money and the other is going to pay out in two to three years and so on, so it will create a multiplier but unfortunately it will be significantly later. the recovery package did a good job because most of tax cuts were very front ended. the flexible money to the states was front ended but a lot of the construction money was further down, but it's pretty positive from a standpoint that it did help over a two to three year period. ..

and then we would see growth budgets in 2012, but if the severity and length of this recession continues then they could go further, but as rate and others have said too, the problem is that we have some real difficult structural issues going forward just in terms of all kinds of cost drivers like corrections cost for prisons, and so the question is as the recovery money ends, how much is made upx't)g by an increase in revenue from an improved

economy? so i think you could see, depending on the state, a leg in terms of growth rates for budgets, not until fy 12. >> the only other comment i would make is, if the unemployment begins to come down, then you can assume state revenues will begin to come up, but the big problem here is that the medicaid growth is going to be very, very late in the cycle and if you don't get a fairly strong uptick, that growth is really going to be a huge problem for several years to come. >> and i just want to add another reminder because i think it is so important from the revenue side, that most states, particularly those with personal income taxes are extremely dependent upon the wealthiest individuals for basically that capital gains and investment income so really what happens with that source of revenue over the next two to five years

really is going to have a huge impact on the fiscal situation in most states. >> any other questions, operator? bead we have a question from john from the commercial. please go ahead. john, your line is open. go ahead and read your question. >> do you all know about how many legislators and governors are late or deadlocked in passing the budget for the next fiscal year? does the financial problems and disagreements-- >> we don't have a number right now. i think that question will be particularly apropos in about three weeks, because it will be interesting to see how many finish up. think their states that are

concerned right now i think it would only be a handful, anywhere from five to ten. >> you can imagine, three weeks is an eternity in terms of legislators and governors tried to fix budgets. >> thank you. >> the next question is from tammy from cnn money. please go ahead. >> do you think the governors and legislators are getting a better handle on the declines in the revenue, so that the money in their budgets for 2010 are going to be even more, i don't want to say realistic but accurate, or will we see you know, continued scrambles? >> i personally don't, i mean unsell the rate of decline really begins to bottom out, in terms of the state revenue

numbers it is going to be very difficult. one of the hardest problems in economic forecasting is to hit the turning points, and it is very, very difficult so once you begin to see that bottoming, then i think the accuracy will increase quite dramatically, but until that time i really think there's going to be a lot of unknowns. >> yeah, i have to say. that is what is so remarkable about this period. the fiscal folks come i can't tell you how much the way to that day when they have the stability in the month of coming in and therefore keston they continue to believe they have ramped their forecast is far down as possible and they are still missing it so it does, it is remarkable as to how difficult this recession has been for-- from a standpoint of state revenues. [inaudible] >> the only other thing i would mention is everybody was looking for so-called green shoots and today they are now questioning whether the green shoots are

really there, so we have got to have the shoots first before we talk at all about revenue. >> thank you. >> the next question is from chris buckley from dnr. please go ahead. >> a quick question about the program cuts. you had talked about in all nine, we have the chart that showed that higher education and k-12 had the highest amount of cuts in terms of the most states making cuts in those areas. do you have numbers in terms of dollar figures which would show by areas by dollar figure got the biggest cuts across all states? >> we didn't specifically ask that in that report. we just ask them if they did a particular cut to that area, to that particular topic area. >> bud you know generally how the education sectors would

compare to other areas? in terms of dollars generally? >> my guess is, and from what we have heard it is you primarily will see that in the higher education area to the extent it was k-12. a lot has been made up by the recovery act funds and of course there are requirements not to allow for further declines based on previous levels, so to the extent you would see that, it would be primarily in certain higher ed areas but again, their maintenance of effort requirements for higher ed also, so my guess is the percentages would be very low although we did seek cuts in those areas. >> thank you. >> we have a question from frank wolf from education daily. please go ahead. >> i just wanted to make sure, these are estimated fy 2009, the tubers-- 2.2% decline in state

spending is projected? i guess most states in their year in may or june. >> has come of 46 states and at the end of this month on june 30 if so you are correct. those are estimates and minelli to this report in december we will have actuals. >> okay, great, thank you. >> at this time we have no further questions. >> okay. thank you very much. appreciate it. >> thank you ladies and gentlemen. this concludes the conference carper code you may old disconnect at this time.

