Economy Now
California warily watches Facebook stock price
August 2, 2012: 3:19 PM ETFacebook investors and employees aren't the only ones carefully watching the company's stock price deflate.
California, which was hoping to net up to $2 billion for its cash-strapped budget from Facebook's IPO, acknowledged this week that the company's stock price has "fallen far below" the $35 level assumed in the state's revenue projections.
Facebook (FB) dipped below $20 for the first time on Thursday, a far cry from its $38 initial public offering price.
Related: Facebook has no friends
But the time period California really cares about for Facebook's stock price will come later this year: Oct. 15 to Nov. 14. In that one-month window, Facebook will issue around 273 million new shares to current and former employees to settle its equity obligations. Employees will in turn hand over around 45% of that windfall to governments to pay off their federal, state and local tax bills.
California was hoping to strike it rich when those Facebook insiders cash in on their stock and options. Facebook had said in May that expects its employees' post-IPO tax obligations to total $4.4 billion. If the stock price remains around the current $20, that tax bill drops to $2.5 billion.
This could spell big trouble -- and deficits -- for the Golden State. The state's Legislative Analyst's Office said in a report Wednesday that if "the lower share prices persist through November and December, hundreds of millions of dollars of income tax revenue assumed in the state budget plan are at risk."
Still, California might not get hit quite as hard if scared insiders dump Facebook shares later this year, since that could generate more taxable stock sales than originally projected. The state will next update its revenue estimates in November.
CNNMoney tech editor Stacy Cowley contributed to this report
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Americans overwhelmingly favor big defense cuts
With annual budget deficits now routinely topping $1 trillion, a majority of Americans favor cutting defense spending, according to a new survey.
The survey, conducted by the Center for Public Integrity, the Program for Public Consultation and the Stimson Center, shows that 90% of Democrats and 67% of Republicans want less spending at the Pentagon.
The survey's methodology is interesting. Instead of simply asking Americans whether they favor more, less or the MORE
Charles Riley - May 10, 2012 4:03 PM ET -
Catholic groups spar with Paul Ryan over budget
Rep. Paul Ryan is scheduled to deliver a speech at Georgetown University later this week, but he is unlikely to receive a standing ovation from some members of the faculty.
Almost 90 faculty members at the prestigious Jesuit school have signed a letter to Ryan that claims the Republican budget guru is misinterpreting Church doctrine as it relates to the role of government in public life.
"We would be remiss in MORE
Charles Riley - Apr 24, 2012 3:28 PM ET -
Surprise! Budget mess rolls on
Congress and the White House took another few steps away from conducting a well-reasoned, bipartisan budget process on Wednesday, as Democrats and Republicans let loose another round of ultimatums and rhetorical bombs.
Let's start with the battle between House Republicans and the White House. Last year, with just hours to spare before a voluntary default on the nation's debt, Congress passed a piece of legislation called the Budget Control Act.
Along with MORE
Charles Riley - Apr 19, 2012 11:30 AM ET -
Paul Ryan's dramatic budget preview
House Budget Committee Chairman Paul Ryan is expected to release his budget proposal for fiscal year 2013 on Tuesday, a rather highly anticipated event in Washington.
And Ryan is only adding to the tension, releasing a short video in which he is seen stalking down empty hallways and talking about the nation's debt problems.
Plus dramatic music!
Charles Riley - Mar 16, 2012 11:49 AM ET
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