State Senator Predicts “Sledgehammer Time” If GOP Tax Bill Passes
Holly Mitchell, a leading legislative advocate for children and low-income Californians, says the state may return to the days of budget cutting if the current Congressional Republican tax plan becomes law.
State Senator Holly Mitchell (All photos by Joanne Kim)
Holly Mitchell, the state Senator who represents Los Angeles’ heavily blue-collar 30th District, has been called by one colleague the “social conscience of the entire Senate.” A personable policy wonk whose career included a stint as chief executive of Crystal Stairs, a child development nonprofit, Mitchell chairs the Senate Budget Committee — the first African-American woman to do so. She recently sat down in Pico-Fairfax with Capital & Main at the Paper and Plastik Cafe to talk about the possible effects of the Republican tax bill on California’s poor.
Capital & Main: Taking the temperature between now and New Year’s, what’s your prognosis for the House and Senate tax bills?
Senator Mitchell: The GOP tax plan is a redistribution of wealth from the poor to the rich or semi-rich. It gambles away the health care of poor people and this is unacceptable.
I’m so disappointed with the work of the [U.S.] Senate Budget Committee. I can’t imagine being a legislator, getting a report from the Congressional Budget Office that says the things it says about these bills — and voting to pass it. Did they ignore it? Did they not care?
One Senator, when interviewed, expressed concern about the bill’s potential to make the deficit skyrocket. When asked if that was enough to make him not vote for it he said, “I’m not sure. I’m still working on it.”
Senator Mitchell: The whole point of having the support of fiscal analysts and the Congressional Budget Office, with their independent status, is to provide you with critical data to help you make a decision. How can you say, “Oh yeah, that’s bad, but I’m not sure if I’m going to go forward on this or not”? Politics is continuing to trump — lowercase T—what’s best.
Is Sacramento concerned?
Senator Mitchell: Am I concerned? Yes! But I think what I’m more concerned about now is the Healthy Families Program.
This is the entitlement for California families who aren’t poor enough for Medi-Cal — but don’t earn enough to have private insurance.
Senator Mitchell: It provides care for about two million kids [and] requires federal reauthorization. And [Congress] has not reauthorized it. That could have immediate impacts on California’s budget. It’s a separate process [from the federal tax bills] but they have already missed the deadline.
It’s also been said that the tax proposals could undermine affordable housing construction in California because they would affect the credits and tax breaks that developers receive.
Senator Mitchell: Yes, which are critical for developments to pencil out. Given how far behind we are in terms of our housing-unit need, it would be devastating. L.A. County has done amazing things — voters have said yes to Prop M, yes to Prop HHH. All of that could be compromised — this delicate balance where developers can come in, get these credits to build affordable units. We’re already behind the eight ball in terms of our need. This would be yet another blow.
Defenders of the tax bill say everybody will get their taxes cut initially. Then by 2027, according to the Congressional Budget Office, middle- and low-income people will experience a net loss.
Senator Mitchell: They claim that they’re protecting “the middle class” — folks who make $100,000 and over. But that’s not how we define the middle class in California—here the salary threshold is much lower. What they claim is good news, I think, masks the bad news. And they’re rushing it through the process.
What steps are needed to analyze and create a response for a new federal tax plan’s effect on California?
Senator Mitchell: It will be a process. Unlike [the U.S. Senate], I will rely on our Department of Finance, the Legislative Analyst’s Office, the Senate Budget Committee staff to have discussions, to have a full budget hearing.
What’s your sense of the tax proposals’ potential effect on the state’s economic health?
Senator Mitchell: How we earn income as a state government could be severely impacted. We are socking money away into rainy-day funds to try to prepare for the time at which our recovery will slow down — [but] we couldn’t save enough to prepare for these [federal] proposals and the kind of hole they could blow in the state’s general fund.
What’s your plan if California does take a financial hit?
Senator Mitchell: As budget chair, I would be forced, as painful as that would be, to go back to the days of cutting. We may not be able to use a scalpel. It may be sledgehammer time — it would be devastating. In terms of the trend we’ve experienced with investments in K through 12, early education, the investments we have made in the last couple of years in the University of California and Cal State University systems — all these investments that we’ve made to expand access to services, would be impacted.
We fund Opti-Cal and Dental-Cal [for eye and dental care] — those are the kinds of core, basic human services that we could potentially have to roll back again. Medi-Cal funding helps undergird and support our overall health-care delivery system. If that went away, everything would be compromised.
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How the GOP Tax Bill Would Hurt Californians
The current House tax bill bestows Californians with incomes in the top one percent more than half of its cuts by 2027. It passed 227-205, on a mostly party line vote.
Changing the mortgage-interest deduction is not the only land mine in the House bill that would directly impact Californians.
No crowds of outraged demonstrators descended on Capitol Hill chanting, “Cut Corporate Taxes! Cut Corporate Taxes!” And scathing nonpartisan analyses uniformly showed that the biggest cuts in the GOP tax plan go to the wealthy and to corporations, while many middle- and lower-income families will face increases.
Nonetheless, the U.S. House version, giving Californians with incomes in the top one percent more than 50 percent of the cuts by 2027, passed 227-205, on a mostly party line vote with 13 Republicans opposing it.
The Senate’s version of the tax cuts is wending its way through that chamber, and the House bill will no doubt be changed substantially when a conference committee meets to reconcile the two versions if and when the Senate bill passes.
As matters now stand, the House version is the only one before the public, and it contains a bit of possibly welcome news for some taxpayers. It doubles the standard deduction from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples. The theory behind that change is that more taxpayers would likely take the standard deduction if it is higher than itemized deductions like mortgage interest. But mortgage interest is a deduction many Californians have come to depend on. And changing it is not the only land mine in the House bill that would directly impact Californians.
“Students would be taxed on income they literally don’t have. They will be even deeper in debt, or won’t be able to go to school.”
U.S. taxpayers can now deduct interest paid on mortgage loans up to $1 million for one or more homes. The House bill and the Senate’s current version slashes the cap to $500,000, and eliminates the deduction for second homes. That provision would disproportionately hit residents of states with high real estate values, like California, where finding a home under $500,000 in most urban markets is very difficult.
National Mortgage News estimates that five of the top 12 real estate markets that would be hardest hit by slashing the mortgage-interest deduction are in California.
The House bill also caps property tax deductions at $10,000 while the Senate is considering eliminating the deduction altogether.
Real estate organizations like the National Association of Home Builders have come out strongly against slashing the mortgage interest deduction, saying it would diminish incentives for buying a home.
The lowest income Americans now have some help with affording housing through a federal low income housing tax credit funded by tax-exempt private activity bonds issued by state or local governments. Those bonds are loaned to private companies to finance projects like affordable multifamily housing and for infrastructure projects, like roads and bridges.