>> the joint economic committee holds a hearing tomorrow morning on the latest monthly employment report from the bureau of labor statistics. previous reports showed 16 straight months of job losses. live coverage is on c-span2 at 9:30 eastern. >> our party needs obviously a lot of work. >> sunday on c-span's q&a, indiana republican governor mitch daniels on a revitalizing the g.o.p.. >> it needs to look in ridley, think about how it can speak more, meaningfully, to the problems of today and to anti-american so today, the young people of today specifically. maybe i can be a part of that. you don't have to be a candidate to do that. >> q&a sunday night on c-span. also on xm radio for download the c-span podcast.

>> now senate republicans on the government's role in the general motors and chrysler bankruptcies. members focused on a bill that would transfer stock in the auto companies directly from the government to taxpayers. this is 20 minutes. >> i am lamar alexander and this is senator bennett with me. senator kyl is going to join us in a few minutes. he is coming from the finance committee. we are introducing today the auto stock for every taxpayer act to require the treasury to distribute to individual taxpayers of the stock in the new gm and chrysler within one year following the emergence of the new gm from bankruptcy proceedings. this is the best way to get the auto companies out of the hands of washington bureaucrats and politicians and into the hands of the american people in the marketplace where it belongs.

so instead of the treasury zero ng 60% of the shares in the new gm and the percentage shares of chrysler you would own them. if you are one of 120 million americans who paid federal taxes on april 15th. this is the fastest way to get the stock out of the hands of washington and back into the hands of the american people who paid for it. to keep it simple and to help the little guy it also get an ownership stake in america's future, the treasury would give each taxpayer in equal number of the available shares. the treasury department has said it wants to sell the shares as soon as it can but the president of general motors said in a phonecall with a number of us in congress a couple of days ago that this is a very large amount of stock and that an orderly offering of the shares might take several years. these shares might not be worth very much at first but put them away and one day they might

contribute something to a college education. for example general motors 610 million shares were worth only 75 cents just before bankruptcy but they were worth $40 a couple of years before that and $75 a few years before that. already we are beginning to see what government ownership of car companies looks like. is today the president of gm and chrysler spent four hours before congressional committees talking about dealerships. i assume they drove themselves here in congressionally approved methods of transportation, probably their own hybrid cars. that and they didn't have any time yesterday to design cars, to build cars or to sell cars. unless to get the stock out of the hands of washington this is going to be repeated over and over and over again. there are 60 committees and subcommittees in washington who can summon the heads of the auto companies here to give advice about how to do their job.

car companies executives it ought to be managing complex companies will be reduced sue the status of an assistant secretary moving from subcommittee to subcommittee, hauling briefing books. you can just imagine what the questions will be next week. what is the next model going to be? what color will the paint the? which plant should be closed? why don't you open one in my congressional district? how many cars should have flexible fuel? what should this salaries beat in the executive offices? where can conferences be held? amman will want to know why the gm volt is buying it back rebated south korea instead lived in that congressman congressional district. there will be lengthy questions about the number of holidays. thousands of written questions demanding thousands of reagan, all of it under oath so lots of lawyers will need to be involved and it is not just the congress

we have to worry about. the president has already called the mayor of detroit and assured him that he is on his side in keeping the headquarters of gm in detroit so the executives want move it to warren, michigan and the mayor of detritus said he has had plenty of conversations with members of the president's auto task force to have assured him there on his side as well. then there's the treasury secretary and then the undersecretary the want to keep up with what is happening to the taxpayers $50 billion. there is a very active economic czar in the white house used to be the president of harvard. there are the epa officials who want to be telling them what size cars to build and there was not very long ago that the administration told general motors it was building too many suv's and that its vault was too expensive to work and the president himself-- so given the stock to the taxpayers who

