Price Gourging Lives On

A Sudden Death in Sacramento;
Atty. General's Anti-Gouging Bill, Opposed by Oil Companies, Killed Unexpectedly At Final Step

Santa Monica, CA -- A measure proposed by California Atty. Gen. Bill Lockyer that would have made it possible to prove -- and prevent -- price gouging by oil refiners in California was universally expected to pass the California Legislature this session. Suddenly, in the final hours of the legislative session, a final Assembly vote that would have sent AB457 to Gov. Arnold Schwarzenegger for his signature was canceled by the bill's cosponsor, Assembly Speaker Fabian Nuñez.

The measure had a powerful opponent: oil companies. And Gov. Arnold Schwarzenegger, to whom oil and energy companies have given more than $3 million, had not supported the measure.

The last-minute loss of a baby-step bill to protect Californians from predatory pricing would not have happened under the rules of Proposition 89, the Clean Elections Initiative, said the nonprofit, nonpartisan Foundation for Taxpayer and Consumer Rights.

"The measure would curb the power of large corporate lobbies through both contribution limits and voluntary funding for political candidates who prefer to spend their time talking with voters rather than begging for large contributions," said FTCR Research Director Judy Dugan.

Lockyer's staff indicated to the Foundation for Taxpayer and Consumer Rights that Nuñez had concluded that there were no longer 41 certain votes -- the number required for passage -- for the measure, and not enough time to corral the wobblers.

The bill would have allowed the declaration of a state of emergency and with it the ability to aggressively investigate price gouging, not just in times of natural disaster but also in times of "abnormal market disruption," which could apply to a sudden price spike that has no readily apparent cause. Such as the soaring gasoline prices that hit California motorists this spring, peaking at $3.38 for a gallon of regular.

The measure also would have allowed such investigations at the wholesale as well as retail level, which would have covered the state's oil refiners.

The definition of "abnormal price disruption" had been weakened by amendment to appease the oil lobby, which supporters thought at least guaranteed it passage in the full Legislature.

AB457 now joins the nearly one dozen bills killed or stalled by the oil lobby in this legislative session. "I cannot believe how many legislators don't have the courage to stand up to them," said Assemblyman Johan Klehs to the San Francisco Chronicle July 14. See http://www.consumerwatchdog.org/energy/nw/?postId=6565 for that story.

What many legislators do believe is that the oil industry's record profits provide unlimited funds for influencing politics. Chevron, for example, spent $1.2 million in California political contributions in 2005 and $1.7 million in 2004, an election year. This year, Chevron has already spent $6.5 million on political contributions, including several million to defeat Proposition 87, the Clean Energy Initiative, on the November ballot. Proposition 87, by funding development of alternative fuels and vehicles, would reduce the political influence of Chevron and other oil companies by reducing the state's dependence on fossil fuels.

"The only preventive for the demise of decent public policy bills like AB457 is to pass Proposition 89 on the November ballot," said Dugan. "Proposition 89 would also shut down the power of large industries and their lobbies to kill any legislation that causes them the slightest irritation." Proposition 89, added FTCR, would also curb such industries' spending for and against ballot measures. For more details, see www.yeson89.org.

Why California has worse flood protection than NOLA

With the Katrina anniversary, there has been lots of talk about what government needs to do to protect citizens from another disaster. The other day, California Assemblymember John Laird told the Capitol Weekly, "We have less flood protection than they had in New Orleans. Sacramento is really not protected and the thousands of people who live here are at risk." But this wasn't a story about the anniversary, this was a report on how flood protection in California died a suspicious death in the legislature:

This week, just as Senate President Pro Tem Don Perata put on hold an eight-bill package of flood-protection legislation, one of his political committees received a $500,000 donation from the California Building Industry Association (CBIA), one of the package's biggest opponents.

The donation is the single largest that a Perata committee has received since he became Senate leader in 2004.

In response, the California Majority Report noted, "As is the case with many policy areas that the legislature deals with, especially this time of year, eyebrows were raised about the timing of all of this." In addition being a policy disaster that risks lives, these scandals harm people's faith in government, decreasing participation in a vicious cycle that gives even more power to the special interests who run Sacramento.

In May, the Public Policy Institute of California polled on the issue (May 14-21, 2000 adult residents, +/- 2% MOE):

Do you think that campaign contributions are currently having a good effect or a bad effect on the public policy decisions made by state elected officials in Sacramento, or are campaign contributions making no difference?"

Good Effect	12%
Bad Effect	56%

The big money that controls Sacramento is so excessive, that it is easy to see why the polls show people realize how it is harming policy. If you check out yesterday's San Francisco Chronicle, you'll see an editorial blasting the "nasty moves" that special interests used to kill flood control. It is easy to see why people who pay attention are disgusted by the way Sacramento operates like an auction.

