Jonathan Kantrowitz

New Labour’s spending legacy tests coalition’s mission to cut deficit

Is Britain moving to the right, along with the U.S.?

The National Centre for Social Research today released its latest British Social Attitudes report, its landmark study of the public’s attitudes and values, published annually for almost thirty years.

This year’s report delivers the public’s verdict after thirteen years of Labour rule. It shows a nation at a political crossroads. On the one hand attitudes on welfare have hardened to the right. On the other, many think there were marked improvements in health and education under Labour, creating potential resistance to reform or cuts in these areas.

A shift to the right in attitudes towards welfare

The public remains concerned about the gap between rich and poor. Yet concern about inequality isn’t matched by support for welfare and redistribution. In fact, attitudes to welfare are even tougher than when Margaret Thatcher left office twenty years ago. Attempts to reform the benefit system chime with the public mood.

• The public is now less sympathetic towards benefit claimants than at the end of the Thatcher era. In 1991, well over half (58%) thought the government should spend more money on benefits: this has halved to only a quarter (27%) by 2009.
• The public also has concerns about redistributing income from the better off to the less well off; only one third (36%) think the state should do this, down from a half (51%) in 1989.
• This is despite the fact that 78% think the gap between those with high and a low income is too large, up from 73% in 2004. More than half (54%) now support an increase in the minimum wage.
• People think the chief executive of a large national company should earn only six times more than an unskilled factory worker. This is far less than the 20:1 ratio suggested by the Hutton report.

Recognition for improved health and education services

Voters may have rejected Labour at the ballot box but this hides a huge increase in satisfaction with core public services over the lifetime of Labour’s government. The coalition government should bear this in mind as it grapples with reform and reducing public spending in services like health and education.

• With more health service reform on the way, satisfaction with the NHS is actually at an all time high. When Labour gained power in 1997, only a third of people (34%) were satisfied with the NHS, the lowest levels since our survey began in 1983. By 2009, satisfaction had nearly doubled, and stood at two thirds (64%).
• There is also high public support for the broader curriculum introduced by Labour as well as satisfaction with the performance of secondary schools.
• In 1996, around a half (56%) thought schools taught basic skills well, rising to nearly three quarters (73%) by 2008. Nearly three quarters (72%) also say schools should be judged on how well they teach children skills for life.
• But widespread concern remains about the effectiveness of schools in preparing young people for work, with only half (49%) thinking schools do this well.

Implementing reform with a deficit of trust

The coalition government must wrestle with these apparent contradictions at a time when Britain’s level of distrust in politicians and government has never been higher and trust in the banks is at an all time low.

• Four in ten (40%) “almost never” trust British governments of any party to put the national interest first, up from the previous all time high of 34% (2006) – and around four times as high as we found during the late 1980s (11% in 1987).
• The banking crisis has resulted in a catastrophic falling away in public confidence in the banks. In 1983, 90% believed banks were well run and their reputation for being well managed was higher than many other institutions including the police and the BBC. Now just 19% think banks are well run and their reputation for good management is far below that of either the press (39%) or trade unions (35%).

Penny Young, Chief Executive of the National Centre for Social Research, comments: “This year’s British Social Attitudes results highlight the scale of the task at hand for the coalition government as it cuts the deficit and drives through its programme of reform. The survey points to a nation at political crossroads between left and right: it is perhaps little surprise that the election resulted in a coalition. On the one hand we are seeing a hardening of attitudes towards welfare reform whilst on the other there is strong support for investment in health and education.

‘Record levels of investment under Labour appear to have paid off in terms of public satisfaction – particularly on health, where satisfaction levels are now at all time high. The coalition will need to tread carefully to avoid a backlash against the potential impact of reform or failure to invest. In contrast, changing attitudes to welfare are in tune with the government, suggesting the public will back benefit reform.

‘It is twenty years since Margaret Thatcher left office, but public opinion is far closer now to many of her core beliefs than it was then. Our findings show that attitudes have hardened over the last two decade, and are more in favour of cutting benefits and against taxing the better off disproportionately. But just as Blair and Brown incorporated key concepts of Thatcherism into New Labour’s ideology, Britain today is sending a clear message to Cameron and Clegg that it values the investment Labour has made in this country’s core public services.