actually pay for it. it is the only way to get the government out of the company's hair and give them a chance to succeed. and, it will create an investor fan base of $120 million are so americans who are now stockholders in those companies, who may be a little more interested in what the next model chevy might be. the fan base of the green bay packers his ownership is distributed among the people of green bay. this is the fastest way to get back to the wise principle. if we can find it in the yellow pages the government ought not to be doing it. more than the money, it is the principle of this thing. the other day a visiting european automotive executives said to me with a laugh, that he had come to the "new american automotive center, washington dc." to get our economy moving again let's get our auto companies out of the hands of washington

politicians and bureaucrats and back into the marketplace in the hands of american investors. the sooner the better. >> when lamar described his amendment that he is just described to you i said, i have an amendment that will fit perfectly, and so i joined my amendment to his and we will be offering it as the alexander bennett amendment or as i suppose it will be known in utah, the bennett alexander amendment. there will obviously be a period of time before the stock can be distributed. he has anticipated roughly a year. in that period of a year, the secretary of the treasury will be in charge of controlling the stock, so my amendments will give the secretary of treasury my portion of this amendment, will give the secretary of the trade jury the same fiduciary

responsibility that any director or official in a company would have. now, we talk about conflict of interest here in washington a great deal and that conflict of interest is not a good thing. the secretary of the treasury finds himself in a position of a conflict of interest. he has his interest as the chief financial officer if you will of the federal government, and conflicts of that with his position running an auto company, or at least overseeing the running of an auto company. the president has said we don't want to run an auto company so i say good, good on you mr. president. we will set up this circumstance with this amendment, where the secretary of treasury has a responsibility to the shareholders, the same as if he were a ceo or a member of the board of directors of a private company and therefore, in discharging that fiduciary responsibility we have removed

the conflict of interest. we have made it clear that he will be subject to the same kinds of laws and regulations and yes perhaps shareholder lawsuits, that anyone would be in a position of fiduciary responsibility. i think by doing that, i will spur the desire of the secretary of the treasury to comply with senator alexander's part of the amendment and get rid of this stock as fast as he possibly can for give giving it to the american people who have paid for it strikes me as a good idea. another portion of my amendment says, no more t.a.r.p. money can go to a bankrupt company. the t.a.r.p. money was sold to the congress as acquiring assets, not as a quiring stock positions in various companies and particularly not in

acquiring a stock position in a bankrupt manufacturing company. when we approved t.a.r.p. the first time around we did it with the understanding he was dealing with the credit crisis and the financial meltdown we were facing around the world and instead the t.a.r.p. money has gone into bankrupt companies, and once again, the question of conflict of interest. i am saying there must be no conflict of interest with respect to how the t.a.r.p. money is being spent so that the treasury secretary says well, wearing my hat, looking at for the benefits of general motors i am going to suddenly switch and take my hat as the treasury secretary and determine some t.a.r.p. money is going to go to relieve my problems as an executive overseeing the auto companies, so those are the two aspects of the addition i am making two senator alexander's amendment. number one, we are giving the secretary of the treasury the same kind of fiduciary

responsibility and therefore exposure that any officer or director would have into a corporate opportunity and the same time we are saying no more t.a.r.p. money mr. secretary, whichever hat you may be wearing, can go to one of the bankrupt auto companies. >> i support the kyl-- no, i am just teasing. i am proud to be a co-sponsor of the alexander-bennett amendment because they joined to excellent ideas together. first of all understand the american people are really fed up with this notion of the federal government taking over business and running those businesses. and, part of this is in response to that but there is a very good governance aspect of this that i want to bring to your attention. you know the government of the united states of america is made up of the people. the people came first. it is we the people in order to form a more perfect union, give the government some of our rights and then we will see

where it goes from there so the people are the government in the united states. wintley talk about the government owning something, it is the people that own it, so it is the people who should have the shares of stock, not the government and that is the first great idea here. that the stock in this company, that the people know own will be held by the people. now it is not just an abstract notion. the second important reason for what senator alexander is doing here and senate-- center bennett alluded to this, that it would not be a good financial thing for the united states government to have to sell off all of this stock in a relatively short period of time and of course we don't want the government to overstock for a long period of time but essentially it is a fires still. everybody in the market knows the government has to unload 60% of the companies so what are they going to do? are they going to pay high

dollar ford? no. the dahlia the government would give that would not represent the true alta madell you we believe of the stock. if it is held on the other hand by millions of individual taxpaying americans, some want to cash in right away, some may want to hold it, some may want to see. most will believe there is a significant upside potential and they may hold it for a long time. i think frankly that is what is going to happen if the company is run right and it will be run right with the additions of the bennett concept should the amendment. so, you don't want the government to get rid of this docket at fire sale prices. the nobody benefits and that is the second practical reason. we the people should have the stock and secondly it will make the most sense from a long term value perspective and senator bennett has spoken to the reasons why the fiduciary responsibility of the government is also very important.