If the final tax overhaul keeps the House’s removal of that exemption, money from investors, mostly banks, will dry up, according to Diane Yentel, president and CEO of the National Low Income Housing Coalition.
Only three of 14 members of California’s Republican delegation voted against
the House’s tax overhaul.
However, Yentel said she doesn’t have an issue with cutting the mortgage interest deduction but with how the savings will be used. “The problem is the House bill would use the savings from slashing the [deduction], which would be $95 billion over 10 years, not to support low-income renters, but to give tax cuts to the wealthiest Americans.”
Housing inequality is a huge problem in California, she said. “For every 100 extremely low-income renters that need housing in California, only 21 units are available. In Los Angeles, it’s 16 for every 100.”
Yentel’s organization has proposed federal renters tax credits and more funding for the National Housing Trust Fund.
Jonathan Kaplan, a senior analyst at the California Budget and Policy Center, agreed with Yentel that the mortgage-interest deduction needs reform and that any reform should generate funds to lessen housing inequality in California.
“Not only are the benefits of cutting the [deduction] going to corporations and the very wealthy, it would raise taxes on many homebuyers, and create disincentives for moving in an already difficult market,” Kaplan said. “That in itself will also exacerbate California’s housing affordability crisis.”
In a cost-sharing arrangement between the state and federal governments, individuals can now deduct state and local property taxes, and either state and local income taxes or sales taxes. The House GOP tax overhaul eliminates state and local tax deductions for all Americans.
More than five million California households claim state and local tax deductions on their federal returns, according to the California Budget and Policy Center. Someone with a gross income of $60,000 who owes $5,000 in California tax, now would pay federal taxes only on $55,000. Under the GOP plan, that individual would pay federal taxes on the entire $60,000, essentially being double taxed.
The House GOP tax bill eliminates the $7,500 federal tax credit for people who buy a hybrid or battery electric vehicle.
The center estimates that eliminating state and local tax deductions would not only raise taxes on millions of Californians, but would put a burden on local governments to fund services like schools and public safety.
“State and local governments will no longer be able to say, ‘We need to raise taxes in order to pay for schools, but don’t worry because you can take a portion of that off your federal taxes,’” Kaplan said.
The House bill affects higher education in three ways. It eliminates the student loan deduction that reduces taxable interest on loans for up to $2,500. It also eliminates a $2,000 lifetime learning credit.
Possibly the biggest hit to students is that tuition waivers would be considered taxable income. This would affect many graduate students who receive reduced or free tuition in addition to a small stipend.
“These are significant tax increases on students,” said Kaplan. “These students would be taxed on income they literally don’t have. They will be even deeper in debt, or won’t be able to go to school.”
Just over a million Californians file tax returns with a student loan interest deduction, amounting to $1 billion, Kaplan said.
The House GOP tax bill also eliminates the $7,500 federal tax credit for people who buy a hybrid or battery electric vehicle. A recent study by the non-profit environmental organization Next 10 showed that five percent of new car sales in California are electric, and a survey by CleanTechnica showed that California accounted for nearly half of all electric vehicles sold in the U.S. between 2011 and 2016.
Given the hits to Californians in the House tax overhaul, it might be surprising that only three of 14 members of California’s Republican delegation — Darrell Issa of Vista, Tom McClintock of Elk Grove and Dana Rohrabacher of Costa Mesa —voted against it.
Upon passage of the House bill Minority Leader Nancy Pelosi (D-CA) sent a message to California Republicans:
“After their deafening silence, any California Republican who votes for the GOP tax scam will be forced to answer why they care so little for their constituents.”
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Study Shows Limits of Cap-And-Trade in California
California succeeded in lowering greenhouse gas emissions last year. But a new study finds the state’s ambitious cap-and-trade program may have had nothing to do with it.
On November 11, shortly after he began his speech at the United Nations Climate Change Conference in Bonn, Germany, California Governor Jerry Brown encountered jeers and chants from Native American and climate justice activists who denounced fracking and the state’s market-based solutions to greenhouse gas emissions by yelling, “Keep it in the ground.”
A visibly rattled Brown snapped at the protesters, saying “Let’s put you in the ground so we can get on with the show here,” before he softened and thanked them for “bringing the diversity of dissent.”
Brown has been hailed as a climate hero for signing the ambitious California Senate Bill 32, which mandates the statewide reduction of greenhouse gas emissions, as well as his public opposition to the regressive climate policies of the Trump administration. But he’s also drawn scorn for his lack of opposition to fracking, his refusal to close the Aliso Canyon gas storage facility, and for his ardent support of cap-and-trade, which some environmentalists say shouldn’t be the lynchpin of progressive climate policy.
In an email, Jean Su, associate conservation director at the Center for Biological Diversity, one of the groups organizing the Bonn protest, countered Brown’s assertion that cutting oil demand is more urgent than cutting oil supply. “California can’t be a model of climate leadership while oil companies continue to produce millions of barrels per year of some of the dirtiest crude on the planet,” Su said.
Coinciding with the Bonn protest comes a new study examining cap-and-trade, Brown’s signature greenhouse gas trading program. In a report released the day before the Bonn speech, the nonprofit think tank Near Zero found cap-and-trade, a key strategy for achieving reductions in greenhouse gas emissions under Assembly Bill 32, the California Global Warming Solutions Act, has fallen short of its promise.
Cap-and-trade is a market-based program that allows companies to buy and sell credits to emit a certain amount of pollution, based on a state-imposed cap on emissions across an industry. The theory is, companies would want to save money by cutting down on greenhouse gas emissions. Brown has said the program will reduce climate-changing gases by requiring covered facilities to factor the cost of carbon into their business operations. The Near Zero study found that California greenhouse emissions have been cut – by five percent in 2016 alone – but through changes in the mix of sources generating electricity, including hydropower and solar, rather than cap-and-trade.
The study’s lead author Danny Cullenward said research found that the current limits on pollution set by cap-and-trade are far above actual emissions. The result is an oversupply of allowances that keep the price of carbon cheap and, critics contend, give companies little incentive to slash emissions. That build up of unused allowances enables companies “to maintain their emissions farther into the future than post-2020 program caps might nominally suggest,” he wrote in the report’s summary.
Cullenward told Capital & Main cap-and-trade needs to be tweaked in order to meet California’s goal of reducing emissions by 40 percent below 1990 levels by the year 2030. “Emissions have fallen pretty quickly and that’s good news. But a lot of people are saying, ‘See, the cap and trade program is working,’ and our analysis shows that it’s too soon to say that.”
Cullenward added that the promise of cap-and-trade is real, but that there is “more work to do” to make it effective. “The state is pursuing an ambitious 2030 climate target, and regulators expect cap-and-trade to play the single biggest role in reducing emissions.”
Earlier this year, California extended cap-and-trade through 2030.
