Economy (The Third Horseman)

The moribund economy is drying up tax revenues more dramatically than expected, forcing 22 states, including California, to confront growing budget gaps. Some states have already eliminated jobs and services -- and more cuts are likely. The new shortfalls -- totaling at least $11.2 billion -- come just months after numerous states enacted belt-tightening measures while writing their yearly budgets. But in many cases, the actual revenue for the first quarter of the fiscal year, which began July 1, has proven to be even lower. The gaps "will almost certainly widen" as tax revenues continue to disappoint, according to the Center on Budget and Policy Priorities. Economists and other observers fear the numbers may signal the onset of a historic fiscal crisis for state governments.

Consumer confidence suffered its steepest monthly drop on record in October, according to two economic reports. The Reuters/University of Michigan Surveys of Consumers said its index of confidence plummeted to 57.5 in October from 70.3 in September. The University of Michigan confidence index dates back to 1952. Its record low was 51.7, in May 1980.

The shape and scope of the Wall Street bailout is finally clear, but a big question remains: How will we pay for it? Propping up the US financial system will require the federal government to borrow hundreds of billions of dollars, adding to a ballooning deficit that will hamstring the next president and eventually require Americans to pay higher taxes, analysts said. The deficit was already set to soar as tax collections plunge in the face of a likely recession. But the cost of bailing out financial firms, plus an economic stimulus package promised by congressional leaders, could send the national debt to historic levels. It's not going to get better in the next fiscal year, either. Over the next two years alone, the government will probably have to borrow some $1.5 trillion to keep operating, adding to a national debt that now tops $10 trillion, analysts said. That amounts to over $86,000 per household or $36,000 per person.

Federal Reserve Chairman Ben Bernanke on Monday endorsed congressional efforts to craft a new economic stimulus package, noting risks of a "protracted slowdown." He said any such legislation should include improved access to credit for consumers and businesses. House and Senate leaders in recent days have said Congress may come back after the election in November to consider a stimulus bill. Democrats generally have talked about such things as extending unemployment benefits, providing new tax cuts and investing in bridges, roads and other infrastructure. Republicans have focused more on tax cuts and have questioned whether public works spending is appropriate.

• JJ Commentary: First the stimulus checks to all taxpayers. Then the bailout. Now more stimulus? This house of cards built on a foundation of debt will eventually come crashing down – if not tomorrow, then soon.

Retirement Crisis

Of all the threats to the American middle-class standard of living, from stagnating incomes to piles of consumer debt, perhaps the least understood and among the most serious is the looming crisis in retirement. Several trends, each debilitating alone, are due to converge on the middle class over the next decade or so. Traditional pension plans are disappearing in the private sector. Workers aren't saving enough in their voluntary 401(k) accounts. Longer life spans are stretching savings even thinner. Social Security remains under stress. Furthermore, all that was going on before retirement plans lost $2 trillion in the recent stock market dive. Taken as a whole, the trends point toward a massive problem as people now in their 40s and 50s start to retire in 10 to 20 years.

Food Stamp Eligibility Rules Eased

As the economy weakens, states and the federal government are trying to help more people qualify for food stamps. Since Oct. 1, new federal rules make it easier for households with income from combat pay, retirement accounts or education savings to be eligible. "This is a nutrition program, not a welfare program," says Jean Daniel, spokeswoman for the U.S. Department of Agriculture (USDA), noting that half the 29 million Americans who receive aid are children. Some states are going further to expand eligibility. Last month, California enacted a bill that will allow low-income people to keep some savings and still qualify for food aid. At least four other states — Maryland, Ohio, Pennsylvania and Vermont — similarly eased the asset test this year.

States Cut Services

Around the country, the mortgage crisis and the slumping economy are causing tax revenue and investment returns to plummet, forcing cities big and small to cut expenses. "You're going to start to see across-the-board cuts in services," said Chris Hoene, director of policy and research at the National League of Cities. "Every service — police, fire, libraries, recreation — will see some cuts. And you start to see layoffs. You won't see the same number of police on the streets." At the center of the financial meltdown, in New York City, officials expect 165,000 job losses in the next two years. Mayor Michael Bloomberg ordered all city agencies to slash spending by $500 million now and $1 billion for fiscal year 2010. The city also is mulling new ways to raise money, like putting ads on the sides of garbage trucks and street sweepers. In Chicago, Mayor Richard Daley plans to lay off more than 900 city workers and eliminate nearly 1,350 vacant jobs to help cover a $469 million shortfall. In Oakland, an estimated $42 million deficit has Mayor Ron Dellums proposing shutting down City Hall one day a week, eliminating 84 city jobs, imposing hiring freezes and cutting other services. The palm trees in many Phoenix neighborhoods will be left shaggy this year. The city can afford to prune the trees only on major streets.

