Public Sector Deficits & Global Warming “Mitigation”

About the same time one might belatedly realize that reducing anthropogenic CO2 emissions will do absolutely nothing to alter or avert whatever climate “change” nature may have in store for us, might also be the time to realize the real reason we have chronic government deficits is because we not only have too many government employees, but we pay them too much. Connecting the dots, on July 2nd, 2008 in a post entitled “Breaking Down California’s AB32 Global Warming Act,” I wrote the following:

“Based on the potential of offset sales, carbon fees, and sales of emissions allowances, one may dismiss claims that AB32 will cost California’s government more than it will bring in revenues. AB32 will potentially cause tens of billions of dollars of net cash per year to flow into California’s public sector. Qualifying municipalities that enforce high density may earn carbon offset fees from polluters, based on how many vehicle miles they can calculate they eliminated through high density zoning. AB 2596 sets the stage for this. Redefining public sector jobs to address global warming mitigation may encompass a huge percentage of the public sector workforce, including construction, infrastructure, education, as well as explicitly environmentally focused agencies. Already California’s 400+ cities, 58 counties, and 32 air quality management districts are imposing new global warming related fees. Since global warming mitigation is a specific program – no vote is required to assess these fees. Auctions of emissions allowances to industry could pour additional hundreds of millions, if not billions, into the public sector each year.

…public sector agencies are salivating over cash flow potential associated with AB32. But why wouldn’t they? Nearly every public entity in California – and elsewhere in the USA – is at risk of bankruptcy, primarily because of grossly over-generous employee compensation, benefits and pensions. Other than carbon-related offset payments, fees and auctions – or massive tax increases – there is no new source of revenue even remotely capable of restoring solvency to public entities. Avoiding public sector reform in general, and avoiding public employee pension reform in particular, is the hidden issue that informs global warming alarm in the public sector.”

Now that California’s Proposition 23 – which would have suspended implementation of California’s Global Warming Act – has failed to pass at the same time as the looming insolvency of public sector employee pension funds is becoming common knowledge – the connection between public sector deficits and the potential revenues associated with global warming mitigation is coming more into focus. Here is more on how AB32 is going to try to rescue the finances of public entities, written in a post last week on entitled “Expect More Population Flight,” by Wayne Lusvardi:

Utility user taxes provide a money lifeline for municipalities to raid water and power utility funds and shift them into their general operating and fiduciary retirement funds. When California’s Green Power law goes into effect in 2012 it is likely that municipal water and power funds will swell and the surplus siphoned into city and county general funds to meet pension obligations. Voters will not have a vote in determining whether existing pension obligations will be met or not. Instead lucrative union pension deals will be buried in increased water and power rates.

This may explain why expensive Green Power is being rolled out so aggressively and so fast over the voices of prominent scientists exposing global warming and C02 pollution as a fraud. Green Power may be a means to bail out broke municipalities before 2015 or 2020 rolls around whichever is the case. Green power could result in 40 percent to 60 percent higher electricity rates coupled with a 15 percent to 30 percent increase in water rates, not including the $44 billion water bond proposed for the 2012 ballot (including bond interest and matching funds).

Despite AB32 being nothing more than a mechanism to transfer wealth from lower and middle class private sector workers into the pockets of public sector workers and “green entrepreneurs” (they are neither), Prop. 23 which would have suspended its implementation was soundly defeated. The reason it was defeated was because its proponents were outspent 3 to 1. And who was it who opposed those evil oil companies? It was wealthy hedge fund oligarchs and “green tech” moguls, abetted by environmentalist “nonprofits” whose boards of directors are almost exclusively populated by trial lawyers, and, imagine this – other oil companies who have sold out. These special interests all know that implementing AB32 will pour more money into their own pockets. Take a look at how many of the super rich threw millions into defeating Prop. 23 in order to protect their financial turf: Ballotpedia Prop. 23

The failure of Prop. 23 is instructive, because it illustrates quite well the accusation by conservatives that the Democratic Party is actually the party of the “ruling class.” Because the incredibly wealthy individuals who stepped up to annihilate Prop. 23 – and they could have spent far more than the $20M+ that they donated without blinking – are nearly all Democrats. They are so wealthy that buying off the public sector workers, who in California make nearly twice as much on average as private sector workers, is more important to them than fostering an equitable society where hard work and merit can still allow people who aren’t spectacularly lucky or supremely intelligent to get ahead financially. As long as society’s administrators and enforcers – unionized public employees – can afford to pay 60% more for electricity and 30% more for water, who cares about all the other little people?

The failure of Prop. 23 is also instructive because it shows, yet again, nauseatingly, where the money really is in the debate regarding what causes climate change. Everything associated with climate change “mitigation” is regressive. It creates new – absolutely absurd, nonsensical “CO2 credits” – classes of assets for Wall Street brokerages to collect trading fees on, it creates new legal frontiers for attorneys, new carve-outs for insurance companies, new accounting rules for CPAs, heavily subsidized new “green” industries to attract entrepreneurs and investors who used to believe in competition, and it pours money into the public sector, alleviating the need for public sector union reform. Everyone wins except the ordinary Californian.

For more on AB32 and the real reason for public sector deficits, read “Implementing California’s Global Warming Act,” and “Public Employee Compensation.”

3 replies
  1. Charles says:

    Mr. Ring

    You really had me going for a couple of minutes there. However, most employees of the State recognize global warming and “green jobs” for exactly what they are, a hoax.

    Al Gore must be crying now. I understand the company dealing in carbon credits, that he helped set up and from which he expected to receive billions quietly shut their doors.

    “They are so wealthy that buying off the public sector workers, who in California make nearly twice as much on average as private sector workers.”

    You really should put that one to rest. I’ll admit that blue collar workers for the State are slightly overpaid and that white collar employees are underpaid. Especially attorneys by a large factor. And obviously State employees have a better retirement and other benefits.

    But the pendulum will swing the other way as it always has. State commerce and employment will increase, wages for private workers will go up, bonuses will return.

    And private employees will still have their 401ks which will start looking good again.

    And they will forget what happened to them. Lied to by Wall St. Loans on houses impossible to pay, risky 401k programs that are subject to frequent crashes.

    After seeing all this for about 42 years I would rather learn experience from others mistakes than from my own.

    The hare wins in the short run, but the tortoise…

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