NCPA - National Center for Policy Analysis


November 14, 2008

In 2006, California passed the most sweeping greenhouse gas limits for any state in the union.  Under the plan, CO2 output would be slashed by 25 percent by the year 2020; that is equivalent to removing 6.5 million vehicles from the road.  Sounds great, except that greenhouse gas output has yet to budge, and the promised boom from "green jobs" is nowhere in sight.  California's jobless rate is now officially over 7 percent, nearly a point above the national average, says Investor's Business Daily (IBD).

Instead, the greenhouse gas limits approved by Gov. Schwarzenegger will cost California billions of dollars in lost output as businesses locate elsewhere and take jobs with them:

  • California's nonpartisan budget analyst predicted the state will have a $27.8 billion deficit over the next 20 months.
  • This gap is equal to roughly 26 percent of the state's $103.3 billion in annual general-fund spending; if nothing's done, the deficit will average $22 billion a year for the next five years.

Gov. Schwarzenegger's response has been to cut spending and raise taxes, says IBD.  The time to cut spending, however, was 4 years ago, not when disaster struck.  A narrow slice of rich Californians now pay virtually all the state's taxes, so when a downturn occurs, the budget collapses:

  • Since then, overall spending under Schwarzenegger has soared $41 billion, or more than 40 percent.
  • General-fund spending has jumped by $27 billion to $103.3 billion, a 35 percent increase.

Moreover, California's economy is struggling in large part because Schwarzenegger hasn't lived up to his promise to tackle the out-of-control budget.  Instead, he's riding his global warming hobbyhorse, says IBD.

Source: Editorial, "Where Have You Gone, Gray Davis?" Investor's Business Daily, November 12, 2008.


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