Building on Bob’s report about the San Francisco Clean Energy Act, the California Air Resources Board has released its draft blueprint designed to fall in line with the mandate of AB 32, the Global Warming Solutions Act, by cutting emissions 30% by 2020.  

The 75+ page plan includes a range of policy recommendations.  Chief among them is increasing the state’s renewable electricity standard.  The plan also contains provisions for a regional cap-and-trade program that could work in harmony with other more specific policies to reduce pollution economywide.  The plan also says CARB will consider a vehicle “feebate” program that would provide incentives to consumers to buy cleaner cars.

In addition, the proposal includes plans to reduce emissions from heavy-duty trucks with hybrid engine technology and better fuel economy.  Like many of CARB’s proposals, the heavy-duty truck provisions would improve public health by also reducing smog-forming pollution.  The plan also advocates for a high-speed train system in California.

Jim Downing at the SacBee has more here.  Analysis on the flip:

There’s no question that California needs to do what is within its control to act immediately.  Climate change is already imperiling two-thirds of the state’s unique plants, and Los Angeles is trying dubious ideas like seeding the clouds with silver iodide particles to force it to rain.  The only sustainable solution is to demand mandatory emissions caps to fight a runaway climate.

Some of their ideas are top-notch.  Robert in Monterey, as his High Speed Rail blog, notes that CARB endorsed HSR to reach their targets:

Transportation is one of the capped sectors of the economy – meaning we can no longer just fly around or drive around endlessly; there will be increasing limits and at the same time rising costs as the cost of the credit purchase is passed on to consumers. To achieve the required lower emissions, and to provide sustainable and cleaner forms of transportation CARB endorsed high speed rail as one of its recommendations.

Their explanation was not particularly detailed – basically an endorsement of the concept of HSR and a projection that it would save around 1 million metric tons of CO2 in 2020. That’s around 22 billion pounds per year, close to the figure of 17.6 billion pounds that Quentin Kopp has been quoting.

I also really like the feebate idea that is part of the plan:

CARB also identified a feebate program as one avenue for reducing vehicle pollution. Such a program would establish one-time rebates and surcharges on new passenger cars and light trucks based on the amount of global warming pollution they emit.  This program would deliver benefits on its own, but also would complement California’s tailpipe standards if both were implemented.  According to a University of Michigan study, implementing a clean car discount program would deliver an additional 21 percent reduction in global warming pollution beyond the tailpipe standards.

The worry, of course, is that by the time the lobbyists and special interests get through with these targets, they’ll blow loopholes in them so wide that their impact will be meaningless.  But since the hard target of a 30 percent reduction is state law, I think there will be more backbone to actually reach those targets.  Builders and design specialists have already seen this coming and are producing innovative solutions to reduce emissions and save money.  At its best, carbon reduction is both efficient and cleaner, so really nobody loses except giant polluters.  They’re going to use the state’s budget problems to raise all kinds of fears about cost, but they’re really separate issues.  Plus, as the Bee article notes:

The air board’s mission may already have been made easier by changes in the economy. Today’s high energy prices are driving many of the sorts of emissions-cutting changes called for under the plan.

Sales of fuel-efficient cars are up, transit ridership is breaking records and businesses are investing in ways to save fuel and electricity.

Many have raised concerns about the cap and trade system, but CARB chair Mary Nichols is clearly invested in it, having presided over the most successful cap and trade system in history while in the Clinton Administration, the one that virtually eliminated acid rain.  It may be insufficient to have a few states in the West implement a trading system, but some industries, like energy production, aren’t likely to up and leave California – the market of 38 million people is too lucrative.  Anyway this gives momentum and support for a national system.

What I would like to see is a progressive cap and trade setup, which recognizes that higher energy costs disproportionately impact the poor, and seeks to balance that.  This is easier said than done:

Two things are worth noting. First, utility costs are a bigger problem than gasoline. On a percentage basis, the poor pay 7x as much for utilities as the well off, while they pay only 4x as much for gasoline. What’s more, unlike gasoline, there are seldom any reasonable alternatives for utility expenditures.

Second, there are always tradeoffs. Using the money from permit auctions (or carbon taxes) to rebate other taxes is indeed progressive if the rebate is fairly flat, but only if you pay taxes in the first place – which many of the poor don’t. For the very poorest, then, a tax rebate scheme would still be regressive: you’d essentially be hitting them with a big new energy tax without any offset at all. Conversely, a more targeted approach, like expanding funding for the Low Income Home Energy Assistance Program, helps the poor more directly but removes the incentive to use less energy.

