zuckerman and with martha raddatz about stories they're covering. later, the federal government's role in the u.s. automobile industry, an update with edward montgomery from the white house. w"washington journal" starts now. host: good morning on this thursday july 2. the new jobless numbers are out. also, on the ground in afghanistan today u.s. troops involved in a major operation. later in the program we will speak with martha raddatz of abc news, the chief foreign affairs correspondent. she has spent a lot of time on the ground in that region reporting on u.s. policy and actions there. we hope to learn more from her. we will spend a lot of time this morning on two issues, the

economy and foreign policy. in the first hour we will get states and the budget woes many states find themselves in. many states started the new fiscal year yesterday. a number of them with unresolved budget. we want to talk with you about the debates you're hearing from your state legislatures about your own budgets and whether you're expecting increases in taxes or decrease in services and what all this means to your view of your states. call us . callhost: here's a look at the financial times this morning. in this story, the first batch of iou's to be issued by california has been printed and

will be sent out today and thus arnold schwarzenegger manages to strike a last-minute budget deal with state government. many other states find themselves strapped for cash this year. we want to talk to you about your views on that. let me introduce you to lisa, senior staff editor for smart money.com. yesterday filed a story with the headline about six states getting residents with big tax hikes." thank you for being here. >> thank you. >> how many states find themselves in economic crisis or difficult times this year? guest: the majority. 47 states have the fiscal year 2010 projected shortfalls in their budget. i would say all of them except for three. a few western states are in good shape for next year.

host: why are states having big battles over the budget? why not just have deficits? guest: unlike the federal government, states are required to balance their budget by law for the upcoming fiscal year. they cannot borrow. they cannot like the federal government does. they cannot print new money. they have to get things done. most of those states have come up on the deadline of june 30 because of the new fiscal year starting july 1. the big problem with the states is the recession hit all of them. in the sense that income tax collection was a big revenue source and that completely was devastated by people's

unemployment situation, sales tax revenue as well, consumption rates going down. that has led to a falloff in sales tax revenue for state coffers. >> what about the federal bailout, stimulus packages that have been going out to states? hasn't that helped some of the pain in the states? guest: i believe it has helped. without the bailout money, the situation in many states would have been a lot worse than it is now. but it is just not enough to really help ministates deal with their shortfalls. host: will learn more about california, but let's take two other states that you reported on and dig deeper. i want to stay in the western region and about what's happening in arizona and nevada. guest: ariz., from what i saw in the news yesterday, they sent

through to the governor a budget without the sales tax increase that she had wanted. so, i think that involved a lot of cuts. they are suffering a great deal. they were hit with a large falloff in real-estate market. and their state deficit estimate for fiscal 2010 is somewhere around $3 billion. host: over 28% of their budget. >> that's right. 28% of their overall budget, which is a big amount. they really got hit with the housing slump and the construction industry. it remains to be seen whether gov. brewer will get her way

with the sales tax so she could at least veto the budget. that has been yet to see. >> i will take calls from viewers and then talk with you about arizona and massachusetts. we're asking you to call us with your views on the budget debate from your own state, your view of it and what you're expecting in terms of your own pocketbooks as the states struggled to resolve their budget issues. let's begin with a call from mandeville, louisiana, paul on the republican line. caller: good morning. it's not bad for my industry. i sell automation and we do a lot of business overseas, especially in south america, automating a lot of different industries. but here i deal with the

chemical industry. i slowed down quite a bit. the budget down here, bobby jindal has done a pretty decent job. he's tried to cut some off of a higher education. we have a pretty big hospital system down here, a charity hospital system. he is trying to do what he has to do to reform the budget, he's getting a lot of flak down here from democrats any time because it's anything. anytime you got anything, you get flak from democrats. i am looking at the nation and the direction or going right now. that really has me scared. obama's four main goals are stimulus, banking, insurance industry. everything that has touched -- i mean, it's not going in the right direction. that is what really scares me.

you don't hear anything on the news about what is going to happen in the future, but i think we are going to have, according to economists, intelligent economists that are not just talking heads for the administration, are saying we will have 20% up to 30% inflation. that scares me because it will devastate the country. host: thank you. let's move on to north palm beach, florida. paul, good morning. caller: florida is like california. it confuses me. i live near one of the wealthiest states -- in one of the wealthiest states. we have oranges, nasa, so much, and tourism. so many different ways people in florida make money. the same as california. i cannot understand year after

year of being the most wealthiest place where most people and a lot of workers and illegal aliens, large amounts, working at low wages, year after year, were not doing nothing but working and working and our dollars that we have sweated for, how can these two states, especially california, be in so much debt year after year after year? it is robbery. i want to know why this is not being investigated. every state everywhere across the country, everybody is broke and bankrupt of a sudden. nobody had any problems until the word "stimulus" or "bailout" came about. there are no excuses. we're working and busting our backs.