i hope that rather than viewing this as some kind of partisan exercise our democratic colleagues will listen to their constituents back home, who were not happy about the way things are going with government takeovers these days and will see the value for them in adopting this amendment. this is an amendment, a bill that should be adopted, and i am very hopeful the democratic colleagues will join us in seeing that that happens. >> senators have you gotten any-- from the test scores and is there any complexity about doing something like this? >> the irs knows where to find this when april 15 comes so it can find this when it is giving something. the irs did not have problems with tax rebates. they have the names, addresses and electronic files of

120 million people who filed returns. it ought to be relatively easy to get stock to them. typically in the way stock is handled in america today the company holds the stock certificates on behalf of the individual owners, so about all you would have to do is let the 120 million americans that you have a few shares of stock and gm and chrysler and when it is time to sell its ego to that process. it should be relatively simple. >> any response from the administration to suggest-- >> i have not suggested it to the administration. i have been thinking about it for several weeks. it seems to me to be perfectly obvious and then the president of gm made it clear, it is the treasury's decision when they still-- sell the stock but he said it is the large amount of stock and senator kyl said selling it would have to probably be done in stages over a period of years. this could be done in a few months and we are out of it.

it would mean we would have 120 million or so americans to own general motors and chrysler. that is 60% of gm. >> uaw fund owns about 17%. that is non-loading. the government of canada owns 12% and the bondholders on the rest. it would be widely dispersed. we would be back in the light companies are supposed operate and the presidents instead of driving their hybrids from detroit to washington every day to answer some subcommittee's questions about the next car model could focus on designing and building and selling cars and competing and try to make the value of the stock go up. >> senator alexander, with some money-- would you support any legislation that would protect the percentage of those jobs in tennessee or any other states? >> i don't know, what kind of legislation would that be? i believe in the free market. the jobs are in tennessee.

we have gone from having almost no auto jobe's-- we are right to work law and other states thumper coolio low taxes and other states don't. we have one of the best four-lane highway systems and other states don't so that is why nissan has been the most efficient auto plant in america many times, why volkswagon chose tennessee and why the springhill plant of tennessee will be successful. >> would not support any legislation that would try to make the government-- [inaudible] >> no, you can't run the country that way. that is the direction we are headed. i am trying to say let the free market work, get the stock of washington so everyone in washington could try to run the car company. >> it may be more efficient for gm to downsize their headquarters and move someplace else but the president is quickly on the phone with the mayor of detroit saying don't worry, we are going to keep the headquarters there in detroit.

that is exactly the kind of political system that has no business and running the company for the value of the stockholders. >> we are seeing steady drops in claim numbers but also-- are you encourage by that and what you think we are going to see tomorrow? >> i want try to forecast what we are going to see tomorrow. the unemployment problem is of course a serious one and it is a tragic one for those people who have lost their jobs. and, i say that as one who has lost my job at various points of my career there and as one who has seen my son lose his job in the financial crisis. and it is a time of great, great difficulty for the individuals and for their families. fortunately my son found another job and i have found another job that i'm trying to keep.

that having been said however, one of the things we have learned is that artificial attempts to maintain employment that go against market forces prolong recessions and sometimes turn them into depressions. and there is evidence with respect to the great depression now, as we go back and study that, that many of the things that were done in the name of protecting jobs in the great depression in fact caused it to last year's lonka then it otherwise might have done. you can read the literature on that income to your own conclusion as to how convincing it may be. the most important thing we must do is get manufacturing and all of those parts of the supply chain that support manufacturing back into a healthy condition again, and it is not just automobiles. it is every portion of the economy that needs to come back.