years, we have about a month left in 2009, 10, 11, is $183 billion patent, which is huge for a historical standpoint. i would probably argue if i looked in my crystal ball, many states indicate they have a shortage in 2011, putting in numbers, i would probably crystal ball and give a range that my senses of the bottom line is probably between 200, and $250 billion in terms of deficit. ..

>> in the budgets, states are recommending that taxes for 2010 are really increased by 24 billion. if you look historically, we have seen numbers at times of 14 or 15 billion never a number of that magnitude. unfortunately, as we go along what governments will really want to cut governments but they will be forced more and more i think to look unfortunately on

the revenue side. most of this problem has come on the revenue side. even medicaid has been somewhat under control. if you look in detail, there's a significant number of states that have seen revenues down between 10 and 20% in terms of personal income, tax revenues. and actually four or five states, over 20%. so huge revenue falloff's. the only other comment i make today is we've are headed for a cliff at some point. this funding, the federal government in select december 20 10, which means sometime after that when that money goes away and the economy has not recovered enough, we are going to have a pretty significant problem to address. it is a period when you want to build rainy day funds, prepare

for that but given this kind of situation there is really very, very little ability to do that. and it's interesting even to compare this, scott mentioned back to 1983 in terms of cuts. but it's interesting when you look at it, that was one year down .7. 1982 going into that year spending group over 6% and coming out of it on the other side, 1984, spending grew 8%. so as bad as that one was, we were down and out of it relatively quickly. this one is going to be deeper and much, much longer. so you're not going to have the capacity to build a revenue base going forward. so with that, why do we open it up to questions. let's hold on the conference call and see whether there's any questions in the room. yester. >> jeff davis dna. to what degree are these

problems concentrated in california and say michigan? >> i would say these are pretty broad. i mean, though states are probably in that category on some of the worst, but orta, nevada, rhode island, you've got a number of others in that category but you've got a whole bunch of others that are close to that. i think when you look at the other side, we all ought to move to north dakota because it seems to be only state that's doing well. but the only states that are doing well with north dakota, wyoming, states that have had some what of an energy -based. when i say, when you look at the number, you had over 20 states revenue personal income tax losses between 10 and 20%. that means it's pretty broad. >> i just want at all so it's really interesting for us because if you look at the mid- 70s period for the early '80s or early '90s, you

still had, as ray said, there was a fair amount of state you had anywhere from six to a dozen doing fairly well. primarily because of energy. this is a very different, very universal with the exception of just a very small handful of states like wyoming and north dakota. you see this across the country in every region. whether it's economy.com, philadelphia reserve, any data shows virtual antistate downturn. [inaudible] i was wondering what you think this means for bond financing, will states shy away from it goes they are expecting lower revenues or will they turn to bond financing to try and fill gaps? >> i think it's going to be depending on the state. i think the overwhelming majority of states will probably do what they would normally do in this type of recessionary period, which is to the extent they can turn to bond financing. i think there are a handful of

stains frankly some of the larger states, obviously california, that will still utilize bond financing. but i think they have their own very difficult issues that they have to deal with to ensure they can continue. but we've never seen a state default. you saw some transportation bonds defaulted on in the '30s. so states are still an exceptionally low risk, good investment. so i think investors realize that. i don't expect that to be a big issue. >> anything else in the room? yes. >> jeff again. if you look at and i appreciate getting what percentage, 11, 12% of the budget here. if you look back in the 80s in the 70s, as a% of the budgets, isn't this on a scale you

haven't seen or is it similar, you know, to that state's budget were smaller? >> yeah, i would say again, i think -- we don't have statistics back to the '30s but i think you really have to go back there. this is the worst thing that we have seen. most people when we initially hit this downturn on it would be similar to 1983. from what i've seen again, we were down in 1983, the report, thereafter we had very good revenue growth so we were down and back very, very quickly. you know, this started, you know, december of 2008. so we're into this a while. we have to do three more years to go. i think it's really the death and the length of this. there is no capability to sort of build the revenue base, built the rainy day funds, really on the defense on the entire time. >> yes.

[inaudible] and the fact that this does look to be a very long and deep downturn? >> know i haven't heard of any states discussing that. i think it will always do that frankly partly because of bond rating issues, but i think it's really the choices are dealing on the expenditure side and the revenue side, tax systems and so forth. >> one more. >> you talk about the number of states, 24 states i think it was, are going to be increasing taxes. was that billion or million? >> billion. >> billion. >> i don't remember the exact number of states. it was 24 billion, but it was like 25 or 30 states i think are not. >> will check that for you.

