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Cal Dems Spend Cap-and-Trade’s Billions on Voting Base

As Breitbart News first reported last week in “Jerry Brown Sending Checks to Poor during 2016 Presidential Primaries,” California’s cap-and-trade program has become a $2.2 billion honey-pot for California’s Governor Brown and his Democrat fellow travelers in the state legislature. Initial program revenue was invested in a typical sustainable agenda to reduce CO2.

But with cap-and-trade cash flow doubling this year and growing rapidly into the future, a newly approved “Scoping Plan” requires “maximizing” investments in “disadvantaged communities” that just happen to vote overwhelmingly for Democrats.

From 2012 to the end of 2014, $969,129,444 of cap-and-trade pollution credits were auctioned under Assembly Bill 32 (AB 32: California’s Global Warming Solutions Act) with the goal of driving greenhouse gas (GHG) emissions back to 1990 levels. The eligible investments were to “entail” energy, agriculture, water, waste management and lands.

But the program also “entailed” a grab-bag under “transportation” investing that included “Vehicles/Equipment, Sustainable Communities, Housing, Fuels, and Infrastructure.”

All revenue from AB 32 cap-and-trade revenue by law must be used to reduce greenhouse gas emissions. The California Air Resources Board (CARB) in 2008 developed a “Scoping Plan” to serve as a blueprint for “cleaning the air, diversifying the energy and fuels that power our society, and spurring innovation in a range of advanced technologies.”  The initial Plan spending was the fairly straightforward environmental agenda of investing in energy efficiency, renewable energy and a high-speed rail system.

The initial cap-and-trade rules that came into effect on January 1, 2013 applied to large electric power plants and industrial facilities. The California auctions were directly linked to the Canadian Province of Québec in 2014, and the number of businesses impacted reached 360 in 2015 with the program extended to fuel distributors.

But with cash flow expected to double in 2015, the Democrat-controlled CARB in 2014 approved the First Update to the Climate Change Scoping Plan to respond to the “latest scientific findings related to climate change and its impacts” that confirmed accelerating ice loss, sea-level rise, ocean acidification, heat waves and lower air quality” than found in “previous assessments.”

The CARB “Update” required raising the target for GHG reductions and to “invest in climate action, with an emphasis on our most disadvantaged communities” that were determined under SB 535 to suffer disproportionately from air pollution. Spending was focused on maximizing the “economic, health, and environmental co-benefits.” Fortunately for Gov. Brown and the Democrats, disadvantaged communities that receive maximum funding tend to be inner-city and vote overwhelmingly for Democrats.

Brown and the Democrat-controlled legislature expect to spend 25 percent of cap-and-trade cash flow on the $95 billion bullet train and 35 percent on “affordable housing and other transportation programs.” Bullet train transportation spending is expected to jump to $600 million versus about $200 million last year. And in an act of creative governance, spending on affordable housing, too, is being justified as funding to encourage the use of public transportation, walking and biking. It will jump from $130 million to $400 million a year beginning July 1.

The remaining forty percent of cap-and-trade revenue has become a sort of political jump ball. Brown wants to spend $120 million on a plan to fight the drought that offers  consumer rebates for buying dishwashers that use less water and energy. Separately, the Governor and the legislature are proposing to start sending $380 million in checks a year to about 825,000 of the state’s poorest residents in a new entitlement program called the “California Earned Income Tax Credit” (CEITC).

The program is patterned essentially to double the federal Earned Income Tax Credit for California families with incomes of $13,870 a year or legs, based on a sliding scale of wages, and how many children there are in a family. Qualifying families will receive a check of $460 to $2,653.

The federal credit has a horrible reputation as perhaps the most fraud-ridden federal program. The IRS Inspector General last year stated that the EITC is the only IRS program that is considered a “high-risk for improper payments,” since “22 to 26 percent of all payments are improper,” approximately $13.3 billion to $15.6 billion.

Bill Whalen of Stanford’s Hoover Institution, who was a speechwriter for former Republican Gov. Pete Wilson, told the Los Angeles Times regarding the cap-and-trade firehose of cash, “This has become a Christmas tree of spending,” because you can make an art form of interpreting it “any way you want.”

California Republicans’ surprising election gains in 2014 blocked Democrats from winning a two-thirds super-majority in the State Senate and Assembly, thus stopping the Democrats’ ability control all budget tax and spending matters. But with cap-and-trade “off-budget,” Democrats have $2.2 billion of Christmas tree spending for their voting base.

 

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