‘Perhaps the biggest problem for the government is how to lead the British public away from recession and implement reform when trust in politicians, government and banks is at an all time low. It will need to convince a sceptical electorate that it is working with their best interests at heart. Emphasising the fairness of any cuts while protecting the tangible outcomes of increased spending will be crucial. The public may want the government to spend less but they don’t want to lose the gains of record investment.”

Applauds House Democrats for Their Commitment to Strengthening the Plan

Responsible Wealth, a nationwide network of more than 700 business leaders and high wealth individuals, vigorously rejects President Obama’s bargain with the Republican leadership on taxes announced Monday and applauds House Democrats for their commitment to improve the tax provisions in the deal. Mike Lapham, Responsible Wealth’s project director, issued the following statement on Friday:

“Responsible Wealth members recognize that in times of crisis, people at all economic levels need to pull together and share in the sacrifice. Our members oppose the Obama-GOP deal because massive tax breaks for multimillionaires and billionaires are fiscally irresponsible, won’t help stimulate the economy, and instead will pull us further apart.

“We got into this economic mess largely by giving huge tax breaks to the wealthy for the past 10 years. Now the GOP insists that the very same strategy will get us out of the mess. It makes no sense at all. If tax cuts for the rich resulted in job creation, we wouldn’t be where we are today. For the GOP, tax cuts for the wealthy are the prescription for every illness. To the contrary, the tax cuts themselves are part of the disease the nation is suffering from.

“Responsible Wealth members, who are all among the top 5% of earners and wealth holders, particularly oppose the estate tax portion of this deal. Rather than reinstating the 2009 estate tax levels, as most observers expected, Obama’s deal actually reduces the rate to 35% and raises the deduction to $5 million for the next two years. It is obscene and unnecessary, and it benefits no one but a handful of heirs of rich parents. The estate tax is reason enough to reject the deal.

“We applaud the commitment by Speaker Pelosi and the House Democrats to reject the tax provisions and work toward a bill that helps working families, limits tax cuts to millionaires and billionaires, and is fiscally sound. They understand that the loss in revenue from these tax breaks will be used to justify cutbacks that will hurt everyday people – schools, health care and other programs will end up being cut.

“The Republican experiment has failed, repeatedly. There is no excuse for giving it another two years, even in good economic times, which these certainly are not.”

Responsible Wealth member Jerry Fiddler, founder of Wind River Systems, and currently CEO of Zygote Ventures, added, “The Obama proposal gives away far too much on both top-bracket income tax rates and the estate tax. As a business owner, I resent being used as a poster child for weakening the estate tax or extending top tier tax rates. No business owner that I know of, myself included, makes business decisions based on paying estate tax. I’m proud and happy to pay the estate tax.”

The Americans for a Fair Estate Tax (AFET), a coalition of dozens of national and state organizations, announced today that it had sent a coalition letter to all members of the House and Senate calling on Congress to “restore the estate tax to 2009 levels or stronger.”

The letter noted that the deal negotiated by President Obama and Republicans includes two years of a significantly weaker estate tax, with a $5 million exemption for individuals and a $10 million exemption for couples, and a tax rate of 35 percent.

In the letter, 69 organizations urged Congress to “re-establish a permanent robust estate tax.” Among the 69 organizations signing the letter are groups with national memberships such as YWCA and USAction, philanthropic groups such as Independent Sector and the National Committee for Responsible Philanthropy, and labor groups, including AFL-CIO, AFSCME, and SEIU.

Lee Farris, Estate Tax Policy Coordinator of United for a Fair Economy and AFET steering committee member, said, “In times of crisis, we pull together and share the sacrifice. While working- and middle-income people are struggling, this deal would gut the estate tax, putting billions more in the pockets of millionaires and billionaires. United for a Fair Economy calls on Congress to amend the deal to restore a strong estate tax.”