host: thank you. in florida there% of general fund deficit is 27% this year. in dollar figures that is $6 billion. lisa is online at reporting on how the states are dealing with their budget deficits this year. we heard about florida. we gave numbers. we also want to look out west to nevada. one of six states looking at a big tax hikes. what's going on there? >guest: they are in a similar situation with arizona in a sense that they got hit in the housing slump. that has devastated the state budget. they have 32% of their general fund budget has gaps. another issue with them is

gambling. it has supported the state final until now. as people cut back on vacations and discretionary income is not available, they are suffering. they have increased their hotel room tax and sales tax and business corporate income tax to make up for it. host: they're hoping the tourists will still come even with those decisions? >> they're allowing hotels to bump up the room taxes in the meantime. host: this is michigan, jessie on the democrats' line to talk about what's happening in the state. caller: good morning. thank you for c-span and letting people voice their opinion. this is devastating here.

everything, property taxes going up. there are no jobs. it is awful. almost like a depression. seems more like a depression than a recession. i don't foresee anything getting any better. the person that called from florida talking about what obama has not done, he forgot about the last eight years of bush that cosmos of our problems. one thing, obama said when he got elected, he was going to start from the bottom up. all they have done is sent out a few checks of $250. you could hardly make a car payment with that. it's really bad. the talk about transferring prisoners from california to michigan to try to save jobs.

that's how bad it is here. it seems like we got a lot of our priorities in the wrong places. if we don't stop spending all this money in different countries and now start spending it on our own people is what many to do. this is my opinion for a long time. thank you for letting me speak. host: edward montgomery will be with us. he's helping the white house direct recovery for autos, unions, and workers. we will speak about some of the communities in michigan having to revisit their structures in order to face declining populations with many jobless citizens. that's our final discussion today. now to san antonio. john on the republican line. caller: good morning. i would like to talk about the

man from florida. i would like to answer his question as to why all the money they made is gone. government employees do not create wealth. the only create debt. they live very well. they raise property taxes when they need more money. if you consider the wealth, or the taxes they create as well creation for the government, there lies the problem. they overpaid workers when secretaries make more money in the public sector than they do in the private sector. california is the biggest problem. they have people making more money than they should be. but no one wants to admit this. no one wants to cut down the size of government and the cost of government like they do in the private sector. in the private sector when business goes bad, they start cutting. the government needs to do the same thing, but the people on the street and let them start paying taxes, which they don't

pay now. host: thank you. states are cutting government workers as a way to address the budget. can you talk more about where that's happening? >guest: that's probably happening everywhere. state lawmakers wandon't want tx increases, so first they tried to cut spending on all sorts of government programs. that includes laying workers off. in california in the news this week governor schwarzenegger mandated another three furlough days for all the state workers. unpaid days that he is forcing people to stay home to save money. that certainly is an option for lawmakers all over.

host: go to massachusetts. when massachusetts was starting to take a nickname about taxes, the state is starting to increase taxes on everything from alcohol to satellite television. why is that? guest: it has a $3 billion deficit for 2010, which is pretty big. it is putting through a sales tax increase, the sales tax is going from 5% up to 6.25%, a pretty substantial, and they're making cuts over the place. i think governor patrick has been unsuccessful with including soda and can't come to tax those items in retail stores, but the sales tax has gone through. >> thank you for spending time with us, lisa, this morning.

i encourage people to find your website smartmoney.com. she's been covering this as a senior staff editor. >> thank you. host: next is a call from philadelphia. pennsylvania has had a lot of this bdiscussions about its budget. caller: governor wants to raise the state income tax. if it is being raised, i guess it's not so bad if everybody's paying for it. it should be from the low income to the high income. and everyone would feel the pain. but that is not a problem. i think the problem is the tension from the city workers, the teachers, the fireman, a policeman. i think there should be a freeze on all government workers for at least the next year or so. i don't think -- i think the

pensions are the biggest thing. that is forcing the big property tax increases, because of policeman -- when a policeman retires, the retire at age of 45 or 50 and they can live another 30 or 40 years, so that is a big pension they are paying. that is the dirty little secret. private industry is saying you have to take a freeze on your salary. some are even being cut. but city workers and state workers, nothing is being cut. pensions are not being cut. i think that is where it has to be. the pensions are driving everyone -- that is what i have to say. host: that was the independent line. now there's this headline today.