In an email, Stanley Young, a spokesman for the California Air Resources Board (CARB), disputed Near Zero’s findings that the state’s cap-and-trade program is not driving observed reductions.
Young cited the Los Angeles Dept. of Water and Power as an example that cap-and-trade can directly lower carbon emissions. “From 2013 to 2016, overall CO2 emissions from LADWP’s portfolio of generating resources decreased 26 percent (3.6 million metric tons) due to the increase in renewable energy and use of the carbon cost adder. This represents a 42 percent reduction from 1990 levels, which exceeds Los Angeles’ 2030 goal,” Young explained.
Liza Tucker, a consumer advocate with Consumer Watchdog, said that cap-and-trade is a bust because the “approach is too lax.”
Tucker also criticized the law extending the program because it directs CARB to regulate refineries only through cap-and-trade and prevents local air quality boards from more aggressively regulating industry. “But [the law] bans CARB and other agencies from imposing new greenhouse gas emission reduction obligations.”
The Near Zero report is not the first study showing the limited impact of cap-and-trade. Last year, researchers from the University of Southern California and the University of California at Berkeley found that California’s cap and trade program had not cut greenhouse gasses. Preliminary evidence suggested that cap-and-trade had, in fact, led to an increase in greenhouse gas emissions in several industries.
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Years of Infamy: A New Documentary About the Japanese-American Internment
And Then They Came For Us is not the first film to tell the story of Executive Order 9066. Rarely, however, has any account of this shameful history been presented with such persuasively contemporary urgency.
On February 19, 1942, President Franklin D. Roosevelt signed Executive Order 9066, which authorized the War Department to declare much of the West Coast to be military exclusion zones, resulting in the arrest, removal and incarceration of 120,000 law-abiding residents — including roughly 70,000 birthright American citizens — for the offense of being of the wrong race during wartime. Civil rights vanished for Americans of Japanese descent who were forcibly uprooted and deprived of their property without due process.
Social justice filmmakers Abby Ginzberg and Ken Schneider’s powerful new documentary, And Then They Came For Us, is not the first to tell the story of one of modern America’s most ignominious mass violations of civil rights. Rarely, however, has any account of this shameful history been presented with such persuasively contemporary urgency.
From Ginzberg’s opening shots of protest at San Francisco Japantown’s February 19th Day of Remembrance march, to the film’s concluding call for solidarity between the survivors of 9066 and the Muslim immigrants who now find themselves targeted by yet another baldly racist executive action, it is always harrowingly apparent who is behind today’s clear and present danger to bedrock civil liberties.
In fact, as Ginzberg explained to Capital & Main, it wasn’t until the days following Donald Trump’s 2016 election victory that she became convinced she had a compelling enough hook on which to hang an otherwise oft-told tale. That’s when she saw Trump surrogate Carl Higbie appear on TV and cite the wartime internment as a precedent for candidate Trump’s calls for a “complete shutdown of Muslims entering the United States,” which included surveillance against mosques and establishing a database for all U.S. Muslims.
“I could suddenly see the politics of the film, I could understand its importance to today,” she recalled. “It didn’t become [a] dry history based on post-World War II analysis. It made me get very excited about it and decide that this film had to be done. We needed to find a way to get it out into the world as quickly as possible.”
Her idea was to approach the internment as if it were a breaking news story. By keeping it lean, forgoing lengthy fundraising or complicated locations, the film might get from script to screen while the headlines were still fresh enough to have an impact. That’s when the Jonathan Logan Family Foundation, which funds progressive investigative journalism, ponied up for the entire budget — a rare stroke of fortune in the social justice filmmaking world: “I was able to create a budget, give it to them and say, ‘I will do this film if you pay the bills.’ And they did. We started filming in October of 2016. And we finished it kind of mid- to end-of-April, 2017. For me that is record time.” (Disclosure: The foundation is a financial supporter of this website.)
The heart of And Then They Came for Us lies in the trauma and unreconciled anger of the incarcerated — including the articulate testimony of former camp children like actor-activist George Takei. The experiences of now-deceased adults survive in an extraordinary trove of documentary images taken by photographers hired as government propagandists by the War Relocation Authority (WRA). The photographers, among them Ansel Adams and the magnificent Dorothea Lange, were carefully monitored by minders lest they violate rules against taking photos of camp barbed wire, guard towers and heavily armed military police. The prisoners themselves were forbidden cameras of any kind, and it is ironic that the only images of the Japanese-Americans behind barbed wire are those taken by internee Toyo Miyatake, using smuggled equipment and film.
“We tapped into a reservoir of stories,” said Ginzberg, “and we were able to kind of cobble the film from everybody contributing something. But the two people who lead the film are George Takei and Satsuki Ina, who really have spent a lot of their lives working on this. … A third person, who’s not related at all to George, is Barbara Takei, who’s part of the Tule Lake Committee.” Local authorities, she added, “are now threatening to build an airfield sorta smack in the middle of the Tule Lake camp, which would mean that any notion of sacred space, or being able to [honor] it as a historical site, will go to hell.”
Eschewing the usual newsreel footage, Ginzberg sought — and was given — unrestricted access to recently unearthed and previously unpublished photographs, and research culled by photo historians Richard Cahan and Michael Williams for their 2016 coffee-table tome Un-American: The Incarceration of Japanese Americans During World War II. The book includes 170 images drawn from a 7,000-shot archive of the “evacuation.” Ginzberg mostly narrows that to the work of Adams and Lange. And it is the unwavering gaze of the Lange portraits — part of an almost legendary, 800-image cache that was immediately impounded and “lost” for 60 years by the U.S. Army — that drives home the human scale of the tragedy. Many of Lange’s photos were impounded for too truly reflecting the emotional reality of the camps.
“We try to let the photos in a certain way speak for themselves,” Ginzberg pointed out. “We’re letting people sort of read it in the faces of the Dorothea Lange [images], and something — “magical” is not the right word — but something deep happens in the experience of looking at those photos that are up there a little bit longer than they might be in some other setting. [Audiences are] able to read, as Takei says, the resilience and the stress. And so there’s something happening that becomes a first-person experience.”
In one of the most haunting scenes, internment historian and filmmaker Satsuki Ina, who was born in 1944 at the Tule Lake Segregation Camp near the Oregon border, a maximum security facility reserved for “troublemaker” activists, pensively encounters a Lange portrait of her mother, Shizuko, taken in 1942. Capturing an attractive, immaculately dressed young woman, the picture freezes a moment when her features are visibly drawn in worry as she waits with other first- and second-generation Japanese-Americans on a long sidewalk queue underneath government posters announcing their imminent removal.
