As inflation continues, California politicians try to respond

Thirty-two years ago, when then-Arkansas Governor Bill Clinton was trying to oust President HW Bush from office, Clinton strategist James Carville summed up the campaign in four immortal words: “It’s the economy, stupid.”

Clinton succeeded in portraying Bush as someone who was out of touch with the fears of voters who had to use their income to cover their living expenses and debts.

If anything, the economic unease is even greater this election year, especially given the high inflation of recent years. And politicians from the White House down are paying attention to one potentially decisive factor.

This explains, for example, why Vice President Kamala Harris promises to ban food price gouging if she wins the election.

“It's an attempt to directly address an obvious weakness of Harris's,” said an Associated Press analysis. “Under the Biden-Harris administration, food prices have risen 21 percent, part of a spike in inflation that has raised overall costs by about 19 percent and left many Americans disgruntled with the economy even as unemployment has fallen to historic lows.”

The residents of Harris' home state are certainly not immune.

“Food prices are up 27% compared to April 2019, and gasoline prices are up 29%,” the Public Policy Institute of California noted in a May report. “While spending on these goods and services makes up a large portion of most household budgets, lower-income households spend nearly all of their resources (83%) on food, housing, transportation (including gasoline), and health care.”

The California Center for Jobs and the Economy reports that Californians currently pay the highest prices in the country for electricity and gasoline for residential, commercial and industrial uses.

The California Public Utilities Commission consumer protection agency reports that electricity prices for Pacific Gas and Electric customers have increased 110% over the past decade, but only slightly less for consumers of other investor-owned utilities.

Housing costs in California are notoriously among the highest in the country. According to a recent Bankrate report, the median home price of $793,600 is the highest of any state and almost exactly double the national average. The median rent for a two-bedroom apartment is also the highest in the country, at $1,903 per month, according to a survey by consumer research firm Consumer Affairs.

California is essentially a one-party state, and Democrat leaders don't have to worry about losing office because of inflation. But they do have to at least feign sympathy for their constituents who can barely afford basic living expenses.

Governor Gavin Newsom, busy building his national political image, apparently plans to seek approval of an electricity relief plan in the final days of the current legislative session.

As the Sacramento Bee reports, Newsom wants to spend about $1 billion on reducing electricity bills, but he doesn't want to touch the deficit-ridden state budget. Instead, he wants to redirect money currently spent on some ancillary programs and tie it to a measure aimed at accelerating green energy projects like offshore wind, which is currently being drafted and is expected to be passed before the August 31 adjournment.

As Newsom's plan makes the rounds in the Capitol, it is facing fierce criticism from supporters of the programs being cut, such as air conditioning for schools, improving electricity in poor communities and installing solar panels in public housing projects.

A coalition of renewable energy, environmental and other groups sent a letter this week to Newsom and legislative leaders opposing any diversions.

“Cutting them would only result in a negligible reduction in energy costs in the short term, while jeopardising the long-term climate and affordability benefits they provide,” the coalition said.

In the final days of the session, a heated confrontation develops between competing concerns.