Bush to California: Drop Dead
You've just been named the victor in a bitterly contested national election. Your legitimacy is in doubt amongst a large percentage of the population, and nine of ten African-Americans voted for your opponent. Hispanic Americans voted in the majority for your opponent. You turn around and ignore them because you won without their support. Politics as usual from the Republican Party.
Bush faces much the same situation in California. Bush "won" the election without California's hefty 54 electoral votes. He leads the United States without a mandate in the planet's sixth-largest economy. This does not seem to bother him, although it should. California has always been a Democratic stronghold, but the Democrats gained ground in the 2000 election and handed Bush a decisive 54% to 42% defeat. The situation was similar in Texas in 1992 and 1996, yet the Clinton Administration did not ignore the Lone Star State.
In 1998, FEMA approved federal aid to help fight fires in Presidio County, Texas. This money comes from the President's Disaster Relief Fund. Later the same year, Bush requested FEMA's help again when he declared 20 counties disaster areas due to flooding and damage from tornados. Bush blasted Clinton's poverty tour and obliquely praised FEMA again when he said, "Perhaps he ought to come to farm country if he wants to find people who are hurting" during a campaign stop in Iowa in 1999. (Source: Des Moines Register, 7/16/1999) He sounds like a compassionate fellow, doesn't he? Fast forward to 2001.
The state of California is in the throes of the state's worst power crisis ever, resulting from the state legislature's 1996 deregulation of the electricity industry, signed into law by former Republican governor Pete Wilson. The industry based future demand for electricity from figures from the late 1980s and early 1990s, when California was in a recession. Demand for electricity quickly outpaced the supply during the booming mid and late 1990s, and as a result, California's electricity industry found itself struggling to keep up. California's current governor, Gray Davis, has repeatedly asked the federal government for help. In the waning days of Clinton's administration, Clinton required distributors to continue to sell power to the state to avert a statewide (and possibly nationwide) crisis. Alan Greenspan has warned of a ripple effect that could undermine the decade-long period of prosperity that this country has been enjoying. (As daily rolling blackouts darken parts of Northern California, power wholesalers are making out like bandits, charging up to $600 per megawatt-hour of electricity. The sky-high prices threaten to bankrupt California's electricity industry.)
The city of San Diego was the first victim of deregulation in California. San Diego Gas & Electric was the first utility to deregulate in 1999. By 2000, SDG&E customers' bills tripled. San Francisco was the next city to fall prey to the crisis, suffering rolling blackouts in June 2000. Relief came for SDG&E customers that September in the form of a three-year price cap, but in the twilight of Clinton's presidency, the Federal Energy Regulatory Commission quickly put a stop to it by allowing only a flexible cap rate, meaning that the utilities could charge customers more if it was "warranted." This gave utilities enough wiggle room to raise rates, and the stage was set for disaster and socialization of losses only days after Bush was selected as the President-Elect. (The new head of the FERC, Curt Herbert, Jr., is opposed to price-fixing and to any federal intervention in the power crisis.) Two weeks before Bush's inauguration, Californians were slapped with a 7 to 15% rate increase by utilities who whined about going bankrupt and laying off employees, something they obviously should have thought about when their lobbyists pushed deregulation legislation through the State Legislature in 1996. A few days later, SoCal Edison announced that it could not pay the $596 million it owed to energy wholesalers. Of course, this half a billion dollars will be paid by some of the most heavily taxed people in the United States: Californians. Why is Bush refusing to help California, the most populous state in the nation, risking economic disaster for not only the state, but also the entire country? The answer is simple. Money.
California cannot produce enough electricity to satisfy the demands of customers. This is a well-known fact. The state of California only produces 16% of the natural gas, 53% of the oil, and 75% of the electricity that it consumes. It imports natural gas from Canada, the Southwest, and the Rockies. It imports oil from Alaska and overseas. It imports electricity from the Southwest and the Pacific Northwest, and more recently, Canada. However, as populations increase the demand on utilities in these regions, they are less able to sell to California, and Canada has threatened to cut California off completely. California has to buy power from somewhere or the lights will go out. Enter Enron.
Enron is the nation's single largest purveyor of natural gas in the country. Bush's ties to Enron are well known, Enron being one of the single largest contributors to his 2000 campaign and to the Republican Party. Enron's CEO, Kenneth Lay, was a member of Bush's energy transition team and has a lot of influence. Enron is one company that stands to profit enormously from the continuation of the energy crisis in California, and Bush only stands to benefit from his largesse to Enron in refusing to help the citizens of California. One hand washes the other, and the people of California are left…literally…in the dark. The Republican Party, responsible (at least the California faction) for the crisis, will socialize the losses while energy interests, traditionally fond of Republican candidates, will make out like bandits and appreciatively line Republican pockets in time for the 2002 election.
This crisis is no more an average Californian's fault than a major earthquake or flood. They had no control over the deregulation of the utilities. Disguised as a money-saving measure, AB 1890 sailed through the House and Senate in California. AB 1890 was actually a stranded cost bailout, adding $27 billion in debt to the California economy. It averages to $844 per capita, or $3400 per family. Only the Congressional bailout of the S&Ls ($120 billion) can compare in its sheer enormity. It's outrageous. Had there been an earthquake or flood in California, Governor Davis could request aid from FEMA and would receive it. However, powerless (literally) Californians, victims of an overzealous, industry-favoring legislature, will be forced to bear the burden of this astronomical blunder themselves, thanks to President Bush, who only stands to gain financially from the crisis. I cannot myself remember a President who was so openly corrupt….or hypocritical.