Other speakers describe remarkably similar memories of the pain of witnessing their parents undergo the humiliation of gradually being shorn of their freedom and independence. Within a matter of weeks, the WRA froze bank accounts, limited movement and finally stripped internees of their automobiles and other property through forced sales. Los Angeles families were shipped to the Santa Anita racetrack and housed in horse stalls. Orwellian euphemisms ran through a government narrative that spoke soothingly of “evacuations” and “relocation centers,” rather than forced removals and concentration camps.
According to Ginzberg the film has been well received by audiences at the handful of film festivals it has entered since its May premiere. She’s been offering it for sale on the movie’s website for activist groups that have already hosted a number of screenings around the country, and it has played particularly well with teachers. Ginzberg’s strategy is to market the film as a classroom-friendly component (the runtime is 46 minutes) to lesson plans about the incarceration.
“Let’s see if we can’t educate people, organize people and have this film be as relevant as possible to what is going on, particularly with the Muslim travel ban, and then with other really repressive immigration policies.”
The November 27 Los Angeles premiere for And Then They Came for Us, at the Downtown Independent Theater, is sold out. Other screenings can be found at thentheycamedoc.com.
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Robert Reich on Trump’s ‘Dangerous Tax Bill’
“All of this rhetoric about a middle-class tax cut,” Robert Reich tells Capital & Main, “is just an absurd lie when you look at the numbers.”
In little more than six months the Republican-proposed tax bill has grown from a one-page White House press release promising financial relief for middle-class Americans to a colossal amoeba containing everything from massive corporate tax cuts to the repeal of Obamacare. Capital & Main’s Jessica Goodheart recently spoke to economist Robert Reich for part of an upcoming series on corporate responsibility. During Goodheart’s interview, Reich spoke about the current tax proposal that many experts see as a dire threat to the very households its sponsors are pledging to protect. Reich’s comments are excerpted below.
Jessica Goodheart: Do you think that reform-minded CEOs are taking any risks?
Robert Reich: If CEOs were really courageous . . . they would be speaking out right now against the shortsighted and dangerous tax bill that is coming through Congress, even though their own corporations might benefit. Over the long term, everyone will lose.
Some have suggested that the anti-free trade, nationalist movement that Donald Trump represents at home might place pressure on corporate leaders to address the widening wealth and income gap. Do you see that as a possibility?
Reich: Some leading corporations could decide to support specific public policies and reduce inequality, such as higher minimum wages, a bigger earned income tax credit, maybe even a universal basic income. They’re not going to do it individually, as companies, but they might come together and act politically, and lend their political clout to this kind of legislation.
What do you think the prospects for that are right now?
Reich: It’s hard to say. The Republican Party is split between its corporate and Wall Street wing, and its Steve Bannon/nationalist/Trump wing. For the time being, those two wings have come together around getting tax cuts for the corporate, Wall Street wing. What will the Bannon/nationalist/Trump wing want in return? Will they be satisfied with Trump’s tweets and nationalist tantrums? I don’t know.
What role are corporations playing in tax reform efforts, both visible and not visible, to the public?
Reich: Well, most of it’s invisible. Right now, there are lobbyists swarming over Capitol Hill, trying to get the largest tax breaks they possibly can for their companies and industries. You have large business groups like the Chamber of Commerce, Business Roundtable and others who are trying to keep the direction of the bill going in very large tax breaks for corporations, overall.
What the public sees and hears is just the talking points that Republican leaders have put out there in order to mollify the public, and to disguise what’s really going on. All of this rhetoric about a middle-class tax cut is just an absurd lie when you look at the numbers. I mean, the longer this goes on, the more likely it is that most Americans will discover the truth — which is why the Republican leadership wants to move quickly, and get this done before Christmas.
On Monday, Trump tweeted a request that the repeal of the Obamacare health insurance mandate be included in the tax reform proposal. How would that impact Americans, and how do you think it affects the prospect of the bill’s passage?
Reich: The removal of the health mandate would cause four million Americans to lose coverage in the first year, 13 million by 2027, according to the nonpartisan Congressional Budget Office. I don’t see how Senators Susan Collins, Lisa Murkowski and John McCain — who voted against repeal of the Affordable Care Act — could possibly vote for the tax bill with this poison pill inside it.
Yesterday, Trump economic adviser Gary Cohn received a tepid response after asking CEOs at a Wall Street Journal conference whether the tax reform bill would cause them to spend more on growth. Does that surprise you?
Reich: It doesn’t surprise me, because American corporations are flush with cash. If they wanted to invest more in growth, they could have done so already. They’re using their profits to buy back their shares of stock, and pad executive pay. That’s what they’ll do with even more profits that come their way because of the tax cut.
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California Bill Would Bring Climate Change Battle to State Construction Projects
A new bill awaiting Governor Jerry Brown’s signature could use the state’s massive purchasing power as the world’s sixth largest economy to address greenhouse gas emissions far beyond its borders.
With California doubling and tripling down on climate change as a reality in 2017, a new bill awaiting Governor Jerry Brown’s signature could use the state’s massive purchasing power as the world’s sixth largest economy to address greenhouse gas emissions far beyond its borders.
Assembly Bill 262, the Buy Clean Act, would require all state departments and the University of California and California State University systems to buy steel, rebar, flat glass and mineral wool board insulation for its infrastructure projects from low-carbon producers. Currently, the state usually buys at the lowest price, meaning that materials can come from companies in China and elsewhere, where the carbon footprint is almost certainly higher.
“We can’t forget our commitment to the environment in pursuit of the cheapest state infrastructure project,” said the bill’s lead author, Assembly Member Rob Bonta (D-Alameda). “We have to pursue getting the best value and protecting our environment at the same time. This is the next step in global climate change leadership in California.”
The bill would require the state to determine the average greenhouse gas (GHG) emissions per unit from the manufacture of those four infrastructure products. Bidders on state projects would then have to submit Environmental Product Declarations, or EPDs, proving they are at or below the average. EPDs are commonly available on many construction materials today.
The Buy Clean bill, co-authored by Assembly Member Marc Steinorth (R-Rancho Cucamonga), has bi-partisan support in both legislative houses and is backed by a massive blue-green coalition of labor, business, environment, and the building trades, many of whom see this as a boon for California. Businesses in the state are already required to meet the most stringent climate regulations in the nation and are thus well-poised to get these contracts. Still, not everyone is on board.
“Small business is going to be adversely affected,” said Tom Holsman, CEO of Associated General Contractors of California, an advocacy group for the building trades. He points out that contractors are required to hire a certain percentage of small businesses known as Disadvantaged Business Enterprises, or DBEs, owned by individuals from socially or economically disadvantaged communities, who may not be able to meet the requirements of the bill. This could hurt local businesses and put contractors out of compliance. “We had to oppose this bill in order to get that point across.”