The answer, then, is almost certainly a bit of this and a bit of that. No single solution targets assistance to the poor ideally, but a basket of solutions (payroll tax rebates, energy assistance, more funding for mass transit, etc.) can do a pretty good job. It won’t be perfect, but a well-designed program can make a cap-and-trade program pretty progressive.

Hopefully this will guide the CARB as they seek to work through the policy grinder and implement their reductions.  Right now the board is considering auctioning off few permits and giving away the rest, gradually eliminating the giveaway over time.  This kind of hair-splitting is wrong, and I hope they come to understand that.

I guess this was in the Huffington Post a couple months ago, but I had missed it.  Today the New York Times brings the news about a group of satirists in San Francisco with an inspired idea and a dream:

From the Department of Damned-With-Faint-Praise, a group going by the regal-sounding name of the Presidential Memorial Commission of San Francisco is planning to ask voters here to change the name of a prize-winning water treatment plant on the shoreline to the George W. Bush Sewage Plant.

The plan, naturally hatched in a bar, would place a vote on the November ballot to provide “an appropriate honor for a truly unique president.”

Supporters say that they have plenty of signatures to qualify the initiative and that the renaming would fit in a long and proud American tradition of poking political figures in the eye.

There’s really no more fitting honor for America’s worst President.  I would fund this initiative.

Here’s a statement from the Attorney General’s office:

California Attorney General Edmund G. Brown Jr. today sued Countrywide Financial, its chief executive Angelo Mozilo, and president David Sambol, for engaging in deceptive advertising and unfair competition by pushing homeowners into mass-produced, risky loans for the sole purpose of reselling the mortgages on the secondary market.

“Countrywide exploited the American dream of homeownership and then sold its mortgages for huge profits on the secondary market,” Attorney General Brown said. “The company sold ever-increasing numbers of complex and risky home loans, as quickly as possible. Countrywide was, in essence, a mass-production loan factory, producing ever-increasing streams of debt without regard for borrowers. Today’s lawsuit seeks relief for Californians who were ripped off by Countrywide’s deceptive scheme.”

It is certainly true that lenders like Countrywide had to feed the beast of mortgage-backed securities, which investors were gobbling up at the height of the housing boom.  They absolutely valued getting a mortgage into the secondary market over securing a mortgage that the buyer could actually pay back.  The question is the level of criminality here.  Atrios, an economist who’s been following “Big Shitpile” for quite a while, isn’t fully convinced:

We do know that at some point the product that mortgage companies were selling essentially flipped. They went from providing mortgages to people, to providing bundled mortgage securities to Wall Street. While it’s quite possible that there was actual fraud going on with respect to mortgage borrowers, the greater fraud might have been perpetrated against the investors which eagerly bought up their chunks of big shitpile. Obviously I sympathize less with the latter who are paid big money to, you know, have some idea what they’re doing.

Tanta at Calculated Risk is similarly unimpressed with a similar lawsuit out of Illinois, saying that it it trying to sue over established industry practice.

Volume-based compensation structures? There have been volume-based compensation structures in this business since long before Tanta got into it. Does it create perverse incentives? Sure. Do we have to like it? No. Has it operated all these years in plain sight of regulators, investors, and the public? Yes. Is CFC’s pay structure all that different from anyone else’s? I profoundly doubt it.

And if anyone who has ever underwritten a loan in 30 minutes has to go to jail, the jails will be full indeed. I wonder if they’ll let me take my new Kindle. Jesus H. Christ on a Process Re-engineering Consultant Binge, folks, anybody who didn’t tell the analysts on the conference calls that they’d got their average underwriting time down to 30 minutes was Nobody back in 2000. Not to mention the AUS side of the business where underwriting had gotten down to 30 seconds.

The problem with Countrywide valuing volume over quality is that they appear not to have to pay the price for that.  In a traditional system, Countrywide getting stuck with a lot of bad loans would hurt them, creating a disincentive.  Now, they’re passing on that pain to investors, and the feds are swooping in to bail the financial institutions out anyway, so it’s guilt-free.  I don’t know that the remedy here is a lawsuit, other than allowing the market to punish bad actors, something we never do in this country, because for decades we have socialized risk and privatized profits.

