If We Could Spend Pretend Money, California Regulations Would Drive A US Budget Surplus

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As a Californian who also lives in New York City, I am fascinated by how these two states do so many things that cost taxpayers money while producing estimates showing how much we all saved, even though taxes remain really high.

In New York, for example, we are told the state Affordable Care Act program, New York State of Health, saves us all billions, yet for some reason we get 11% of federal money while only having 6% of the enrollees. It's not really a victory for economics when you stay afloat because you get twice as much money as another state. If we were really saving money, that would mean we would instead be able to send money to poor states. 

My other coastal home, California, is saving billions of dollars by penalizing businesses, we were recently told. But like in New York, it's pretend money, not the real kind. At the Senate Environmental Quality Committee hearing on “The Federal Clean Air Act: California’s Waivers – How California’s Strict Air Quality Standards Have Created Economic Growth and Improved Public Health”, anti-science groups like Union of Concerned Scientists gushed about how awesome California was for making things more expensive. (1) The EPA similarly gushed about how many lives were saved. And then there is the money. It's staggering how profitable these regulations have been.

  • U.C. Berkeley claimed the San Joaquin Valley alone has profited by $13 billion from climate regulations.
  • The EPA noted that air pollution regulations in California have led to a $38 return for every $1 spent.
  • The controversial California Air Resources Board (CARB) beamed that the air pollution control industry accounted for 42,000 jobs in 2015, which is 3.2% of total manufacturing jobs in the state (2) and have generated $8 billion in revenue.
  • Meanwhile, the American Lung Association said the state is still not doing enough. We are leaving $15 billion per year on the table by not implementing more regulations that would stop asthma, not to mention ER visits and premature deaths caused by pollution.

I don't know about you, but I kind of want to turn my 401K over to these pollution control people in California. Heck, why not the whole federal treasury? Michael Milken probably never got his investors a 3800% return on their money, and he was so confident he guaranteed his customers against losses.(3) The justification is easy.The U.S. government gathered $3.2 trillion in Fiscal Year 2015. The deficit is only $19 trillion. While it's scary thinking about the fact that the deficit is 104% of our annual Gross Domestic Product, it's comforting knowing that if we turned our $3 trillion from just one year of income over to California pollution advocates, that entire deficit would be wiped out in just two months.

Given that math, even more regulations would make us profitable indefinitely.

There's just one problem. None of it is true. The EPA can claim that their new regulations have saved lives and therefore money, for example, but actual evidence does not show that. Dr. Stan Young, on the American Council on Science and Health Board of Scientific Advisors, ran what is arguably the largest data set of California deaths ever, because he, too, probably wanted to know if he should turn his 401K over to CARB and let them make him rich with all the savings we'd have if we implemented more rules on PM 2.5 (4) but unfortunately he couldn't find their regulations were preventing any acute deaths at all. Not during the entire existence of the EPA.

He even threw in giant wildfires, which we know throws a lot of particulate matter into the air. Heck, if we was in the epidemiological massaging business, like most activists, he could show more PM2.5 prevents death.

Instead of cackling like Scrooge McDuck while sitting on all of the newfound wealth he was going to enjoy with more regulation, he found there was no reduction in mortality with improved air quality. Since 1970. (5)

Claims of acute deaths related to pollution are instead all hype. (6) That means the savings are pretend money. And that won't lead to anyone's early retirement.


(1) Not just cars. Food processors are fleeing the home of American food production because the cost of subsidized energy has been passed along to everyone else, making California too expensive in energy unless you only make software.

(2) Obviously we hate companies who make things besides software and food in California.

(3) Which got him sent to jail. Apparently you can't prevent people from losing money without being in violation of federal law. This explains a lot about why the federal government believes they are saving money by taking it from us and spending it inefficiently.

(4) Small particulate matter that can pass through a 2.5 micron grid.

(5) There are limits. I support the Constitution, including gun ownership, for example, while acknowledging that we don't want to turn into Somalia. And we don't want our cities to become Beijing. But California has run out of pollution to fight, they instead want new regulations because of PM2.5 being highest in four California cities. If no data show that's harming us, we are off in the homeopathy realm. It's the pollution equivalent of claiming vaccines cause autism because some kids who got vaccines also got autism. It's therefore no surprise that most of the people who believe one of those things believe all of them.

Bonus: Scrooge McDuck. The rest of us are only this happy if we are California environmentalists.

(6) Worse than hype, they could be made up. For example, the trucking companies that went out of business because of  $10 billion in equipment costs and $2.4 billion in annual compliance costs to meet arbitrary sulfur emissions don't feel like they saved the environment or benefited from all of the virtual money regulators claim to have generated. And another 9 cents a gallon in gasoline cost doesn't sound like a lot, but it is if you are poor. Then there is the auto industry, which has been fine with increased costs of $15 billion by 2025 because they look like environmental heroes while passing along the cost to consumers. Finally, the economic benefit CARB claims to have brought about was because they declared over 60 percent of trucks illegal meant requiring them to get a $15,000 filter for each one. CARB counts that as actual revenue they generated, instead of what it really is; unnecessary fees they imposed that cost companies.