Gary Bass, OMB Watch Executive Director and AFET steering committee member, said, “The presence of an estate tax provides an incentive for the wealthy to contribute to charitable organizations. And in this harsh economic environment, institutions that feed the hungry, shelter the homeless, and train jobless workers are acutely feeling the crush of an increased demand for their services as their funding sources dry up.” He continued, “President Obama inexplicably gave away the store to Paris Hilton and other heirs to vast fortunes through the evisceration of the estate tax.”

The letter also points out that:
Restoring the estate tax to 2009 levels or stronger would affect only the wealthiest one quarter of one percent of estates and would bring in roughly $250 billion in revenue over 10 years.
The Tax Policy Center estimates that in 2009, only 100 small businesses and small farm estates nationwide owed any estate tax.
Polls show a clear majority of voters want there to be an estate tax, believing that an exemption of between $2 million and $3.5 million is fair. Voters continually place the estate tax at the bottom of the list of taxes the government should cut.
Continued repeal of the estate tax would deepen the budget deficit by roughly $800 billion between 2012 and 2021.

The complete text of the letter

Americans For a Fair Estate Tax is a coalition of nonprofit organizations and others from around the country, representing a wide cross-section of America, and includes civic, labor, social justice, faith-based, environmental, and human services groups. The coalition is dedicated to preserving the estate tax as a valuable part of the progressive U.S. tax system.

United for a Fair Economy is a national, independent, nonpartisan, 501(c)(3) non-profit organization located in Boston, MA, which advocates for progressive economic and tax policies.

OMB Watch is a nonprofit research and advocacy organization dedicated to promoting government accountability, citizen participation in public policy decisions, and the use of fiscal and regulatory policy to serve the public interest. Learn more at www.ombwatch.org.

Today, we got some good news about how the Affordable Care Act is already making a difference in people’s lives across the country.  The California Public Employees’ Retirement System (CalPERS), which provides retirement and health benefits to more than 1.6 million people and their families, sent a letter detailing how the new law has already helped them improve benefits and keep down costs for thousands of retirees and their family members.

One of the new law’s key first-year provisions allows most children who don’t get health coverage from their jobs to stay on their parents’ plans until they turn 26.  CalPERS reports that under this provision, 27,000 young adults will get coverage by the beginning of next year.  That’s not only good news for those young people, but imagine what a relief it is to their parents and other family members who worried that their sons, daughters, brothers, and sisters were going to be uninsured.  Instead, thousands of families will have new peace of mind next year.

According to the letter, another of the Affordable Care Act’s provisions CalPERS is making a big dent in the cost of insurance.  The new law created the Early Retiree Reinsurance Program to help plan sponsors like CalPERS maintain health coverage for early retirees and their families, for whom premiums have skyrocketed in recent years.  So far, approximately 4,700 employers and unions have signed up, including CalPERS.

In its letter, CalPERS explained that by factoring the new program into its 2011 health plans, it was able to provide approximately $200 million in premium savings to 115,000 early retirees and their families.  That makes a huge difference at a time when many families are struggling to pay their bills and make ends meet.

This letter is good news for California families, and we’re seeing similar signs of progress across the country.  Just nine months after it was signed into law, the Affordable Care Act is already fulfilling its promise to help working Americans get and keep insurance, and to slow rising costs for those who have coverage, while ending some of the worst practices of the insurance industry with a new Patient’s Bill of Rights. 

As the White House and Congressional Democrats and Republicans continue to negotiate the extension of the Bush-era tax cuts, a proven job creation program has been left out of the current draft. The tax package that Senate Finance Chairman Baucus introduced last week and failed to get cloture on Saturday included a one year extension of a Treasury Grant Program that invests in renewable energy, but the program is not included in the negotiated ‘framework’ put out by the White House. Renewable energy industries say that this program, which allows investment and production tax credits to be turned into direct grants, is critical to their continued growth as an industry, with a particularly strong impact on manufacturing facilities in America. In the next day or two the final details of this package will be negotiated and finalized for a vote.

