In 2007, Governor Arnold Schwarzenegger signed a landmark cap and trade bill into effect that was to be the crown jewel of his political career. Proponents of the bill touted that the initiative would create green jobs and reduce greenhouse gas emissions. When AB-32, as the bill is known in California, was first making the political rounds in 2006, times were good for the golden state. The economy was growing and state unemployment was under 5%, but today that’s not the picture. AB-32 has now become more of a threat to the struggling state than any kind of achievement. State finances are in shambles and millions of people have become unemployed, pushing the state’s rate up to 12.4%. The state’s own auditing agency has deemed the green measure a bust, stating that the “net economy wide impact will in all likelihood be negative.”
Now AB-32 is facing a potential setback in this November election, which makes it the number one ballot initiative for the national green movement this year. The ballot initiative, Prop 23 tries to strike a compromise between pro-jobs policy and pro-environment policy. Californians will be asked to vote to suspend AB-32 until the state unemployment rate falls to 5.5%. So really, this initiative is not a direct shot to repeal the law. Instead, Prop 23 is asking Californians to give the state’s economy some time to recover before the expensive effects take hold.
The ballot initiative has a good chance of passing, and for good reason. Simply put, for the vast majority of Californians right now, this law just doesn’t make sense. It would be disastrous to the golden state’s economy if the AB-32 rolled into effect any time soon. The Wall Street Journal explains,
A 2009 study commissioned by the California Small Business Roundtable found that when fully implemented AB 32 would cost the state more than one million jobs and “result in a higher cost to California households of $3,857 per year.” That’s more than the typical California family pays each year in federal income tax. A new study by the Pacific Research Institute predicts job losses of 150,000 by 2012 and 1.3 million by 2020.
Environmentalists counter that “green jobs” will save the day, as if a million Californians will make windmills and solar panels. California already leads the nation in regulations and subsidies to boost alternative energy, and it still has the third highest jobless rate in the nation.
Getting this kind of bill passed may have been a big achievement for the green movement and California’s governor (in addition to a slew of businesses backing the measure) but its implementation would come at a high cost to the state. Too high. Californians need to take into consideration the future of their economy this year as they approach the ballot box.