California would be the first state in the U.S. to have such a policy, though the idea behind Buy Clean is already widely in practice in California and beyond. Buildings certified by LEED (Leadership in Energy and Environmental Design), a green building rating system, already require EPDs on materials. The California High Speed Rail Authority adopted a sustainability policy that similarly requires EPDs on steel and concrete. Oregon and Washington State have also recently started developing a statewide policy.
We can’t forget our commitment to the environment in pursuit of the cheapest state infrastructure project. We have to pursue getting the best value and protecting our environment at the same time.
Businesses already investing in clean tech, however, are seeing this policy as an opportunity to showcase their green credentials. Gerdau Steel, which runs the state’s only full-production steel plant, making steel reinforcing bar, or rebar, at its facility in Rancho Cucamonga, has already put $33 million into switching its power source to renewable energy, and helped craft the bill.
“We compete with neighbors in Arizona, Oregon, Washington, and then in Asia, that use less clean processes and haven’t made the investments we’ve made,” said Gerdau Rancho Cucamonga Vice President Mark Olson. “And then we get underbid by a nickel and we lose out. That was very frustrating to us. We believe it’s a way for California to really push climate goals to surrounding states.”
It is also a way to create and keep jobs in California. Purchases previously made out of state or overseas may shift to California, where not only environmental regulations but also labor standards are more stringent. Just about every major labor union, including the California Labor Federation, SEIU California, the Communications Workers of America and the United Steelworkers support the bill, as does the labor-environmental BlueGreen Alliance.
Kathryn Phillips, of Sierra Club California, points out that the Buy Clean Act is a first attempt to address a huge source of GHG emissions. An estimated 22 percent of all global emissions that contribute to climate change are embedded in the supply chain and are attributable to manufacturing.
Governor Brown had already demanded in an executive order that state agencies take climate change into account in their planning and investment decisions, and “employ full life-cycle cost accounting to evaluate and compare infrastructure investments and alternatives.” That order means agencies had to look at whether any infrastructure decisions would mean increased costs due to climate change remediation actions later. AB 262 is an attempt to codify that order and put it into action, with identifiable goals and standards.
“The Department of General Services and the Department of Finance are concerned that it could lead to millions in increased costs,” said Phillips. “There’s no reason that the price should have to go up. Unless what they’re admitting [is] that the state has routinely gone out and bought the cheapest and dirtiest products, and I say: shame on them! What hypocrisy!”
Buying cheap has occasionally led the state to environmental embarrassment. One outstanding example that stuck in the craw of lawmakers was the reconstruction of the San Francisco Bay Bridge which re-opened fully in 2013. The structural steel used to rebuild that bridge was purchased from a Chinese firm that did not meet California environmental or climate standards. It was just less expensive.
Mike Mielke, senior vice president at the Silicon Valley Leadership Group, noted that even if the bill did create some front-end cost for new infrastructure in the state, it would pay for itself. He drew a parallel to those LEED-certified buildings. “They last a lot longer, people are happier in them, they are healthier in them, and there’s been lots of research that point to the fact that that additional up-front cost is more than borne out over the life of the building,” he said. “So I think that is not so different here.”
It’s not rocket science. It’s just basically saying you have to buy from the cleaner half, instead of the dirtier half.
Materials covered by the bill leave a couple of glaring exceptions: cement and concrete. They were in the bill until it went into the Assembly’s Appropriations Committee where they were then stripped out. Bonta notes there was “significant opposition” from the cement and concrete industries, and also from Caltrans, who argued that compliance would significantly increase their concrete costs.
This cost increase is way overblown, said U.S. Concrete Vice President Jeff Davis. His firm was a major backer of the bill and is still supporting it. “For 12 years we have been focused on developing the most sustainable, lowest-carbon footprint concrete in our marketplace and for that matter, leading the entire industry in low-carbon concrete,” Davis said. “But I can tell you that here, in the SF Bay Area, our low-carbon concrete is selling competitively with standard concrete.
“We see the value of this bill and the value for our industry. It provides the incentive for the industry to continue to focus on innovation, and to continue to advance that goal of lowering our carbon footprint.”
Bonta sees the bill as a foundation to be built upon later. “Sometimes you start with a significant stake in the ground and get a program started, and then you can build on that program going forward and include more materials,” he said “The political pathway this year didn’t include concrete, but that’s not to say that it won’t be included in the future.”
It seems like a bill like this would be a slam-dunk with Governor Brown, but reading Brown can be very difficult. It’s already been a banner year for the state’s climate policy, with Brown successfully extending his hotly debated cap-and-trade program from 2020 to 2030. Cap and trade requires companies to buy permits allowing them a certain amount of greenhouse gas pollution. A monumental bill requiring 100 percent clean energy production in the state by 2045 was rolled over into the next legislative session. But legislators are pushing ahead.
“It’s not rocket science,” said the Sierra Club’s Phillips. “It’s just basically saying you have to buy from the cleaner half, instead of the dirtier half. And it’s notable that I think every California company will fall into the cleaner half.”
California Controller Betty Yee: Trump Tax Plan Will “Exacerbate Pervasive Inequality”
In an interview with Capital & Main, the California State Controller offers her assessment of the president’s proposal, and concludes that it is not genuine tax reform but largely a giveaway to the wealthy.
As the CFO of the country’s most populous state and the world’s sixth-largest economy, Betty Yee has a keen interest in any tax proposal coming out of Washington, D.C. So it didn’t take long for California’s controller to issue a response to Donald Trump’s tax plan, which she characterized as “a tool to play partisan politics” that will “exacerbate our nation’s pervasive inequality.” Capital & Main spoke to Yee and asked her to amplify on her concerns about Trump’s proposal.
Capital & Main: There’s a lot that we still don’t know, but can you lay out the most important changes?
Betty Yee: First, I would not call this tax reform. His plan has various provisions that benefit certain taxpayers, but it certainly doesn’t provide broad-based benefits. It eliminates the death tax but doesn’t do much with respect to middle-class tax relief. It repeals the alternative minimum tax – that’s a gift to state taxpayers who still have a liability after taking advantage of all the special tax treatments that they’re entitled to. It reduces the top marginal income tax rates. It seems to be heavily favored towards the wealthy, but there’s not much with respect to middle-class and lower-income taxpayers.
So how do you define the difference between tax reform and tax cuts?
BY: One of the tenets of tax reform is that you look at how to broaden the base and reduce rates. That’s a starting point for any conversation. I don’t see that here. Whether it involves simplifying the system or trying to incentivize economic activity, there’s a bigger purpose with tax reform than just targeting specific types of taxpayers with benefits. You’re looking at the overall system, not just providing windfalls.
There’s a lot in this proposal that is left unanswered. What will you be paying attention to in the weeks to come?