If Congress is serious about breathing life into our economy with this tax package, it will include critical clean energy provisions. Wind, solar and geothermal, among other renewable energy industries, have been a bright light in an otherwise dim economy these past few years. The 111th Congress should not adjourn for the year before extending this important program that helps clean our air and protect our health through incentives for clean, renewable energy.

The public health and environmental benefits, as well as tens of thousands of new jobs and billions of dollars in investment that have been generated by these growing clean, renewable energy resources would not exist if not for investments like the Treasury Grant Program. To date, more than 1,300 renewable projects and around 75,000 jobs in the wind and solar industries alone have been supported by the program.

In Connecticut, over $12 Million in Treasury Grant money has gone to nearly twenty corporations working on solar power.

Absent of a long term commitment to renewable energy, like a renewable electricity standard, we must at the very least extend the Treasury Grant Program for another year, in order to continue this growth and its benefits. With the program set to expire in just a month’s time, action on this critical investment is urgently needed.

It would be unconscionable for the 111th Congress to leave without extending this program, thus dimming the lights for clean energy and our economy.

The National Venture Capital Association (NVCA) and TechNet strongly support the addition of two critical energy tax provisions to the tax bill. The Treasury Grant Program, Section 1603 and the Advanced Energy Manufacturing Credit, Section 48C are both due to expire at the end of the year and, if they are allowed to lapse, investment into clean energy technology companies in the United States will suffer. Failure to extend these critical energy tax programs will further widen the lead that other countries – most notably China – now enjoy in the global clean energy marketplace.

Hundreds of renewable energy companies have applied for and received Section 1603 “grants in lieu of tax credits.” In turn, these companies have used the cash grants to fuel their growth in the creation of thousands of new “green jobs” in the U.S. Without Section 1603, the investment and production tax credits intended to benefit these companies will remain dormant and fail to achieve their legislative purpose.

Similarly, Section 48C of the Internal Revenue Code provides a 30% tax credit for investments in facilities that manufacture components for the production of renewable or clean energy. The program was over-subscribed, and the 48C credit was instrumental in incentivizing the location of manufacturing plants and the creation of high-wage, skilled “green jobs” in the United States.

Tax policy must be used to link American innovation with American production. All too often in the past innovating American companies have located their manufacturing plants in other countries. The provisions contained in Sections 1603 and 48C are vital to our ongoing global competitiveness.

The United States has failed to meet most goals for women’s health—largely federal objectives drawn from the U.S. Department of Health and Human Services’ Healthy People 2010 agenda—according to a report released today on the status of women’s health by the National Women’s Law Center (NWLC) and Oregon Health & Science University (OHSU). Overall, the nation is so far from meeting the Healthy People and related goals that it receives a general grade of “Unsatisfactory.” Of the 26 health indicators that were graded, the country received a “Satisfactory” grade in only three and received a failing grade in half.

The 2010 edition of Making the Grade on Women’s Health: A National and State-by-State Report Card, is the fifth in a series of reports since 2000. It grades and ranks each state based on 26 health status benchmarks and also identifies whether states have met 68 health policy goals. NWLC and OHSU developed the report as a resource for advocates, policymakers, and health experts to assess women’s health at the federal and state levels. The Report Card provides comprehensive data for researchers to analyze changes in women’s health and well-being. This edition of the Report Card includes an analysis of the current status of women’s health, a ten-year look back at progress and setbacks, and a comparison to women’s health status in 2007, when the Report Card was last published.

The Connecticut Report is here!

TEN-YEAR LOOK BACK
Less Smoking, More Colorectal Cancer Screening, Lower Heart Disease and Cancer Death Rates; But More Chlamydia, Diabetes, High Blood Pressure and Binge Drinking, Fewer Pap Tests

In the years since the original Report Card was published, the nation has made notable progress on several women’s health indicators, including lower death rates from coronary heart disease, stroke, and breast and lung cancer. In addition, fewer women are smoking and more women are being screened for colorectal cancer. Unfortunately, however, there are now greater proportions of women with high blood pressure and who haven’t had a recent Pap test. Since 2000, declines in women’s health status have been most pronounced in the areas of diabetes, Chlamydia and binge drinking.