talks ended tuesday night with no substantial progress. that's an rouge, louisiana, diane on the democrats' line. go ahead. caller: hello. after the first caller from the man from mandeville, i'm glad i got through. i've been disabled since 1997 with a rare disease that has no cure and just gets worse, but walt kilmeade. my husband died three years ago, leaving me widowed and destitute at 40. not exactly the plan for our lives. the thing i was calling about was i just found out the long- term personal care that i waited two years and eight

months for and other people are still waiting for, they will start cutting it back. i can barely get around, but i can at least get around. they're cutting people who are in real tears and cannot move into place caught fire. the planning to cut things like that. host: what would your message be to the state legislators in that news? caller: louisiana politics are screwed up. i would say please don't cut long-term personal care. why do they always cut education and services first when those are the things people need the most? i don't know what i would do now without my personal care worker and i only have her a few days a week. thank you so much for letting me get through. have a good day. host: good luck to you in figuring out how to proceed with that situation.

this a front-page story about the budget battles in california. iou's on the way. state workers will be ordered to take a third day off possibly. assembly speaker karen bass of los angeles charged out of the governor's office clearly distraught and walked briskly down the hall. she says "he should fix it." a luton to arnold torres and mariposa refusal to accept a budget deal that would have averted if the iou, but not closing higher deficits. the governor is using social media tools to give his side of the budget deal. he has his own page on twitter.

let's show it to you. he is sending tweets of what is happening with the state budget. here is one from july 1 posted at 11:00 a.m.. that is a look at his page on twitter. something he and his staff are using is youtube. they've created a video that gives their perspective of how the legislature is approaching the budget. let's look at it. >> right now in the midst of a budget crisis, they are debating about cottontaiw tails. >> [unintelligible] >> [unintelligible] >> i think this is inexcusable. how can they explain this to the

california people, that in the midst of the biggest budget crisis we're having a debate about cow tails. i'm asking legislators to stop debating about that and get to the budget. host: here's what it looks like another front page in orange county. let's go back to calls about what's happening in your state. now on the republican line is daniel. caller: the money is going -- too many things out there democrats and republicans have said are untouchable. when you are in debt, you have not enough money coming in, too money coming out, then

everything needs to go on the table. here in the state of ohio we have a house of representatives and the governor that are actually trying to violate the state constitution by putting a tax on food and drinks. coming along here and wanting to give another $685 billion more than what we have in our budget. they don't seem to understand that the well is dry, the bank is closed, there's no more money. you have to put everything on the table, if it means cuts than that is too bad. you cannot do anything else. you cannot raise taxes in this type of economy and expect to get anything out of the deal. host: next ray is watching from clinton, pennsylvania. independent line. caller: i am happy with what's

going on. i don't blame the government. i blame the people. people don't vote. they don't really care. for the last 30 years they've been asking and asking and someone else will pay for it. now the politicians are going to wreak havoc in that somebody has to pay the tab for all the things that have taken place where the people have caused it themselves. if you want a change in the future, you don't trust the same people that are in office now. you get rid of them. all the legislators have six or eight years in state legislator because they're not doing the job. get rid of them. they're going to want to point the finger at bush or here or there. in the state of pennsylvania our state legislators get $650 a month to rent the vehicle. they voted for that, themselves. that's for driving back and forth from harrisburg.

they can check a vehicle out that gets good gas mileage, but they don't want that vehicle. it won a mercedes. in pennsylvania, new york, florida, and all these places, i hope someday you're out there competing with a roblin in my yard and watching right now digging for once in my yard. there's an explosion coming. get off your reran and go out to vote these idiots out. -- get off your rear end and vote these idiots out. host: we will continue this discussion, but were joined by guests who is the director of state fiscal project for the center on budget priority policies. here to give us details about their study of what's happening. you can send us an e-mail, if you like, about what's happening your state or send us

the twitter message at c- span.orgwj. next call from albany, georgia. jonny on the democrats' line. caller: i was calling to get george it added to the list of bankrupt states. they have -- this year it to a about four months extra to get our income tax refunds back because they fired all the people. now they have raised our property taxes $300 and sent us a letter last month saying it will be raised and you have told nov to get it. it seems all the state's republicans are running are going bankrupt. thank you. host: let me show you a map that was in the paper this morning in which it says the great states are finalized

budgets on the bojune 30 deadline. the ones in black are not yet finalized. the ones in white, the fiscal year does not end on june 30, so the discussion continues there. now let's go to illinois with derek. illinois is in the middle of a budget battle. in "the chicago tribune." fiscal year starting out shaky. what is your perspective on what's happening? caller: the other democratic states, social services are too high and everybody's trying to blame the governor, but if the legislature -- but it is the legislature. it's the american people, if they look at themselves in the mirror, they will notice they

are the ones that went out and got these mortgages they cannot afford. in illinois they have tried to raise our taxes. they won't make any spending cuts. you can always expand on what you have. that's one of the biggest problems. as far as the american government, the one-party rule is one of our biggest problems. we had all republicans for six years. now we have all democrats. a change has not happened. we need to break up the congress so conservatives can take over the congress and the american people can get some changes so we can get it under control when clinton was president newt gingrich forced him to make tough choices. i look at the prosperity we had. it's pretty simple. don't spend more money than you taken. that's what the government has to do. that is what