BY: We need to see who truly benefits. Look at the proposal to double the standard deductions, for example. Is that really a tax cut for everyone, or just limited to some? How is the plan going to help small businesses? The details will give us a better sense of just how broad-based these proposals are going to be. What we’ve seen so far suggests that it could be like the tax cuts under President George W. Bush, and not a real reform of the tax code. What we see are some pet provisions that would be revised to accrue benefits to the wealthy.
It seems to be heavily favored towards the wealthy, but there’s not much with respect to middle-class and lower-income taxpayers.
Are there particular concerns that you have in terms of how the tax proposal would affect Californians specifically?
BY: One of the biggest problems that we’re already pushing back against is the proposal to repeal what is called the state and local taxes deductible. For high income-tax states like California, this repeal would have a dramatic effect on our economy and people’s purchasing power. It would increase the burden on so many Americans who have limited incomes. We love this state, but it’s a high-cost state, so anything that exacerbates affordability for Californians will be a tremendous issue.
In 2015, you pulled together a group of experts to study the problems of California’s tax system and propose avenues for reform. Where do things stand now in your efforts to encourage comprehensive tax reform?
BY: For now I’ve put that effort on hold until we know more about the federal proposal, because I don’t want to get out too far ahead. In California, we have an outdated tax system, the structure of which I don’t believe really does the job of encouraging economic development and sustaining economic growth. We have a very progressive tax system, and so anything at the federal level that would look to impair top income tax rates or benefit the wealthy will just exacerbate the volatility. The more the rich make, the more we will get in revenue, but it makes the system all the more volatile. And so we have to figure out a better way to manage the volatility.
I haven’t seen anything yet about how they’re going to pay for their tax proposal.
BY: It’s incomplete. And it’s not just the tax proposal, but how it will be paid for, that could have an impact on programmatic funding. It will diminish the purchasing power of those at the lowest end of the income spectrum and could lead to reduction in the services they receive from the government. Those are the people who will be disproportionately hurt.
The Electric Road to Zero Emissions Hits a Gas Pocket
Activists have sent a loud and clear message to the California Public Utilities Commission: L.A. and the state should make electric transportation in the city and at the Los Angeles and Long Beach ports a priority.
Electrician Francisco “Paco” Arago attends a California Public Utilities Commission community meeting on electric transportation. Arago, a Boyle Heights resident, says he doesn’t know how he will continue to raise his family in such a polluted area of the city. (Photos: Joanne Kim)
Union members, environmental justice advocates and green transportation activists packed a meeting room Tuesday evening in Downtown Los Angeles to send a loud and clear message to the California Public Utilities Commission (CPUC): the city and state should make electric transportation in the city and at the Los Angeles and Long Beach ports a priority.
The Clean Energy and Pollution Reduction Act of 2015 (Senate Bill 350) requires utilities to present programs to accelerate the widespread use of zero emission vehicles over the short term and longer range. Southern California Edison, San Diego Gas & Electric, and Pacific Gas & Electric, utilities providing about three quarters of California’s electricity service, have all proposed paths to zero emissions, and the CPUC hearing was part of the public process to weigh the merits of those proposals.
“The natural gas industry sees electric vehicles as the future . . . That’s why SoCalGas is fighting Edison on this. They’re opposed to electric across the board.”
Regulators will determine whether the proposals will benefit ratepayers with greater energy efficiency, improved air quality, lower emissions of greenhouse gases, reduced dependence on oil, and increased job creation, including jobs in disadvantaged communities.
The new proposals include programs to accelerate the adoption of light-duty EVs (electric vehicles), but also address trucks, buses, port equipment, forklifts, and the other vehicles that move people and goods in bulk in an effort to reduce diesel pollution.
Pacific Gas & Electric has proposed spending $250 million over five years to install infrastructure to electrify fleets of medium and heavy-duty vehicles. That infrastructure includes all the necessary electrical equipment from the transformer down, but not the actual charging stations. San Diego Gas & Electric proposed a $244 million outlay for its five-year program to install 90,000 charging stations at homes in the San Diego region at an estimated 71 cents monthly cost to its customers. The most ambitious proposal has come from Southern California Edison, which includes $554 million in infrastructure to electrify vehicles and equipment moving goods from the Port of Long Beach. PG&E estimates its customers will see a 28-cent hike in their monthly bills while SoCal Edison customers will pay 53-cents more a month.
But the Southern California Gas Company (SoCalGas) is determined to protect its piece of the energy pie. If SoCalGas’ arguments to the CPUC are effective, none of the electric utilities’ proposals will be adopted.
Clean Energy Fuels Corp. attorney J. Nathan Jensen urged the CPUC in August to make “cautious, measured movement toward electrification in the off-road, medium-duty and heavy-duty (MD/HD) sectors of the transportation market.” The MD/HD electric vehicle market has “only limited areas of early commercial readiness,” he said in written testimony submitted to the commission.
“Ratepayers are already being asked to shoulder market development costs as the utilities experiment in the MD/HD market,” Jensen said. “Asking them not only to assist customers in funding infrastructure but to allow the utility to earn a return on that assistance is unreasonable.”
Adrian Martinez, an attorney with Earthjustice, said after the meeting that SoCalGas is mostly worried about its own bottom line.
The company “is basically arguing that the natural gas infrastructure is already installed, and therefore there will be stranded assets and harm to ratepayers if the CPUC allows electric vehicle infrastructure to be installed,” Martinez said. “But it’s SoCalGas and other gas companies that will be hurt.”
SoCalGas’ testimony is unusual in that it sets up a situation of one utility potentially going up against another, and SoCalGas going up against a sister company, San Diego Gas & Electric.
Advocates for electric vehicle infrastructure say SoCalGas is playing hardball.
Melissa Bailey, a spokeswoman for Sempra Energy, parent company of SoCalGas and San Diego Gas & Electric, rejected the contention that it was a utility vs. utility fight. For heavy duty trucking, Sempra is touting natural gas engines fueled by biogas, made from green waste, waste water, and other organic sources.
“Natural gas and biogas engines reduce the emissions of smog forming pollutants to nearly zero,” Bailey said. “When fueled by biogas, these natural gas engines actually deliver lower greenhouse gas emissions than electric ones. That’s because biogas takes climate pollutants out of the air and uses them as clean, renewable fuel instead.”
Alexandra Nagy, Southern California Community Organizer with Food & Water Watch, said biogas promotion amounts to “greenwashing.”
“Those vehicles still have tailpipes that still emit greenhouse gasses,” Nagy said. “And gas companies still need to build out infrastructure to move the gas from farms to the consumer, which undercuts their argument about stranded assets.” Food & Water Watch supports the use of biogas onsite, she said, but not for widespread consumer distribution.
Advocates for electric vehicle infrastructure said SoCalGas is playing hardball.