“The good news is that when the nation rallies around a health problem with federal and state policies and programs as well as public attention, we can achieve real progress,” said Judy Waxman, NWLC Vice President for Health and Reproductive Rights. “Unfortunately, we have much more work to do in many areas of women’s health.”

KEY FINDINGS FROM 2007-2010
Improvements in Cholesterol Screening, But Fewer Women Having Regular Pap Tests and More Reporting Binge Drinking

The most disturbing trends over the past three years (since the Report Card was last published) have been a marked increase in the proportion of women who report binge drinking—a dangerous form of alcohol abuse that involves having five or more drinks on one occasion—and a considerable decline in the percentage of women who get a regular Pap smear, the primary test to detect cervical cancer. The nation’s grade for binge drinking declined from a “Satisfactory minus“ to an “F,” and the grade for Pap test rates dropped from an “Unsatisfactory” to “F.”
Cholesterol screening was the only area where women’s health improved enough to merit a higher grade when compared to 2007 (moving from an “Unsatisfactory” to a “Satisfactory minus“). Other gains—including lower proportions of women dying from heart disease, stroke, lung cancer, breast cancer, and during or shortly after pregnancy–fell far short of the national goals and were not enough to generate better grades on the 2010 Report Card.

State-by-State Grades

In 2010, not one state received an overall “Satisfactory” grade for women’s health and just two states received the next highest grade of “Satisfactory minus” – Vermont and Massachusetts – a decline from the 2007 edition of the Report Card, when three states received this grade. A majority of states (37) receive an “Unsatisfactory” grade and nearly a quarter of all states (12) receive an overall failing “F” grade. Nine of the 10 states that ranked at the bottom in the original Report Card in 2000 continue to rank at the bottom today; these include Alabama, West Virginia, Oklahoma, Arkansas, Louisiana, and Mississippi. The only state that moved out of the bottom 10 over the course of the decade was Texas, which nonetheless receives an “F” in 2010.
“It is shocking that there is not a single state in this country where women enjoy overall satisfactory health status,” said Michelle Berlin, M.D., M.P.H., Vice Chair and Associate Professor of Obstetrics and Gynecology, OHSU School of Medicine; and Associate Director, OHSU Center for Women’s Health, a National Center of Excellence in Women’s Health.

State Policy Indicators

In addition to health status indicators, the report also assesses 68 health and health-related policies. Of these, only two policy goals were met by all the states: Medicaid coverage for breast and cervical cancer treatment and participation in the Food Stamp Nutrition and Education Program. Only nine states meet a majority (35 or more) of the policy goals, with California (44), New Jersey (43), Massachusetts (40), and New York (39) meeting the most. The four states that meet the fewest policy indicators are Mississippi (10), Idaho (11), South Dakota (11), and Alabama (12).

Though most states have made only piecemeal progress in adopting policies to improve women’s health, many of the policy goals examined in the Report Card will be realized with the implementation of the new federal health care law, the Patient Protection and Affordable Care Act. For example, four Medicaid eligibility and enrollment policy goals will be accomplished when new Medicaid eligibility rules take effect in 2014. Several of the Report Card’s policy goals for private insurance coverage of preventive services (such as Pap smears, mammograms, and osteoporosis screenings) were achieved when a provision of the law that requires all new health plans to cover recommended preventive care with no cost-sharing took effect on September 23 of this year.

“The Affordable Care Act emphasizes access to health care, including the critical preventive services that women need to stay healthy,” said Waxman. “There is no doubt that it will make an enormous difference in addressing the problems identified in the 2010 Report Card.”

Women need better access to health insurance to get necessary health care.

• One in 5 women ages 18-64 is uninsured, representing a considerable increase since 2007, the highest rate since the Census Bureau began reporting such data.
• No state meets the Healthy People 2010 goal of 100% of women having health insurance; Massachusetts comes the closest with 95% of women insured.
• The disparities in insurance coverage between White women and women of color are alarming. Nationwide, 37.6% of Hispanic women, 32% of American Indian/Alaska Native women, and 23.4% of Black women do not have health insurance coverage, compared to 13.9% of White women

Access to reproductive health services is insufficient.

