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Calif. AB32 Set to Make Bad Economy Worse

 By Warner Todd Huston  Monday, September 20, 2010

Four years ago those Californians, ever the starry-eyed dreamers, came up with the “Global Warming Solutions Act of 2006,” also called AB32. But like most of these global warming laws, the results will be to oppress the economy and throw people out of work while doing little about global warming.

The law mandates that by 2020 the state’s greenhouse gas emissions must be reduced to 1990 levels. Supporters say it is the premiere global warming reducer in the nation and makes California a leader in new green technologies. Critics say it is killing jobs right during the worst economy since The Great Depression, a time when jobs are needed most to bring California out of the black hole that the budget has fallen into. 

To counter the deleterious effects of AB32 opponents have introduced Proposition 23, a ballot initiative that would put a hold on AB32 until unemployment drops below 5.5% and stays at that rate for at least a year.

Prop 23 has a lot of backing from the oil industry. It is also backed by the Adam Smith Foundation, a conservative think tank interested in free markets, and government fighting waste and corruption. 

The Adam Smith Foundation has entered the fight because it worries that the “poorly-designed and heavy-handed regulations” will work their way east to infect the rest of the country. Of AB32 the Adam Smith Foundations says:

Suspending the stricter environmental rules will allow the economy to grow and encourage job creation. Employers who were going to have to buy new equipment to comply with the law can instead use that money to hire new employees or put into research and development. Passage of this proposition will also serve to discourage other states from adopting the stricter standards.

Now, just for a second let’s forget the simple fact that the efforts of one state, by destroying its own economy to “save the world” from global warming, is a farce to beat all farces. The efforts of California don’t amount to a drop in the ocean as far as solving global warming is concerned. Heck if a dozen Californias joined the effort it wouldn’t make even the tiniest dent in global warming — and that is assuming there is such a thing as global warming in the first place, something no one knows for a fact.

But let’s also realize that AB32 is adding to the growing costs to California’s government and the private sector alike right at a time when bringing down costs is a make or break proposition. Prop 23 would help alleviate that problem, if only a little. California’s independent Legislative Analyst’s Office released a report in July that stated that Prop 23 will likely reduce the cost of energy to government, a reduction that would, “translate into an unknown but potentially significant increase in revenues to the state and local government.”

California Republican Gubernatorial candidate Meg Whitman has pledged to put AB32 on hold in anticipation of federal action on cap and trade and other green efforts. She’d rather the feds take the lead while she attempts the more important job of reviving California’s moribund economy.


Prop 23 supporters say that just the cap and trade provisions alone of California’s global warming act AB32 will cause the state to lose up to 485,000 jobs by 2020 when the full effects of AB32 are supposed to have been realized. Further if AB32 follows the projected effects of the federal Lieberman-Warner bill the cost of gasoline for automobiles will go up between 60 and 144 percent of current prices. 

Of course, supporters of government intervention in green jobs claim that federal funds flooding into such technologies will somehow jumpstart the next great wave of technology. Absurdly Obama constantly points to Spain as great of example of how government sponsored green jobs can “work.” But the truth is Spain is failing miserably to make this idea work for themselves so she is hardly a good example for us to follow.

As the Weekly Standard’s Andrew Wilson notes, even our own government economists scoff that this waste of federal money on green tech is not efficacious. Wilson quotes a “prominent government economist” to that effect: “The opportunity cost of creating these jobs is important. If the government takes a million dollars to create one job, that’s a million dollars that could have gone to more efficient and productive use in the private sector — in creating stronger and better jobs for more people.”

Still supporters of AB32 claim that new jobs have been created as new green technologies meant to satisfy the global warming initiative grow. 

Likewise, the anti-Prop 23 forces are bringing their own big money to bear to stop it. Hedge fund capitalist Tom Steyer has already given $2.5 million to stop Prop 23 and to keep California’s global warming initiative alive and others are joining him.

Internet giant Google, ever ready for a left-wing cause, has also jumped into the fray to defeat Prop 23. Others include Carl Gardino, Silicon Valley Leadership Group’s CEO, who has voiced his support to stop Prop 23 and Democrat Candidate for Governor Jerry Brown is also lining up against Prop 23.

So, as the months to election day count down there is a big fight over Prop 23, one that both sides are well funded to wage. Let us hope that California’s voters are not fooled by the starry-eyed dreams of global warming believers, however. The immediate goal of steadying its economy and bringing down its wildly over spent budget is a more important goal than something that may or may not happen by 2020.