>> okay. why do we go to the phone. operator, are there any questions on the phone? >> we do have a question once again if there are any questions, press star and didn't want on your touch tone phone. we have a question from frank. please go ahead. >> i wonder if you can discuss education funding by the states a little bit, what impact we are seeing and what this can do to sort of protect k-12 programs. >> well, they were beginning to do some cuts in education, and then when the recovery package came i think they have sort of backed off somewhat. and governors generally like to protect it, but i think unfortunately going forward, it's going to be hard to continue to protect it in spite

of the recovery package funding. because it's such a significant portion. in other words, if you look at healthcare and education you have about 70% of your total budget, and i think so far what they've done is they have got the rest of it, but now i think going forward unfortunately they will probably have to look more both are higher in elementary and secondary. >> thank you. >> our next question is from kevin from associated press. please go ahead. >> given the economic environment, should the federal government consider guaranteeing short-term loans and the bond issues from the states? >> i let you take that. >> well, we certainly don't have a position on that. and that does seem to be an issue where the states very in

their positions on that, just depending on their current ability or at least their perceived ability to go out in the markets. i do think though that while there was a lot of consternation at the beginning of this financial crisis last fall, it's interesting to see that again i think there's a realization that despite the turmoil and the difficult fiscal situation from a debt financing side, again, states compared to other entities are very low risk. and even in california, frankly, is a very low risk, both historically and otherwise. and i think over time that will be realized. >> the only other thing i would say is it's not easy. as i remember, the federal reserve really can't do that legally. i think you need congress to act to provide the right. and i would just say in the area in terms of broad governors are not pushing forward.

>> our next question is from tammy from cnn money. >> our next question is from lisa from abc news. please go ahead. >> thanks to my question has to do with a recovery act, interstates fiscal spending as with respect to a. you talk a little bit about how that even with the recovery act the decline has gone on. did you speak a little bit more about how the recovery act impacted in medicaid and education? where are we seeing specifically how that helped? >> okay. well, as i mentioned, those two programs represent about 135 billion. it is the only flexible money that is there. and what it has allowed states

to do, particularly the medicaid, because it's also medicaid money was retroactive to october as a remember, 2008. and it's over a 27 month period. but that's allowed states really to take back their money because the feds are picking up over a 6% share. and to spread it around in fact you will find places where that money was even used to protect education. from a macro economic standpoint it was very positive because we had shortfalls of 200 billion going into -- or before the recovery package, and i would've had a larger negative impact so that medicaid money and the education money, really you could see it as soon as it appeared that that bill was going to go through. a number of states had already announced that. were able to put them on hold. the problem is that we always

figured it would be nice to get 30 to 50% of the shortfall. and in the particular time, that's what it and out to be, but the economy deteriorated so much more after that that there's just not enough flexible money. so i think it was a very, very good policy. it was a fair amount of flexible money and it was highly targeted. basically the two carriers that governors wanted to protect so i'm very positive about the recovery package. but this downturn is just much worse than anybody anticipated. >> caller: and then if i could just follow-up, have the states said anything to you about the multipliers that didn't have hope that that impacts the revenues in terms of some of even the car targeted non- flexible spending that's supposed to go on interstates? >> there's a multiplier effect on all of the stimulus and

unfortunately a lot of the other, it's going to be much later. in other words, the highway money and the other is going to pay out over two to three years all the water money and so on and so it will create a multiplier but unfortunately it will be significantly later. the recovery package i think did a good job because most of the tax cuts were very front ended, the flexible money to states was front ended but a lot of the construction money was further down. but it's pretty positive from the standpoint that it really did help over a two to three year period. >> caller: thank you. >> the next question is from steve. please go ahead. >> caller: i have a question for both of you. usually a lag time for states to catch up to the recovery is about two years. are you saying today from your

comments that you think it might be three, four, five years this time? >> scott, do you want to take that? >> i think it could. and i think what most states are telling us right now, and certainly when we look at his report, what we see is if you do have the recession ended this year for by the end of this year, we hope that by at least at 111 you would start to see why does come close to 2008 levels and then we would see growth budgets in 2012. but if the severity and length of this recession continues, then it could go further. but as ray and others have said also, the problem is that we have some real difficult structural issues going forward just in terms of all kinds of cost drivers like corrections costs for prisons. and so the question is as the recovery money and, how much is

made up an increase in revenue from an improved economy. so i think you could see the painting on the state, a lag in terms of growth rates for budgets, not until fy 2012. >> 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 at also another reminder because i think it's so important from the revenue side is most states, particularly those with personal income taxes, are externally dependent on 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 both states. >> any other questions, operator? >> operator: we have a question from john please please go ahead >> caller: yes, do you all know how many state legislatures and governors were late or deadlock in passing the budget for the nest fiscal year because of 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 fish a. i think there are some states that are concerned, but right now i think it would only be a handful, anywhere from five to 10. >> you can imagine no, three weeks is an eternity in terms of legislatures and governors trying to fix budget. >> caller: thank you. >> operator: the next question is from taney from cnn money. please go ahead. >> under >> caller: i thought of another. [inaudible] are they getting a better handle on the declines in the revenues so that there money in 2010 going to be i don't want is a more realistic or accurate, or will we see you know, continued in the scramble to close gaps ex- >> i personally don't, i mean, until the rate of decline really begins to bottom out in terms of