• Nearly half of all pregnancies are unintended, thereby missing – by a substantial margin – the national goal to reduce unintended pregnancies to 30% or less of all pregnancies.
• Just seven states recognize the importance of access to comprehensive maternity care by requiring that these services be covered in all individual and group health plans. Only eight states meet the policy goal of requiring that private insurers cover contraceptives as they do other prescription drugs.
• Nineteen states restrict private insurers’ ability to cover abortion services, and 26 states diminish women’s access to abortion care by requiring that they receive biased counseling and endure a mandatory delay before receiving an abortion.

Gaps in economic security continue to compromise women’s health.

• The number of women living in poverty has increased in 33 states, with 13.4% of women living in poverty nationwide. Even the top-ranked (i.e., lowest poverty level) state of New Hampshire experienced a considerable rise in poverty – from 6.3% in the 2007 Report Card to 8.5% in 2010. In bottom-ranked Mississippi, 21.1% of women live in poverty.
• Poverty rates for women of color are markedly higher than for White women with 23.7% of Black women and 23.1% of Hispanics living in poverty compared to 9.7% of White women.
• As in 2007, only Washington and Oregon have a minimum wage that allows a family of three to reach the federal poverty threshold ($8.31/hour). Sixteen states did worse on this policy indicator when compared to the previous Report Card.

A woman’s health varies depending on where she lives.

• The District of Columbia has the highest heart disease death rate at 174.8 deaths per 100,000; Hawaii, which ranks first, has a heart disease death rate of 60.9 per 100,000.
• More than one third of women in Mississippi (36.8%) are obese, compared to fewer than 1 of 5 in Colorado (19.4%).
• West Virginia has the highest rate of diabetes, with 12.9% of women diagnosed with this condition compared to 5% of women in Alaska.

To learn more about how your state or the nation fared on critical health status indicators and policies, go to: http://hrc.nwlc.org.

The Bureau of Labor Statistics (BLS) has released its monthly employment data for the month of November. Unemployment rose for both men and women; the overall women’s rate reached 8.4 percent, its highest level since June 1983. Although 39,000 jobs were added in November, women saw a loss of 14,000 jobs last month.

The following is a statement by Joan Entmacher, Vice President of Family Economic Security, National Women’s Law Center (NWLC):

“These numbers are a stark reminder that the economy remains fragile. With millions of women and men still without work, the country’s top priority must be to create jobs. Unless Congress acts immediately, by the end of the month more than two million people will have lost their unemployment insurance benefits. It is not surprising that the Congressional Budget Office ranks unemployment insurance as the most effective means of stimulating the struggling economy, generating $1.90 in economic activity for every $1 the government spends. In the midst of the current deficit debate, policy makers must not lose sight that in the short term the focus must remain on investing in the nation’s economic recovery and helping struggling families through this crisis.”

Poll Finds Strong Backing for the Proposed Emissions Trading Program

More than one month after voters soundly defeated a ballot measure that would have suspended California’s efforts to address climate change indefinitely, new research shows that state’s proposed emissions trading or cap-and-trade program will create minimal economic impact, and California voters are solidly behind (64 percent) implementing this new program.

In anticipation of the California Air Resources Board (CARB)’s upcoming decision over a greenhouse gas emissions trading program, Next 10, a nonprofit nonpartisan research organization, commissioned a poll from the Field Research Corporation as well as five research papers from leading academic experts(1) to address the multibillion dollar issue of how California should distribute greenhouse gas allowances and the resulting revenue. The projected value of emission permits in 2012, the first year of California’s cap-and-trade program, will be $2.5 to $7.5 billion. By 2020, the value will rise to an estimated $7.3 to $21.9 billion.

