A U.S. Treasury Department study shows that the national Cap and Trade plan (Cap and Tax), which passed through the House in June, will cost American households nearly $2,000 a year.
In California we don’t have to wait for the U.S. Senate to pass Cap and Tax to feel the massive burden of government’s attempt to insignificantly slow Global Warming: We have AB 32, the Global Warming Solutions Act of 2006, as law today. For three years, the California Air Resources Board (CARB) has been hard at work inventing environmental regulations that will kill the California economy.
AB 32 is a plan to reduce greenhouse gas emissions in California to 1990 levels by 2020, and by 80% by 2050. CARB is charged with imposing and enforcing measures to reduce greenhouse gas emissions from nearly every phase of life and work in the state.
A June study, commissioned by the California Small Business Roundtable, concluded that the plan could result in average annual losses of $182.6 billion, or 10%, of gross state output – that’s one and a half times the state budget – from small businesses alone. That translates to nearly 1.1 million lost jobs. The report also estimates a cut of more than 25% in the average family’s discretionary spending.
These are catastrophic figures for the California economy. To understand just how bad the economic toll from this plan will be, let’s break down some of the numbers.
Because costs to business are generally passed to consumers, the increased cost in just five areas of the economy: transportation, housing, food, fuels and utilities will result in $3,857 per year in increased household costs. That amounts to a new tax on families and means Californians will either have to cut back on spending for basic household needs, or cut back even more in other areas.
On average, each small business in California will lose nearly $50,000 because of AB 32. Depending on the industry, some will lose much more. Either way, about one in three small business employees will be out of a job because of this bill.
Small businesses account for 52% of all private sector jobs – that’s one in six jobs statewide that will disappear because of AB 32. Think of it this way, either you, your spouse, one of your parents or one of your in-laws will be out of a job in the state’s attempt to trim Global Warming by almost nothing.
The state’s unemployment rate is 12.2%: The highest rate since records have been kept. And 12.2% doesn’t include the “discouraged” – those not looking for jobs – the real number could be as high as 20%. Small businesses account for more than 90% of new job creation in the state. Instead of recovery, AB 32 offers business a renewed incentive to relocate to a more competitive state.
In the professional service sector alone, over 459,000 jobs will be lost and over $96 billion in output will disappear. That’s a fifth of California’s gross state output. Many of those businesses will leave the state or go bankrupt. Any competitive edge left for businesses in California will vanish with AB 32.
Because of the lost productivity in the private sector, the government will have to reduce its budget by 80%. Don’t get me wrong, I fully support smaller government, but cutting government spending by choking the economy to death is not what I had in mind.
I can see it now. The year is 2050. California’s golden bears, the symbols of this once great state, are gathered in the center of a deserted city which, like so many others, has been reclaimed by the forest. The bears gather to mourn the death of California.
As the bears rise one by one to deliver their eulogies, a raspy, angry voice can be heard in the distance. The sound reverberates down through the valleys, from Sacramento, where the great bureaucracy still holds sway. The bears hush their mournful prayers and listen: “Bears: This is the California Air Resources Board. Disperse your carbon footprints immediately!”
Through the muffled grunts and growls of the departing beasts, one bear can be heard saying to another: “I hear they still have picnics in Nevada.”