Gas Prices Continue to Decline

The national average price of a gallon of gasoline has fallen below $3 for the first time since February. The average price for a gallon of regular gas was $2.92 Monday, according to the AAA's daily survey. A year ago, the national average price of a gallon of gas was $2.81, according to AAA and a month ago, it was $3.835. Gasoline prices have been sliding along with crude oil prices since July, when gasoline hit a peak of $4.114. Gas prices likely will fall further, and figure to hit $2.50 to $2.60 a gallon if oil goes down to $50 a barrel as some analysts suspect.

The recent plunge in oil prices threatens to trigger unexpected financial headaches for top producing nations, especially Iran and Venezuela. The oil producers' plight is another sign that the global economic slowdown could become self-reinforcing. As their oil revenue falls, producing nations will cut back or delay new infrastructure projects and reduce purchases of goods made abroad. "They're going to have to re-evaluate their spending plans," says Mohsin Khan, the International Monetary Fund's director for the Middle East and Central Asia.

ACORN Scandal Highlights Need for Voter ID Laws

A former member of the Federal Election Commission believes states need to require voter identification at the polls to make sure groups like ACORN aren't able to pull off a "coordinated national scam" of voter registration fraud. Hans von Spakovsky is a visiting legal fellow at The Heritage Foundation and author of a recent report titled "The Threat of Non-Citizen Voting." He says the plethora of voter registration fraud allegations against ACORN (Association of Community Organizations for Reform Now) now being investigated by the FBI demonstrates the need for voter identification laws. ACORN affiliates have received at least $31 million in direct federal funding from taxpayers over the last decade.

Crisis Pregnancy Centers Under Attack

America's crisis pregnancy centers, designed to help mothers with problem pregnancies choose life, are under attack. Over the last five years, even during the Bush administration, there has been an uptick in attacks against pregnancy centers. Kristin Hansen of Care Net, which has 1,100 centers around the country believes an even further increase in attacks could occur if a pro-abortion administration takes over the White House. On a federal level, bills have been introduced accusing pro-life pregnancy centers of false advertising, which Hansen says is absolutely untrue. LifeNews.com reports that Obama, if elected, could shut down pregnancy centers across the country. The article calls Obama the "lap dog" of Planned Parenthood and NARAL, saying he will give them his full support if he reaches the White House.

Thousands Rally Against U.S.-Iraqi Security Pact

BAGHDAD (AP) — Shiite cleric Muqtada al-Sadr on Saturday called on Iraq's parliament to reject a U.S.-Iraqi security pact as tens of thousands of his followers rallied in Baghdad against the deal. The mass public show of opposition came as U.S. and Iraqi leaders face a Dec. 31 deadline to agree on the deal to replace an expiring U.N. mandate authorizing the U.S.-led forces in Iraq. "The Iraqi government has abandoned its duty before God and its people and referred the agreement to you knowing that ratifying it will stigmatize Iraq and its government for years to come," he said. "I am with every Sunni, Shiite or Christian who is opposed to the agreement ... and I reject, condemn and renounce the presence of occupying forces and basis on our beloved land," the message added. Al-Sadr also cast doubt on the Iraqi government's argument that the security pact is a step toward ending the U.S. presence in Iraq. The deal would require U.S. forces to leave by Dec. 31, 2011 unless Iraq asked some of them to stay.

WASHINGTON (AP) — Defense Secretary Robert Gates says troops will be well-protected under a draft security agreement giving Iraqis some legal authority over U.S. forces and contractors. Officials said the agreement includes a timeline for U.S. withdrawal from Iraq by 2012, and a crucial but unpopular compromise that gives Iraq limited ability to try U.S. contractors or soldiers for major crimes committed off-duty and off-base. The administration has not released the text of the agreement.

Taliban Militants Kill 31 Afghans; 34 Taliban Killed in Separate Incident

KANDAHAR, Afghanistan (AP) — An Afghan official says 34 Taliban were killed in an operation by Afghan and foreign forces near a key southern Afghan city. Daud Ahmadi says the Afghan forces battled the militants south of Lashkar Gah on Sunday evening. Ahmadi says the authorities recovered a number of weapons, ammunition, motorbikes and other vehicles used by the Taliban.

KANDAHAR, Afghanistan (AP) — Afghan officials say Taliban militants have killed about 30 Afghans after stopping a bus on a highway and taking the passengers hostage. Six of the dead were beheaded. Provincial police Chief Matiullah Khan says the militants captured about 50 people during the attack Thursday.

60 Militants Killed in Pakistan

ISLAMABAD, Pakistan (AP) — Troops backed by helicopter gunships and artillery pounded militant positions in northwest Pakistan, killing 60 fighters and wounding many others, the military said Saturday. U.S. officials, concerned about rising militancy in both nuclear-armed Pakistan and neighboring Afghanistan, have praised Pakistani efforts to clear Taliban and al-Qaeda strongholds near its northwestern frontier. But militants are mounting stiff resistance including a string of suicide attacks that could fan widespread Pakistani concern that they are paying too high a price for their front-line role in the U.S.-led war on terror.

