17 Jul

Episode 13 – Cause of Death: Cap and Trade

The cause of death was Cap and Trade

Cap and Trade has been extended in California until at least 2030, and Jerry Brown couldn’t be happier. He sold his soul to ensure California businesses and, most importantly, residents will be forced to struggle for their very existence. We aren’t very positive in this episode. Yet again, a Republican has broken rank and sold out the rest of the state in order to ensure Jerry Brown’s legacy. We break down what will probably happen, and it isn’t good.

California Story – Cap and Trade Passes Out of Committee


  • The bill has already passed in the Assembly 75-0 (with 5 assemblymen not voting)
    • Everyone voted for it. This is the extension of the Global Warming Solutions Act of 2006
      • “The two measures would extend the cap-and-trade program, which requires companies to buy permits to release greenhouse gas emissions, and require tougher regulations on pollution in disadvantaged communities.”
  • Jerry Brown has been pushing hard for this bill to pass.
    • Several environmental groups are opposed to it ostensibly because they feel it isn’t hard enough on the polluters like oil companies and such.
    • I’ve heard the “polluter” companies are actually in favor of it because it provides them with clear rules and regulations, rather than being subjected to the whims of unelected air resources boards (which have traditionally been fairly draconian in their regulations).
  • This bill is part of Jerry’ Brown’s legacy.
    • He’s always pushed for environmental reforms.
      • That’s what got us the bullet train to nowhere.
    • These “reforms” have created an economically unbalanced playing field when it comes to commerce.
      • Companies outside of California do not incur as many costs as companies inside California, so their margins are going to be better.
      • I also wonder how people in areas like the LA Basin and the Bay Area would react if the solar and wind farms and whatnot that will have to be used to achieve Kevin de Leon’s plan to use 100% renewable sources to provide California’s energy were erected in their backyards. It’s fine when the people in the desert or in the Central Valley have to shoulder the costs and cede space for these projects, but what if they had to “pay” for them? Would their attitude change?
  • In all likelihood, this bill will pass. It will be considered a “bi-partisan victory” and everyone will pat themselves on the back.
    • Basically, the argument is doom and gloom if it doesn’t pass.
      • This is Jerry Brown’s go-to argument. It’s always “if you don’t pass this, the system will fall apart.”
    • If it does pass, there is a strong chance it could raise our already ridiculous gas prices another $0.45!
      • If we’re trying to recall Josh Newman over a $0.12 increase, among other things, then every single person who votes for this Cap and Trade bill should be recalled as well.
        • I’m all for this.
  • If you want a list of reasons why this bill is a bad deal for California, head over to the Flash Report.

California Story – We Need To Build More Homes. Like Now.


  • From 2009-2014, California only added 308 housing units per 1,000 new residents.
    • That is a recipe for disaster.
      • Housing costs have risen to 2.5 times the national average.
      • In some areas of the state, there’s no feasible way for a working or even middle class family to afford housing.
        • Average rents of nearly $3,000-$4,000 in the bay area.
        • A recent story about the need to make over $100,000 to rent a 2-bedroom apartment in some parts of LA.
  • Prop 13 (passed in 1978) is the cause of much of this.
    • It incentivized cities to zone areas for commercial development, rather than residential.
      • Cities could collect more revenue in the form of sales taxes than they could from property taxes under prop 13.
        • As a result, many areas of cities are zoned for commercial developments.
        • I know Brea gets a good deal of revenue from sales tax, especially from the Mall.
  • Environmental regulations also create a barrier to building new housing units.
    • “The California Environmental Quality Act was created for good reason, and it helped prevent sprawl. But it’s now being used to prevent new developments for reasons unrelated to the environment. A recent study found that nearly 80 percent of CEQA lawsuits targeted urban infill projects, including dense, transit-oriented units that would have lowered housing costs while helping the environment.”
  • Finally, the author argues that a change to California’s tax code is warranted to create more revenue for affordable housing.
    • Basically, if we eliminated the mortgage interest deduction for second (or third, fourth, etc.) homes, the increased revenue from those taxes could fund the construction of affordable housing units.
      • Or it could prompt those owners to sell those second homes, thus increasing the available housing stock.
  • If we don’t do something to address this through market means, we might end up with people arguing for statewide rent control.
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