goes down – housing

slump proves

Simon Kennedy, 2007 (Bloomberg News, “Trade may offset a housing slump and weak investment,” TheInternational Herald Tribune, 9 April 2007, accessed 7/14/08 lexis)

That is a change from the past 40 years, when the United States powered the world economy throughfinancial crises elsewhere but gained little thrust from abroad when demand turned weak at home. Back then,when the United States sneezed, the rest of the world caught a cold. Nowadays, when the U.S. sneezes, the

rest of the world goes shopping,11 King said.The shift gives central bankers and finance ministers of the Group of Seven industrialized economies reasonfor optimism as they meet in Washington this week.There are in Europe elements of broader and deeper sustained growth which exists independently of

the other side of the Atlantic,11 the president of the European Central Bank, Jean-Claude Trichet, saidduring a press conference in late March.The housing slump that is dragging down demand in the United States is having little impact beyond

the country’s borders, while other economies are generating enough demand on their own to prop up

growth elsewhere.

Growing markets like Russia and India increasingly lessen global dependence on the

American economy

Simon Kennedy, 2007 (Bloomberg News, “Trade may offset a housing slump and weak investment,” TheInternational Herald Tribune, 9 April 2007, accessed 7/14/08 lexis)

The world may become even more reliant on growth outside the United States in the years to come, as

productivity gains accelerate more in Europe and Japan than in America , said Larry Hatheway, chief economist

for UBS in London.The result, he said: Economic growth in the United States will weaken to about 2.8 percent annually over the next decade from 3.3 percent. Meanwhile, growth in Europe will pick up to 2.2 percent from 2 percent, and in Japan to 1.8 percent from 1.2 percent.A relative shift in trend growth rates ought to be positive for the world economy,11 Hatheway said.Brazil, Russia, India and China will increasingly contribute to global growth by providing alternatives

to the U.S. market, said Jim O1Neill, chief economist at Goldman Sachs in London. European exports to

China and Russia last year grew four times as much as those to the United States, and the emerging

market economies are where all the future juice is for the world economy,11 O1Neill said.




Gordon/DunnEcon DA

A/T: US Key to global econ

Strong global economic growth despite US struggles proves the US is no longer key

Xinhua, 2007 (“Yearender: World economy maintains robust growth but faces greater risks,” Xinhua General News Service, 13 December 2007, accessed 7/14/08 lexis)

In 2007, the robust economic development of the newly-emerged markets, especially in Asia, haslargely offset the slowdown in economic growth of the United States and its economically-related

countries stemming from the U.S. subprime mortgage crisis and subsequent world financial market

unrest.

"The expansion is projected to remain above the long-term trend, notwithstanding recent financial marketturbulence, with emerging markets and developing countries leading the way," the IMF said.Global economic growth has been faster, broader and more stable since 2004 than at any time in the

previous 30 years. Between 2004 and 2006, global economic growth remained at a stable 3.25 percent.




Gordon/DunnEcon DA

A/T: US Key to global econ

The world economy can weather the US housing crisis – economists prove

Emma Vandore, AP Business Writer, 2007 (“OECD: World economy can weather housing crisis without ratecuts,”

The world economy can weather the fallout from the U.S. housing crisis, the Organization forEconomic Cooperation and Development forecast in its economic outlook Thursday, urging the EuropeanCentral Bank and U.S. Federal Reserve not to cut borrowing costs.The United States has already lowered its benchmark rate twice because of worries about a slowdown, whilethe Bank of England made a quarter-point cut Thursday. The ECB held steady.Economic growth in the OECD's 30 members which include the U.S., Britain, Germany and France will slowto 2.3 percent next year from 2.7 percent in 2007, the Paris-based think tank predicted in its twice-yearlyforecast. In May, the OECD saw growth rates next year equaling 2007."Although near-term growth has been revised down virtually everywhere," the outlook "is actually not

that bad in view of the recent shocks," said Jorgen Elmeskov, the OECD's acting economics chief.Corporate profits, high employment and increased global trade have supported the global economy,

while it has been buffeted by tighter credit conditions, slowing housing markets and rising energy andcommodities prices, the OECD said.

http://www.lexisnexis.com/us/lnacademic/search/XMLCrossLinkSearch.do?bct=A&risb=21_T4159917885&returnToId=20_T4159928984&csi=138211&A=0.6415466362946624&sourceCSI=000000&indexTerm=%23CC00091PQ%23&searchTerm=European%20Central%20Bank%20&indexType=C







Gordon/DunnEcon DA

A/T: High food prices hurt the econ???????//

Oil is the source of economic woe in the US

Shawn Mccarthy, Global Energy Rep, July 12, 2008, “U.S. economic woes, supply threats drive price of crudehigher, http://www.theglobeandmail.com/servlet/story/LAC.20080712.ROIL12/TPStory/Business, Accessed July

14, 2008”When there is precious little supply cushion in a market, every bump in the road becomes a jarring

jolt. That's the situation in tight global oil markets, where new supply threats reignited a buying frenzy

and drove prices above $147 (U.S.) a barrel yesterday to yet another record. Coupled with concernsabout production in Iran, Nigeria and Brazil, investors were focused yesterday on U.S. economic woes,which drove the greenback lower against major currencies and gave a fresh boost to commodities like

crude oil that have become a hedge against U.S. dollar weakness. But it was geopolitics that dominatedthe crude markets this week, as sabre-rattling between Iran, and the United States and Israel have raised fearsabout the security of supplies that travel out of the Persian Gulf through the narrow Straits of Hormuz. "We'relooking at relatively tight balances here ... and demand is still exceeding supply by a slim margin," JimRitterbusch, who runs his own oil trading advisory firm, said yesterday. "But the bottom line here is that

the market is very, very sensitized to any geopolitical headline that suggests that this supply-usage

balance could tighten." In the past two sessions, crude oil prices have shot up nearly $10 a barrel on

the New York Mercantile Exchange, closing yesterday at $145.08. The near-month contract for light,

sweet crude rose to a record $147.27 in morning trading before giving up some of that gain. The U.S.dollar closed at $1.59 against the euro and 99 cents against Canada's dollar.