The top findings of the Field Research Corporation poll, completed November 11-23, 2010 among a random sample of 493 registered voters, are:

• 66 percent of California voters favor strongly (44 percent) or somewhat (22 percent) the 2006 law to reduce emissions of greenhouse gases that cause global warming (AB 32), up from 58 percent who backed the law when Field Research last polled on this topic in March.
• 64 percent of California voters favor strongly (34 percent) or somewhat (30 percent) creating an emissions trading program wherein businesses would be required to obtain tradable permits to continue emitting greenhouse gas emissions.
• Just over half of California voters (52 percent) favor distributing these permits for free rather than requiring businesses to purchase them (35 percent).
• If the state did require businesses to purchase the permits, 54 percent of California voters would favor using the resulting revenue to reduce cuts to state services, as opposed to returning the money to residents (39 percent).
• 73 percent of California voters agree strongly or somewhat that California can reduce greenhouse gases that contribute to global warming and expand jobs and economic prosperity at the same time. This is up from 69 percent who agreed with this statement in March.

Findings of five research papers from leading academic experts are highlighted in Next 10′s Summary report entitled “Designing the allocation process for California’s emissions trading program: The multi-billion dollar question” and include:

Macroeconomic Impacts

• The impacts of an AB 32 cap-and-trade program on Gross State Product (the value of goods and services produced in California) will be very small. Each study finds that these impacts might range from very slightly negative to slightly positive depending on assumptions and policy scenario designs. (Roland-Holst, Rose et al)
• Leakage of business activity from California as a result of AB 32 is likely to be small. Any leakage will stem from the rather minor effect of the bill on the costs of production in most competitive sectors. It is apparent that AB 32 adjustment costs do not outweigh the benefits of market proximity, network synergies, etc., currently enjoyed by firms now located in California. (Roland-Holst, Rose et al)
• Changes in retail electricity prices resulting from AB 32 and the emissions trading program will be very small. (Roland-Holst, Rose et al)
• Economic growth as well as income distribution impacts range from slightly negative to positive depending on the extent to which the opportunity cost of free allowances will be passed to the consumer or not. (The models examine the extreme cases: The structure of Roland-Holst’s model enables a significant amount of carbon price pass through; Rose et al assumes none of it will be passed.) If costs are not passed along, then there is estimated to be a net positive impact of free allocations on consumers.
• According to one paper, 100 percent auction scenarios with an annual energy efficiency improvement of one percent produce the best jobs results. 115,000 jobs by the year 2020 result from the 100 percent auction scenario in which revenues are returned to Californians through dividends, while 109,000 jobs are produced by 2020 in the 100 percent auction scenario in which resulting revenues are returned to Californians through reductions in personal tax rates. (Roland-Holst)

Impacts on Industry

Even if industrial producers failed to respond to incentives to use cleaner technologies, and they continued to use the same energy mix after the introduction of an emissions trading program, the impacts to California’s energy intensive and trade exposed industrial sectors would be small. (Morgenstern and Moore)
Under the formula embodied in federal legislation that passed the House of Representatives in 2009 (ACES), the impacts average 0.43 percent of the value of production for the most energy-intensive industries facing the greatest international competition. Given CARB’s stated intention to be more generous to these sectors than under the federal proposal, the anticipated impacts should be even smaller and some sectors could well enjoy higher profits as a result. (Morgenstern and Moore)

Priorities for Revenue Investment

A clear priority is for government investment to facilitate the capture of low cost greenhouse gas emission reductions that the emissions trading program alone would not achieve. This enhances cost effectiveness by overcoming market barriers inhibiting the transition to low carbon economy technologies that exist even after a price on carbon is established. (Farbes and Kammen)

In light of the above, and AB 32′s mandate to ensure fairness in implementation and environmental justice in particular and the need for California to adapt to climate change to the extent some warming is inevitable, research identifies a number of priority investments: 1) Research, development and demonstration funding to speed the invention and commercialization of new advanced technologies, 2) incentives to bolster the diffusion of existing improved technologies, 3) investments in communities burdened by high pollution levels and low income, to capture public health benefits there and to enhance the program’s fairness, and 4) adaptation to climate change recognizing that some global warming is inevitable. (Farbes and Kammen)