The impending budget cataclysm, having drawn all the politicalcourage it possibly can out of California's politicians, has now begunproducing the much-less-desirable opposite reaction: namely, panic.
Capitol Weekly, the self-proclaimed newspaper of California Governmentand Politics, has a story on the most recent gimmick proposed by Governor Schwarzenegger to shave money off the budget. According to the story, Schwarzenegger has "called on thefederal district court to immediately terminate itsprison health-care receivership, saying that the court-appointedreceiver forced an ill-advised, $8 billion spending program on thestrapped state inviolation of federal law."
Theimmediate impulse is to say, "Thank Heaven", as the closer the stategets to implementing unnecessary humanitarian projects the better, andindeed, the program in questionought not to have ever existed. But a gimmick, necessary or not, isstill a gimmick, and one should be wary of allowing theatrical gesturestoward fiscal responsibility to obscure the encroaching catastrophe.Moreover, the extended legal battle which is likely to ensue as aresult of Schwarzenegger's defiance is arguably even more undesirablethan the $8 billion. Given that this is a specifically legalbattle, Schwarzenegger ought to be especially wary, since a vote fromCalifornia's people would arguably be much more friendly than a rulingfrom one of the most liberal circuit courts in the country.
Of course, there is a much less contentious and far more useful program which the governor could terminate, but to do so would swiftly terminate the accolades he is currently receiving from the press -- that is, those elements of the pressthat don't understand economics. I refer, naturally, to the anti-globalwarming regulations President Obama gaveSchwarzenegger the green light (no pun intended) to enforce uponCalifornia's unsuspecting population. The Schwarzenegger who isdefending these regulations, probably passed solely for the purpose ofgetting on the good side of California's Democrats, is a throwback tothe Schwarzenegger of old, citing bipartisan concerns for the sake oflooking enlightened and like the sort of person who could fit in at aSan Francisco social function.
Unfortunately, as one often has to point out, the reality isinfinitely less glamorous. Stephen Moore, the senior economics writerfor The Wall Street Journal, has writtenthat "since 2007 -- in anticipation of the new mandates -- Californiahas led the nation in job losses." The "mandates" in question are thenew global warming regulations which are, in theory, supposed to createnew, "green" jobs. However, given Mr. Moore's words, these jobs areonly "green" insofar as they ought to induce seasickness inCalifornia's workers.
Scholarly studies on the subject paint a similarly alarmingpicture. Robert Bradley Jr., the president of the Institute for EnergyResearch in Houston, Texas, and an adjunct scholar of the CatoInstitute, has written a studyentitled "Renewable Energy: Not Cheap, not 'Green'" in which he pointsout that what he refers to as "eco-energy planning" (the sort oftactics Schwarzenegger is using) face "three major obstacles": theabsence of "renewable energy options," the fact that "renewable energysubsidies and mandatory energy conservation are proving to beincompatible with a competitive restructuring of the electricityindustry because of unfavorable economics and surplus existingcapacity" and the fact that "economic and environmental advances in thefossil-fuels industry, particularly in the use of natural gas inelectricity generation and reformulated gasoline in transportation havereduced the environmental costs of fossil-fuel consumption necessary tojustify subsidized alternatives to fossil fuels."
On the basis of thesethree objections, Schwarzenegger ought to cut the exhorbitant fundingthat will be necessary to keep these programs going, which will alsostimulate California's economy by aiding business expectations aboutthe future of the economy, which surely cannot afford another shock ontop of its current budget problems.
This is the moment, in short, when Schwarzenegger will show himselfeither to be a seasoned leader or just another green amateurpolitician.