Blame Schwarzenegger for ‘terminating’ affordable housing in California

Every now and then former Gov. Arnold Schwarzenegger takes leave from making another movie to bequeath us his political wisdom. A rambling Oct. 30 post on X explained why Conan the Republican was supporting Democrat Kamala Harris for president. He attacked Donald Trump for, among other outrages, a “tax cut that helped his donors and other rich people like me but helped no one else else [sic]…. Turn the page and put this junk behind us.” 

As I’ve written before, I’m far from rich, but got a $1,000 yearly tax cut from Trump. You probably did, too. By contrast, Schwarzenegger signed off on a record $13 billion tax increase in 2009 that slammed everybody in California, including me – and didn’t even work to close the deficit. As Rep. Tom McClintock calculated a year later, after nine months “sales tax collections are down $270 million; income tax collections are down $10 billion.”

But the worst actions of his governorship were two horrible bills that continue to severely restrict housing construction. First was  Assembly Bill 32, the Global Warming Solutions Act of 2006, by Assembly Speaker Fabian Núñez. Note the “global warming” moniker, still used when the bill is mentioned, but which soon gave way to the more malleable “climate change.”

AB 32 imposed draconian cuts in greenhouse emissions of 25% by 2020, which actually were met by 2014, according to CalEPA. But the cost was immense. The Orange County Register Editorial Board noted in June 2007 how Jerry Brown, then the attorney general, used AB 32 to attack growth. He sued San Bernardino County and threatened San Joaquin County “on the grounds that their transportation plans failed to explain how they plan to construct or operate highways without increasing carbon dioxide emissions.”

Second was Senate Bill 375, the Sustainable Communities and Climate Protection Act of 2008. The most “sustainable” communities are those never built. It was by Senate President Darrell Steinberg, who as Sacramento’s mayor has dealt with the devastating results of his anti-housing folly. An August Register editorial that year warned SB 375 would “transfer decisions about local developments from property owners and local cities to state environmental officials, who will use a variety of regulations and incentives to force developers to only build the kind of developments the bureaucrats prefer.”

The full effects of AB 32 and SB 375 were delayed by the 2007-10 Great Recession, which crashed housing prices across the state. But the bills’ double-whammy hit home affordability since the recovery began. In September, Redfin calculated it takes $251,302 of income to afford a typical starter home in Anaheim, where the median income is $122,192. For Los Angeles, it’s $184,477 to afford such a home, where the median income is $93,197.

Shortly after leaving office in 2011, it came out Schwarzenegger had impregnated the family maid. His wife, Maria Shriver, began divorce proceedings, which lasted until 2021. According to TMZ, his $400 million fortune “pretty much got divided down the middle. There was no prenup.”

Yet in May 2024, Forbes added Schwarzenegger to its list of billionaires. He certainly has been busy making movies in recent years. But Forbes also noted, since he came to California in 1968, he “pumped his money into commercial real estate, private equity and stocks,” and “an estimated $40 million in personal real estate, including a ski getaway in Sun Valley, Idaho and a seven-bedroom mansion in Brentwood, California.”

I’m sure he didn’t intend his policies to benefit himself personally, putting his investments in a blind trust while governor. But it’s Economics 101: If you restrict supply and demand stays the same, the price goes up. 

Certainly other factors have hurt housing affordability, such as high interest rates and the California Environmental Quality Act. But Schwarzenegger’s policies compounded those problems by artificially constraining real estate and shooting up the value of his properties. 

Back in Sacramento to celebrate the 10th anniversary of his signing AB 32, Schwarzenegger used movie terminology we’re all sick of to boast of opponents, “We pushed back and pushed back and we terminated them.” He also terminated any chance for most Californians to afford a home without leaving the state.

John Seiler is on the SCNG Editorial Board and blogs at johnseiler.substack.com