Special Interests Killing Universal Health Care Legislation

Yesterday, the California Assembly passed historic Universal Health Care legislation. This bill would save $8 billion a year and at the same time provide insurance for 6 million Californians. Sounds too good to be true? Well here comes the but...

Insurers have spent $3.7 million in campaign contributions in California since 2005. Governor Schwarzenegger, who alone has received $765,000 from health insurers, has said he will veto the bill.

The big money has a proven ability to stop sound policy, and so California will waste $8 billion a year so that 6 million less people will have health insurance.

Special Interests New Deregulation

Public safety and health care aren't the only areas where big money dominates in Sacramento. While lawmakers are holding dozens of fundraisers as they wrap up the legislative session, AT&T lobbyists are hitting the jackpot:

The Public Utilities Commission (PUC) gave AT&T and smaller Verizon permission to raise telephone rates at will, even as a telecommunications deregulation bill -- a bonanza for AT&T and a bane to consumers -- sped toward passage in the state Senate, jammed with last-minute amendments. [...]

AT&T, while publicly billing the deregulation as beneficial competition in the video market, has not promised any rate reductions or other specific consumer benefits. It has poured nearly $18 million into lobbying efforts over the last few months, and $500,000 into direct political contributions during this election cycle, noted FTCR. That does not include contribution pledges made during legislators' mad dash of fund-raising during the last three weeks of the legislative session, which ends next Thursday. These contributions will not be known until after the hundreds of measures still coming to a vote are passed or killed.

Yes, it sounds exactly like what went on during electrical deregulation, but as with flood protection, government can't learn from past mistakes when special interests are running the show.

Solution: Proposition 89

Proposition 89 is the Clean Money and Fair Elections initiative that California will vote on this November. Put on the ballot by the California Nurses Association of anti-Arnold fame, the proposal addresses that systematic problems that are holding back good policy on a wide array of issues. Here are the details of Proposition 89.

Strict contribution and expenditure limits
Prop. 89 ends the fundraising madness with constitutional limits so regular voters aren't drowned out by big money.
* Proposition 89 bans contributions from lobbyists and state contractors
* Proposition 89 limits contributions from corporations, unions, and individuals to state candidates
* Proposition 89 limits corporation donations to initiatives to $10,000

Clean Money public financing of political campaigns
Prop. 89 levels the playing field so new candidates can win on their ideas, not
because of the money they raise.
* With Proposition 89, candidates who agree to spending limits and to take no private contributions qualify for public funding
* Under Proposition 89, $5 contributions from voters required to prove viability
* With Proposition 89, lean candidates receive enough to run competitive campaigns. They can't raise money beyond public funds

Tough disclosure and enforcement for politicians
Prop. 89 stops candidates from hiding behind negative ads and punishes politicians who violate the law.
* Proposition 89 makes wealthy self-funded candidates disclose the amount of personal funds they will spend
* Under Proposition 89, publicly financed candidates must engage in debates
* Proposition 89 imposes mandatory jail time and provides for removal from office of candidates who break the law.

The Challenge

Of course, the special interests who dominate Sacramento are spending at least as much money to stop Proposition 89 as they spend for each issue where they want to dominate the debate. While we won't have as much money as the opposition, what we do have is a great initiative, a reality-based argument, lots of supporters, and trusted organizations like the League of Women Voters, Common Cause, California Nurses, the Consumer Federation of California and the Foundation for Taxpayer and Consumer Rights all aggressively and creatively working to pass the initiative.

We would also like to have your support. We have started a campaign blog to keep supporters up-to-date and would appreciate it if supporters would sign up for email updates. Thanks for reading all the way down.

Batman Fights for Clean Campaigning

Bat Signal Shines Light on Schwarzenegger Fundraiser, Alerts Public to Political Corruption

Batman made a cameo appearance last night for California’s political reform initiative, Proposition 89. While Arnold Schwarzenegger was inside raising funds from special interests in exchange for policies that benefit those vested interests at the expense of everyday Californians, Batman arrived outside—and projected his 40-foot high logo on the outside of the building where Schwarzenegger was having his event.

“When politicians like Schwarzenegger sell access to events, it's the people of California who pay the real price. Patients today can't afford healthcare, schools fail our students, and oil companies foul our environment. That's why we're here shining the 89 logo on this fundraiser--to let the people of California know there's hope for change in our broken political system.,” said Rose Ann DeMoro, Executive Director of the California Nurses Association, the proponents of Prop. 89.

During his time in office, Schwarzenegger has become a national symbol of the need for campaign finance reform. Despite promising to clean up Sacramento, he has broken all records for political fundraising, and in return has offered Big Oil, Big Drug, Big Insurance and other corporations unprecedented influence over government policy. Prop. 89 sets tough limits on contributions from corporations, unions and individuals and bans contributions to candidates by lobbyists and state contractors. It establishes public financing for candidates who reject private money, and contains tough penalties for candidates who break the law, including jail time and removal from office.