Kathleen Woodfield, of the San Pedro Peninsula Homeowners Coalition, gave Capital & Main a letter she had sent to the ports of Los Angeles and Long Beach regarding possible SoCalGas interference at a joint Clean Air Action Plan hearing in August.
Woodfield wrote that on the evening of September 1, a woman approached her and said that she and 35 other people had been hired to give pro-natural gas testimony at a Clean Air Action Plan hearing, and that about 35 other people were each paid $60 and were given a free dinner for similar testimony. The woman said she had been hired by a PR firm called Method, Woodfield said.
Martinez said such tactics to sway regulators, if true, wouldn’t surprise him.
“They’re desperate,” Martinez said. “The natural gas industry sees electric vehicles as the future, and they don’t want to lose their market share. That’s why SoCalGas is fighting Edison on this. They’re opposed to electric across the board.”
At the downtown CPUC meeting, Jennifer Kropke, Director of Workforce and Environmental Engagement at the International Brotherhood of Electrical Workers Los Angeles area Local 11, testified that Edison’s approach was bold, and that it was the perfect nexus of “good, green jobs paying a living wage to local workers, and cleaner air for people who live near our ports.”
Kropke also emphasized, as did many others at the meeting, that building out EV infrastructure solves a chicken or egg problem. “It is easier to transition to EVs when the charging infrastructure is in place,” Kropke said after the meeting.
The CPUC hearings on the electric utilities’ proposals will be wrapped up in the next three weeks. Decisions on whether to approve or deny a proposal are expected early next year.
Copyright Capital & Main
Activists Push Los Angeles to Hold Its Bank Accountable
A coalition of elected officials, local residents and community leaders are encouraging Los Angeles’ City Council to require that any bank it does business with not engage in the kinds of unethical practices that helped mire the city’s current bank, Wells Fargo, in scandal.
A broad coalition of elected officials, local residents and community leaders are encouraging the Los Angeles City Council to require that any bank it does business with not engage in the kinds of unethical practices that helped mire the city’s current bank, Wells Fargo, in scandal. The San Francisco-based financial services giant has been rocked by revelations that its employees created as many as 3.5 million accounts nationwide without customers’ knowledge or consent. With a payroll services contract between the city and Wells Fargo about to expire, activists see this as the best opportunity in decades to demand accountability from any bank that contracts with L.A.
On August 17, the L.A. Community Review Board on Responsible Banking met at Gilead Missionary Baptist Church in South Los Angeles to examine ways to implement responsible banking practices that might help restore residents’ confidence in who the city banks with.
“The city does not have to do business with banks that hurt workers and customers in our communities,” U.S. Representative Maxine Waters told the panel and audience members.
Next week the City Council’s Budget and Finance Committee may consider adding new language to the Responsible Banking Ordinance, which the council passed in 2012 but never officially implemented. Addressing issues stemming from the 2008 financial crisis, the 2012 RBO included language for disclosure, and an annual ranking report that the city could use to give more business to a responsible bank, or take business away from an irresponsible bank.
Defining “responsible” and “values-based” is contentious, and advocates say they have been pushing for the strongest language possible to define these terms in the RBO’s new version. And they want that language to be part of the request for proposal (RFP) for all banking services. The final RFP for the city’s payroll services is expected to be released in December or January. The language in the RBO would also cover banking services, including investments and bonds/underwriting when those contracts are up for review.
“Our point of leverage is during the RFP selection process, which is right now,” says Maria Loya, Los Angeles Policy Director with the Committee for Better Banks, one of the lead organizations pushing for new ordinance language.
“The city has never submitted a ranking report card since 2012,” Loya said, echoing fears of many advocates that the city might be reluctant to hold its banking partners accountable.
Coming out of the August meeting at Gilead Church, the Community Review Board on Responsible Banking has released a report with specifics on what it wants – and doesn’t want – in the city’s banking partners. Among other recommendations, the board wants L.A. to give preference to banks that emphasize collective customer service rather than sales goals. And they want the city to contract with banks that don’t use sales performance as a factor in employee discipline or termination.
Advocates emphasize that aggressive sales quotas led to the Wells Fargo scandal.
“Commercial banking contracts are usually awarded to the lowest bidder,” Anastasia Christman, senior policy analyst at the National Employment Law Project told Capital & Main. “But a city can absolutely judge [a bank] with a values-based approach when choosing a partner to handle its assets and banking contracts, not just fiduciary.”
Earlier this year Wells Fargo agreed to pay $142 million in a bevy of class-action lawsuits for opening the unwanted and unauthorized accounts. It also agreed to pay $50 million to the city and county of L.A. in a lawsuit filed in 2015 by Los Angeles City Attorney Mike Feuer. The bank had stopped using sales quotas last year, but industry insiders say the practice of predatory sales quotas continues unabated at other banks.
For its 2016 report, “Banking on the Hard Sell,” the National Employment Law Project analyzed interviews with bank workers in branches and call centers across the country, including Wells Fargo, Bank of America, J.P. Morgan and others. Employees testified to a culture of aggressive sales goals, and explained common practices like “sandbagging” (processing customer account applications on the days they count the most towards a quota), “gaming” (opening accounts at any cost to meet a target) and “pinning” (assigning new PIN codes unbeknownst to customers to help add on products later). It’s those practices that the L.A. Community Review Board on Responsible Banking says should be unacceptable in a city’s banking partner.
One group behind the suggested new language for the RBO is the Alliance of Californians for Community Empowerment (ACCE). Several ACCE members testified at Gilead Church last month that they were either directly impacted by big banks, or as bank employees, perpetrated those actions. They claimed that huge bank profits come at the expense of seniors, low-income families, people of color and immigrants who are often targeted for unnecessary products.
Ruth Landaverde was a credit manager for Wells Fargo Financial in Palmdale, California in 2009 and 2010. She told Capital & Main that putting strong social responsibility language in the city’s banking RFP was a personal issue for her.
“I saw the impact the bank’s policies were having on customers and other employees,” she said.
Landaverde said she was required to cold-call customers with marginal or bad credit and tell them they were approved for credit cards at a very high interest rate. “We had to keep calling the clients and pressure them. We had clients come down to the branch and say ‘please stop calling me.’ But we would get written up if we didn’t hit our sales goals, and this was during the recession. We had to stay and work after hours to make more calls and hit our numbers.”
Landaverde said her tasks involved debt consolidation and refinancing, so she couldn’t open new accounts. “But I know some branch managers opened accounts without the clients’ knowledge.”
She added that the city’s RFP needs “strong and specific language” to prevent such sales goals and to protect bank whistleblowers.
Paulina Gonzalez, executive director of the California Reinvestment Coalition, said that, at a minimum, a city should choose a bank that does no harm to the community.
“The city should also consider how much a bank is reinvesting in a community, through business loans and other products. This is an opportunity for the city of L.A. to define what is responsible banking.”