the state revenue numbers, it's going to be very, very difficult. one of the hardest problems in economic forecasting is to get the turning points, and it's 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 is going to be a lot of unknowns. scott. >> got, i have to say that's what's so remarkable about this period. because the fiscal folks, i can't tell you how much they can't wait till that day when they have stability for money coming in and their forecasts, and they continue to believe that they have wrapped their forecasts as far down as possible and they are still missing it so is remarkable as to how difficult this recession has been from a standpoint of state revenues. >> caller: that would be about right. >> the only thing i would mention is that everybody was looking for so-called green

shoots, and today they are now questioning whether the green shoots are really there. so we've got to have the shoots first before we talk at all about revenue. >> caller: thank you. >> operator: our next question is from chris buckley from enr. please go ahead. >> caller: a quick question about the program cut you had talked about in 2009, we have a chart that showed that higher education and k-12 had the highest amount that in terms of the most date making cuts in those areas. do you have any numbers in terms of dollar figures that would show which areas by dollar figure got the biggest cuts across all states? >> we didn't specifically ask that in this report. we just asked them if they get a particular cut to that area, to that particular topic area. >> caller: would you know

generally how the education secretary's would compare to other areas? in terms of dollars and generally. >> my guess, and promote we have heard is you primarily will see that in the higher education area. to the extent it was k-12, a lot have been made up from the recovery act funds. and of course, there are requirements and 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 and education areas. but there are maintenance of requirements for hire at also so my guess is that the percentages would be very low although you did see cuts in those areas. >> caller: thank you. >> operator: we have a question from frank. please go ahead >> caller: i just wanted to make sure, these are estimated fiscal year 2009

for the two-point to% decline in state spending is projected, i think most date in their year and may, was it me or jim? >> yes. 46 dates in at the end of this month on june 30. so you're correct, those are estimates. and when we do the fiscal report in the summer we will have actuals. >> caller: okay. great. thanks. >> operator: at this time we have no further questions. >> okay. thank you very much. appreciated. >> >> operator: thank you ladies and gentle and. this concludes the conference call. you can all disconnect at this time. >> joined us later today for a speech by david simon, creator and head writer of the wire. mr. simon also wrote for the baltimore sun for 12 years and he will talk about the future of

journalism. that's live at 1 p.m. eastern here on c-span2. a look here at the u.s. capitol where both the house and senate will gamble in to start the week. legislative work starting at 2:00 or you can watch that live on c-span. while the senate comes to order at 2 p.m. eastern after some general speeches. lawmakers continue work on a bill regulating tobacco products. our lives in a coverage right here on c-span2. will get a status report on how the fec is to bring viewers for the change. the communicators on c-span2. and we have more live events for you later with the director of

national intelligence dennis blair. that dni is speaking to the intelligence and national security alliance and you can see that live here starting at 8:45 eastern after the communicators on c-span2. how he sees and funded? private donations. >> i don't really know. >> from public television. >> donations. >> i don't know where the money comes from. >> federally. >> contributions from donors. >> how he c-span funded? 30 years ago america's cable companies created c-span as a public service, a private business initiative, no government money. >> now a discussion on iran, its relations with the u.s. and its neighbors and the upcoming presidential election there. the rand rand corporation in washington, d.c., hosted this event last week. it's about an hour.

>> okay. we are going to resume and we will start as people flow in. as is our panel before hearing from a doctor krasinski at our lunch. you probably will be grateful to know that we only have one more powerpoint. this is a grand conference so of course it is often powerpoint heavy and we apologize for that but we try to limit it as much as as much as possible today. i think you will find david's powerpoint well worth the. we have two of our senior analyst at rand resenting the external perspective today. we heard a lot this morning about negotiations with iran, the internal domestic situation within iran, factionalism, the economy. now we are turning to a ron's place in the broader region. and we will start with david who will be focusing on iran's military power projection and their capabilities, and it will

be followed by fred weary, another senior analyst your it will be focusing on regional reactions to iran. so without further ado. thank you. >> thank you. think you all for being here. i'm going to talk today about iran's defense strategy and a little bit about its military doctrine, and in how well it has been able to operationalize that doctrine to develop capabilities that will benefit that doctrine and meet the requirements of strategy. mikey points are threefold. first of all it looks like from our perspective that iran is able to formulate a strategy and a doctrine that aligns well with that strategy. i'll talk about that in just a minute. the second piece is that while

this is the case, a number of capabilities that they have developed or try to develop have fallen short in some key areas. have fallen short of that doctrine, but in other areas, the third point i will get to, there is some reason to be concerned especially as we look out next three to five, even 10 years if they continue developing these capabilities they could be a problem for our power projections in the region. so based on an analysis of the statements, some work from within iran, looking at exercises and those kinds of things, we discern for components of what iran calls its diverse defense strategy. the first one, of course, is on regime survival. that's paramount for the islamic republic, but defending the

regime against internal threats. they have capabilities in partida military, paramilitary, intelligent capabilities that are designed to ensure that the regime is stable and can survive. the secondary is on deterring aggression. deterrence is a major part of the strategy which -- i didn't say, geopolitically offensive strategy we believe it has some tendencies. if deterrence fails, they intend to defeat aggression within their borders through a number of capabilities, mainly partisan warfare and those kinds of things which i will get you in just a second. the fourth thing which is really the offense of tendency part of their strategy is their