The old adage, “As goes California, so goes the nation,” could foreshadow troubling years ahead when it comes to economic prosperity in the United States. And if the California Air Resources Board (CARB) moves forward with implementing costly regulations to reduce carbon dioxide and greenhouse gas emissions, it could serve as a precursor to what the U.S., specifically small businesses and American families, will face under a nationwide cap and trade program.
The Global Warming Solutions Act, also known as AB32, is a plan to reduce greenhouse gas emissions in California to 1990 levels by 2020, and by 80 percent by 2050. Since 85 percent of America’s energy needs come from carbon-emitting fossil fuels, the regulations imposed equate to a massive tax on energy consumption if enacted.
Who suffers the most? According to a new study by Sanjay Varshney, Dean of the College of Business Administration, California State University, Sacramento and Dennis H. Tootelian, Ph.D., Professor of Marketing and Director, Center for Small Business, California State University, Sacramento, the answer is that small businesses and families do. They found that
small businesses in California will pay an additional $49,691 as a result of the California Air Resources Board’s implementation of AB 32. Citing severe economic impacts, a coalition of small business organizations called today for the suspension of the regulatory proceedings to implement California’s greenhouse gas program until the report’s findings are analyzed and mitigation measures are added to the state plan.
The report concluded that when the program is fully implemented, the average annual loss in gross state output from small businesses alone would be $182.6 billion, approximately a 10% loss in total gross state output. This will translate into nearly 1.1 million lost jobs in California. Lost labor income is estimated to be $76.8 billion, with nearly $5.8 billion lost in indirect taxes.
The study reveals that when the plan is fully implemented, California families will be facing increased annual costs of $3,857.”
Griselda Barajas, owner of Tex Mex Restaurant in downtown Sacramento, asked, “Californians will be getting less and paying more. How can the small business community survive in a political climate so determined to put us out of business?”
Stanley Young, a spokesman for CARB, dismissed the report because it was not commissioned by the state government and commissioned by the Small Business Roundtable. It’s possible they commissioned the report knowing very well these regulations would severely affect their bottom lines. If AB32 increased their profit, who’s to say they wouldn’t commission a report supporting the bill? Michael Shaw with the National Federation of Independent Business (NFIB) asserted, “When Assembly Bill 32 authorized this program in 2006, CARB promised to develop a greenhouse gas plan that would provide benefits to small business, not bankruptcy.”
And because the report did not come from the government but two professors with Ph.D.s, it shouldn’t be taken seriously? Apparently, checks and balances of government power aren’t necessary anymore. We’ll have the government commission sanction and publish every study and tell us whether their policies are good or bad for American citizens.
Maybe CARB should look back to the critiques made by their own economic analysis of the bill. Tom Tanton, senior fellow at the Pacific Research Institute, elaborates,
CARB released its economic analysis in September, three months after releasing its mix of measures for implementing the legislation. CARB projected the planned policies would increase gross state economic product by $4 billion in 2020, to $2.59 trillion, compared to $2.586 trillion if no emission reductions were undertaken.
Perhaps most interesting is the unanimous condemnation of the board’s economic analysis by its own selected peer reviewers.
All six economists selected by CARB to peer review the analysis found it deeply flawed. Several said the state “handpicked” data to improve the economic case for the proposed plan.”
In May, California’s unemployment rate hit 11.5 percent—the highest it has been since 1941. We recently learned that unemployment for the nation hit 9.5 percent in June—the highest rate in 26 years. California has the fourth highest foreclosure rate in the country. Of the cities with unemployment rates exceeding 15 percent, nearly half are in California.
As goes California, so goes the nation. And so go the people. Straight to the unemployment line.