Darfur: U.N. Says 40,000 Displaced

KHARTOUM, Sudan (AP) — Some 40,000 civilians have been displaced in Darfur in the last two months by fighting between Sudanese government forces and rebels in the northern and central parts of the war-torn region, said the U.N. on Saturday. Most of the newly displaced are living in the desert rather than in refugee camps. "No emergency assistance has gotten to these people," said Alex. "For the last five or six weeks, they have been living off assistance they are getting from other people ... or what they can scrounge for." More than 2.5 million people have been displaced in Darfur and up to 300,000 killed since ethnic African groups rebelled against the Arab-dominated national government early in 2003.

More than 5,000 Flee Congo for Uganda

KAMPALA, Uganda (AP) — The U.N. refugee agency says 5,680 Congolese have fled fighting in eastern Congo and crossed into Uganda over the past three days. Spokeswoman Roberta Russo says the Congolese refugees lived in villages and at Nakivale refugee camp near the border. The fighting pits Congo's army against a rebel group claiming to be protecting the area's Tutsi minority. Different groups have fought Congolese soldiers in eastern Congo for several years. Residents in the region normally flee to Uganda and then return home when things calm down.

N. Korea Steps up Disabling of Nuclear Reactor

WASHINGTON (AP) — The United States said Friday that North Korea has stepped up its disabling of a nuclear reactor it had been threatening to reactivate, a sign of progress in six-nation nuclear disarmament talks that had been on the verge of collapse. North Korean specialists have removed 60% of the fuel rods from the reactor. Fuel rods can be processed to obtain plutonium for nuclear bombs. The progress at Yongbyon came after North Korea ended a two-month boycott of a nuclear disarmament deal following the United States' removal of the country from a terrorism blacklist as an incentive.

China to Help Build 2 Pakistan Nuclear Plants

ISLAMABAD, Pakistan (AP) — Pakistan said Saturday that China will help it build two more nuclear power plants, offsetting Pakistani frustration over a recent nuclear deal between archrival India and the United States. The agreement with China was among 12 accords signed during Pakistani President Asif Ali Zardari's recent visit to Beijing, said Foreign Minister Shah Mahmood Qureshi. The accord deepens Pakistan's long-standing ties with China at a time when its relations with Washington are strained over the dragging war against terrorism. U.S.Islamabad on Saturday for talks, have rejected Pakistani calls for equal treatment with India on nuclear power. Pakistan's nuclear program remains a sore topic with Washington because of its past record of proliferation. International sanctions were slapped on Pakistan after it detonated its first nuclear charges in 1998 in response to similar tests by India. The revelation in 2004 that the architect of Islamabad's nuclear program, Abdul Qadeer Khan, had passed nuclear secrets to Iran, Libya and North Korea set back Pakistan's hopes of becoming a trusted member of the world's exclusive nuclear club. officials including Assistant Secretary of State Richard Boucher, who arrived in

Tainted Feed Kills 1,500 Dogs in China

BEIJING (AP) — Some 1,500 dogs in northeast China have died after eating animal feed tainted with the same chemical that contaminated dairy products and sickened tens of thousands of babies nationwide, a veterinarian said Monday. The raccoon dogs — a breed native to east Asia that is raised for its fur — were fed a product that contained the chemical melamine and developed kidney stones, said Zhang Wenkui, a veterinary professor at Shenyang Agriculture University. All of the dogs died on farms in just one village. Zhang determined that the animals died of kidney failure after performing a necropsy — an animal autopsy — on about a dozen dogs. In the ongoing milk scandal, melamine was said to be added to watered-down milk to artificially boost nitrogen levels, making products seem higher in protein when tested. The animal deaths raise questions about the extent of the chemical's presence in the country's food chain. Last year, melamine-tainted wheat gluten, a pet food ingredient made in China, was blamed for the deaths of dozens of dogs and cats in North America.

Canada to Declare BPA a Hazard

TORONTO (AP) — Canada will be the first country to limit the importation and use of products containing an ubiquitous chemical found in hard plastic water bottles and baby bottles, metal cans and other food packaging when it formally declares bisphenol A a hazardous substance on Saturday. The announcement comes six months after Canada's health minister, Tony Clement, surprised the chemical industry by labeling BPA as "dangerous" and saying that he may ban its use in baby bottles. Clement said a draft report on bisphenol A has found the chemical endangers people, particularly newborns and infants, and the environment, citing concerns that the chemical in polycarbonate products and epoxy linings can migrate into food and beverages. More than 6 million pounds of products containing bisphenol A are produced in the United States each year, including dental sealants, baby bottles, the liners of food cans, CDs and DVDs, eyeglasses and hundreds of household goods.

The biggest concern with this widely used chemical has been over BPA's possible effects on reproductive development and hormone-related problems. Many scientists believe it can act like the hormone estrogen, and animal studies have linked it with breast, prostate and reproductive system problems and some cancers. So far, the European Union and the U.S. Food and Drug Administration say the chemical is safe. However, the FDA is awaiting word from a scientific panel expected to deliver an independent risk assessment later this month.