Gordon/DunnEcon DA

A/T: Investor/ Consumer Conf key

Consumer/Investor confidence is not key to the economyMaggs 01 (The Power of Negative Thinking. By: Maggs, John, National Journal, 4/14/2001,

Vol. 33, Issue 15. Academic Search Premier)

Larry Lindsey has an interesting take on the power of his boss to influence consumers and investors .He calls it a "silly proposition" that politicians can have any impact on the economy just by saying that

things are good, or bad. "I've been going to Japan for most of the 1990s, and I can't remember how many

times I came out of the Ministry of Finance with them saying, 'All we have to do is say the economy is

going to do well and it will do well.' It is just a preposterous proposition."

Consumer/Investor confidence is not key to the economyMaggs 01 (The Power of Negative Thinking. By: Maggs, John, National Journal, 4/14/2001,

Vol. 33, Issue 15. Academic Search Premier)Did Bush's pessimistic statements discourage people enough to harm the economy? Can any political figurehave that kind of impact? And if enough people believe there is a recession, can that belief actually cause

one? Most economists say no, that consumers and investors react to information, not opinion, and that

they are guided by reason, not emotion. But unlike other social sciences, economics has gone a few

hundred years without altering its view of what motivates humans. Inspired by the evidence of irrational behavior during the now-burst stock market bubble, a new school of dissenters is putting forward a morecomplex view of economic behavior that incorporates research in psychology. This new perspective can helpexplain how people once managed to believe in a never-ending boom-and how they now might be convinced,with help from our political leaders, that things are worse than they feared.




Gordon/DunnEcon DA

A/T: Small Business key to econ

Small businesses do little for the economy

PRWEB, 2008 ( press release newswire “Small businesses fuels the economy”) onlinehttp://www.prweb.com/releases/2008/06/prweb991244.htm accessed July 14, 2008

"The bad news," David continues, "is that the small business sector is the most over-looked and under-assisted

area of many national economies, and the North American scene is no exception." Because of the currenteconomic situation, the banking world generally shuns small business enterprises as being under-capitalized and

generally speaking too small or too new to command a place in their financing programs . Therefore, small businesses have to exist on their own resources. This often means that the next growth plateau is just out of

reach for the majority of them, and they become the victims of their own success . The lack of short-termworking capital continually hampers their growth opportunities.

http://www.prweb.com/releases/2008/06/prweb991244.htm

http://www.prweb.com/releases/2008/06/prweb991244.htm




Gordon/DunnEcon DA




Gordon/DunnEcon DA

A/T: Nuc War !

A depression wouldn’t cause major wars-people are concerned only about personal survival

Berry in 91 (Prof Univ Texas @ Dallas, Brian, Long wave rhythms in economic development and politicalbehavior)

Trough wars help in the recovery from depression; peak wars add to the runaway inflation that terminatesthe upwave. All o f the most pronounced instances of inflation have occurred during or shortly after greatwars. Trough wars are short, decisive, and easily financed when commodity pries and interest rates have

just bottomed; peak wars last longer than predicted, have indecisive results, carry a high price tag interms of lives and money, spur inflation via massive deficit spending, and engender countervailingattitudes in the postwar period. During major war periods, consumption rises and production falls, anddemand moves out ahead of supply to push up prices. The inflationary jolt becomes globalized inprolonged wars involving the world’s major powers. “War is a symptom of the social and economicpressures which build up in the system. …. Wars at the end of the upwave are due in part to the samesocial tensions associated with hyperactivity during high inflation, generating exceptionally strongemotions. Wars at the early stage of the upwave are far less popular and are more of less accepted as afait accompli by the electorate” (Beckman, p.29). “In the years before the peak, tensions build with the

excitement of prosperity. The great issues that develop are both national and international” (NathanMager, The Kondratieff Wave, pp. 50-51). Deep-seated passions and pent-up repressions gush out in anemotional peak, a national catharsis. People seem unable to cope with mounting complications of life asthe long-wave peak approaches; they have no stamina for keeping up with the accelerated rate of change. Peak wars start with a crusader fervor. Trough wars, on the other hand, are taken in stride;depression forces people to be predominantly concerned with their own well-being (ibid.; see also DavidMcClelland; Power: The Inner Experience).

K-wave proves that massive global war can only occur during major growth upswingsDunn in 99 (Christopher Chase, Volker Bornschier, The Future of Global Conflict, republished online,http://www.lclark.edu/~podobnik/war.html )

While the onset of a period of hegemonic rivalry is in itself disturbing, the picture becomes even grimmer when the

influence of long- term economic cycles are taken into account. As an extensive body of research documents (seeespecially Van Duijn 1983), the 50 to 60 year business cycle known as the Kondratieff wave (K-wave) has been insynchronous operation on an international scale for at least the last two centuries. Utilizing data gathered by Levy(1983) on war severity, Goldstein (1988) demonstrates that there is a corresponding 50 to 60 year cycle in thenumber of battle deaths per year for the period 1495-1975. Beyond merely showing that the K-wave and the war

http://www.lclark.edu/~podobnik/war.html

http://www.lclark.edu/~podobnik/war.html

bizcon da - dunn

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