Gonzalez added that, while Los Angeles hasn’t yet considered “values” when choosing a bank, there is precedent for doing so with other contractors. In 2000, the city adopted an ordinance requiring bidders to respond to a “Responsible Contractor Questionnaire,” and answer questions relative not only to financial resources and technical qualifications but a “satisfactory record of business integrity.”
Other cities are using social responsibility as a bargaining chip with its banking partners. Earlier this year both Seattle and Davis, California, pulled billions of dollars of business from Wells Fargo over the bank’s financing of the Dakota Access Pipeline.
On Tuesday, ACCE members and other activists paid a visit to City Council members and staffers to lobby them on the language of the ordinance ahead of a hearing in the budget and finance committee next week. Maria Loya learned that big banks, including Wells Fargo and Bank of America, have also been lobbying hard against strong and specific language in the responsible banking ordinance.
“We’ve been hearing that the banks are telling the City Council that they need sales goals to function like every business,” said Loya. “But we say banks are different than a shoe store or other retailer because their products carry huge debt.”
Wells Fargo and Bank of America were contacted for this story but they declined to comment on responsible banking ordinances.
Loya added that she and other responsible-banking advocates were concerned to learn that the city’s Department of Finance has already posted a banking report on the city’s website without any definition for sound responsible banking. “This is not a good sign,” Loya observed. “It says that the city may be content to keep doing business as usual.”
As of publication time, it was still not clear whether the RBO language would be on the agenda of Monday’s Budget and Finance Committee meeting.
Copyright Capital & Main
Worse Than Terrible: How Graham-Cassidy Will Gut States’ Health Care
The latest Republican assault on the Affordable Care Act came fast at health-care advocates in the past few weeks, leaving analysts flat-footed in their attempts to decipher its complex funds-allocation formula. But some predict catastrophe ahead, especially for California.
Health Care Advocate:
“This is not just a rollback of the last five years of progress.
This is a rollback of the last 50 years.”
In the final hours of the Senate’s July health-care debate, Louisiana Republican Senator Bill Cassidy revealed what he considered an astonishing statistic. Thirty-seven percent of federal Affordable Care Act funding goes to just three states: California, Massachusetts and New York. Cassidy’s Senate collaborator, South Carolina Republican Lindsey Graham, elaborated — with charts — showing if you add Maryland, the share rises to 39 percent, despite these four states holding a mere 22 percent of the population.
“They get twice as much, if you will, on a per-beneficiary basis, as the rest of the nation put together,” Cassidy complained. “That is not fair.”
Graham-Cassidy-Heller-Johnson, as the bill later became known after co-sponsorship from Sens. Dean Heller (R-NV) and Ron Johnson (R-WI), came fast at health-care advocates in the past few weeks, leaving analysts flat-footed in their attempts to decipher its complex funds-allocation formula. But even back in early September, when the plan existed only as bullet points, some saw catastrophe ahead, especially for California.
Graham-Cassidy’s repeal of the state’s Medicaid expansion alone would leave four million California adults living at or near the poverty line without the health coverage they’ve had since 2014.
“It looks like it’s going to be a nakedly partisan attempt to buy off red-state Senators,” said Anthony Wright, executive director of the nonprofit advocacy group Health Access California, in a conference call September 5. “That’s something we in California should be specifically concerned about.”
California receives a higher percentage of ACA money, Wright noted, “because we expanded Medicaid, and our state invested in outreach and enrollment.” Since the ACA has been in force, California has seen the steepest drop in uninsured residents of any state in the nation. “We’re proud of that,” Wright said.
Had he known the full extent of Graham-Cassidy’s intentions, Wright says now, he would have described himself as less concerned than alarmed. California will indeed suffer deep cuts if the newest iteration of ACA repeal happens, but so will every state, Republican or Democrat, whether or not they opted in to the ACA’s expansion of Medicaid coverage for low-income single adults. “After 10 years, every state is a loser,” Wright says. “And most states are losers before that.”
The bill “is designed to punish states that did the right thing, whether expanding Medicaid or ACA coverage,” says Richard Kirsch, a New York-based advocate who led the grassroots campaign to pass the ACA. That punishment includes states like Florida, which didn’t take the Medicaid expansion but set up a strong and successful state exchange. Florida stands to lose close to $200 billion in federal health-care funds by 2036, according to policy analysts at Avalere Health, a Washington DC-based consulting firm. California will lose $800 billion in the same period.
Graham-Cassidy’s repeal of the Medicaid expansion alone would leave four million California adults living at or near the poverty line without the health coverage, known in the state as Medi-Cal, that they’ve had since 2014. In Los Angeles County, where one-fifth of the state’s Medi-Cal recipients reside, nearly 1.2 million people will lose coverage — 11 percent of the county’s population — according to an analysis by the University of California, Berkeley Labor Center.
Some of California’s $17 billion in federal Medicaid expansion funding has helped opioid users gain access treatment for the first time. Funds have also gone to provide people living on the street with preventive health services. A program serving the children of unauthorized immigrants under Medi-Cal would lose nearly a third of its federal support under the proposed repeal.
But Graham-Cassidy gets worse. A bedrock of the Medicaid program for the 52 years since its inception has always been that the federal government matches, dollar for dollar or more, what the state spends on each person, no matter how much those people cost. Graham-Cassidy ends that matching guarantee, replacing it with a per-capita cap. “Even though we have an aging population, even if there’s a public health emergency, even if someone requires higher cost of medications,” Wright says, “that per-person amount the federal government provides won’t change.
“This is not just a rollback of the last five years of progress. This is a rollback of the last 50 years.”
Also, as of December 31, 2019, Graham-Cassidy ends the cost-sharing program that under the ACA helped low and middle-income people buy health insurance. In its place, if offers block grants that states can spend mostly at their own discretion. States can use those grants to subsidize premiums, but they can also allow insurance companies to turn down people with pre-existing conditions, or put lifetime limits on coverage.
Even employer-provided insurance plans are not immune, nor are blue states with high ideals. Between 2020 and 2026, the federal government will spend $243 billion less on the block grants than it would have paid to states under the ACA, and state budgets will feel the strain. “It’s not like we had those consumer protections in place before the ACA,” Wright says. “Without those subsidies, there’s going to be tremendous pressure on policy makers to whittle away at benefits.”
Senate Republicans plan to vote next week on this fourth attempt to pass ACA repeal with only 50 votes under filibuster-proof budget reconciliation rules. They have until September 30. Kirsch worries they might succeed.
“What’s frightening about this push is that it’s been done at the last minute, and this is by far more destructive than any of the other repeal-and-replace bills,” he says. “What they’ve done is come up with a proposal that fits neatly into longstanding Republican ideology about returning power and money to the states. Its impact will be cataclysmic.”
Copyright Capital & Main
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