1. Cap-and-trade is dead
Cap-and-trade is deader than dead. Everyone in Washington officialdom knows that. Virtually no one in Washington officialdom understands how it would work or how much economists think it would cost, but they’re certain it’s bad, bad, bad and had to die.
Polluting industries and wealthy right-wing oligarchs, aided by a well-funded grassroots army, sympathetic conservative politicos, and a major cable TV news network, cast cap-and-trade as a plague of socialist cooties that would destroy the economy. The left’s Purist Brigade wove florid tales of corruption and plutocracy. The reality — a long, opaque, technocratic bill burdened with several high-profile side deals — inspired no one. All the passion, all the anger, was found on the side of opponents.
In the end, the bill was done in by a dysfunctional, sclerotic Senate. Its enemies were many, among them the miserable economy itself, but special contempt must be reserved for the Senate’s “moderates,” virtually all of whom have revealed themselves as temporizing invertebrates.
Despite the fond hopes of its critics on the left, cap-and-trade won’t likely be replaced with a carbon tax or a tax-and-dividend system or massive investments in R&D. Far more likely is that energy policy will limp along as it has for decades, an incoherent, inconsistent system of tax breaks and credits — an incumbent protection racket that is both ineffectual and a magnet for rent-seeking.
Climate hawks often forget that a majority of the country, a majority of legislators in both houses of Congress, and a majority of other countries in the world are on their side. It’s just that in America in 2010, that’s not enough.