Well, John W. McCain had a great couple of days in the Golden State.  First he went to Santa Barbara, site of a huge 1969 oil spill, to promote his plan to cancel the moratorium on offshore drilling, and he ran into an expert who rebutted his entire premise.

Feeney also took issue with McCain’s controversial proposal to lift the moratorium on offshore oil exploration: “It makes me nervous to think about those who are proposing to drain America’s offshore oil and gas reserves as quickly as possible in the hopes of driving down the price of gasoline, because I think when you look at the good sources of information, were we to open up the California coast or the Alaska National Wildlife Refuge to drilling, it would be 12, 15, maybe 20 years before those resources came online and got to full productions.”

Adding that some research shows that drilling in ANWR would only “reduce our dependence on foreign oil from 70% to 67%,” Feeney added, “I’m not sure most Americans would think that’s really worth the price of admission.”

Then, in Fresno, he admitted that there would be no material benefit to offshore exploration:

That Charlie Black comment wasn’t McCain’s only off-message moment yesterday. At a town hall in Fresno, CA, McCain admitted that the offshore drilling proposal he unveiled last week would probably have mostly “psychological” benefits, NBC/NJ’s Adam Aigner-Treworgy notes. “Even though it may take some years, the fact that we are exploiting those reserves would have psychological impact that I think is beneficial.” Uh oh.

Later, at a fundraiser, an attendee very nicely called him an idiot:

“We’re really kind of goosey here about oil spills, and we’re goosey here about federal drilling and oil lands, which are abundant offshore,” the attendee said. “So we ask you to look out there to the south and the southeast and remember the greatest environmental catastrophe that’s hit this state and then balance that with the notion of winning California.”

And McCain topped it off by telling Fresno that we went to war for oil.

I also want to make sure that we will take concrete steps towards eliminating our dependence on foreign oil.

And I am confident that uh, the, the conflicts that we are in in both Iraq and Afghanistan have also a bearing on that.

(Incidentally, is there anyone in America who doesn’t know this?  We’ve been going to war for oil since oil became profitable.  Before that the world used a lot of whale oil, and if we still did America would be at war with Sea World.)

Thanks for coming, Big John!  Please stop by again sometime and further ruin your candidacy!

California is starting to look more and more like the factory states in the 1980s after everybody pulled out.

California’s deteriorating economy is demonstrated anew by a sharp jump in the state’s unemployment rate to 6.8 percent in May.

The Department of Employment says 60,000 fewer Californians held jobs last month than in April, and 18,000 fewer than in May 2007. Unemployment, meanwhile, hit 1.3 million, up by 300,000 from May 2007.

That’s an over 30% increase in the unemployed in just one year.  

The paralysis of the state’s government is slightly more manageable when job growth is expanding, sectors are booming and money is flowing into the coffers.  When you have a dramatic downturn like this, government simply must have the flexibility to act.  It actually needs that flexibility all the time, but in a downturn people suffer visibly from the structural stasis.

If the Democrats can use the Youngstown-ization of the state economy as a lever to argue for legitimate, long-lasting structural changes, they’d gather a lot of support.  The LA Chamber of Commerce is talking about restoring the car tax, fercryinoutloud.  The problem, of course, is that California’s government is being held for ransom, in a bipartisan way, and it simply eliminates any opportunity for moving forward.

The backers of a package of bills to overhaul subprime lending regulations pointed to a deepening crisis that has put one of every 242 California homes into foreclosure in February, the second highest rate in the nation […]

The package of subprime bills had been approved by the Assembly. But it hit rough waters Wednesday in the Senate banking committee, chaired by Sen. Mike Machado, D-Linden.

Machado has dealt with mortgage issues for years. His district is one of the national epicenters for foreclosures. But Machado is seen by some consumer advocates as overly sympathetic to the industry.

“The arguments he makes are certainly quite similar to those made by the industry folks we are negotiating with, and in many cases don’t seem to put the protection of consumers at the forefront,” Leonard said.

Machado isn’t alone in being bought and paid for, of course.  The lobbyists talk about “regulatory nightmares” that will stop anyone from getting credit and stunt job growth.  They spend lots of money to ensure their argument will be heard.  And they water everything down.  

This is why we have a bitter, angry electorate.  Democrats have the opportunity to channel that anger.  But the universe of those who put their constituents first is narrow indeed.  Broken government leads to broken lives.

Welcome to Youngstown.

(alternatively, you could call it Bankruptsville, USA.  But I like Youngstown.)