David:
Economic Scene - Overcome by Heat and Inertia: This city just endured its hottest June since records began in 1872, according to the National Oceanic and Atmospheric Administration. So did Miami. Atlanta suffered its second-hottest June, and Dallas had its third hottest. In New York, the weather was relatively pleasant: only the fourth-hottest June since 1872. Then again, New York is on pace for its hottest July on record. Yet when United States senators and their aides file into work on Wednesday, on yet another 90-degree day, they may be on the verge of deciding to do approximately nothing about global warming. The needed 60 votes don’t seem to be there, at least not at the moment.... [T]he odds of a major climate bill are not great. And if this White House and this Democratic Congress can’t pass one, you have to wonder what the future of climate policy looks like. All the while, the risks and costs of climate change grow. Sea levels are rising faster than scientists predicted just a few years ago. Himalayan glaciers are melting. In the American West, pine beetles (which struggle to survive the cold) are multiplying and killing trees.
According to NASA, 2010 is on course to be the planet’s hottest year since records started in 1880. The current top 10, in descending order, are: 2005, 2007, 2009, 1998, 2002, 2003, 2006, 2004, 2001 and 2008.
Hot is the new normal.
The most efficient way to begin attacking the global swelter is no mystery. It involves raising the price of carbon emissions, which are warming the planet, and then letting the private sector find innovative ways to use less dirty energy. Conservative economists, like Gregory Mankiw, support this approach. So do liberals, like Joseph Stiglitz. But taxing carbon has never had much of a political chance. It’s too honest. It acknowledges that the best way to reduce the use of a product is to increase its price. We would all prefer a free lunch. So Congress has been laboring to disguise a price increase in a more palatable package.... Republican leaders, though, were only too happy to cast cap and trade as “cap and tax.”... The sad paradox is that cap and trade — which trusts in the efficiency of markets — was originally a Republican policy, signed by the first President Bush to reduce acid rain....
[T]he fuel economy rules from the 1970s that required car companies to make fewer gas guzzlers. The newly imposed scarcity of guzzlers, in turn, increased their price. But the relationship wasn’t obvious. Americans do not think of fuel economy rules as a tax on large vehicles. This explains why the rule-based approach seems to be the best bet for winning Republican votes. Senator Richard Lugar, Republican of Indiana, has proposed new rules not just for vehicles but also for appliances, building codes and power plants. If these regulations were tough enough, they could make a difference, as the fuel economy rules have. So some Democrats and environmentalists see this approach as their best remaining chance.... On the other hand, such rules would require government regulators to make all kinds of decisions — about which dishwashers qualified as efficient, about which alternative energies power plants had to use and the like.... The result would almost certainly be higher, albeit better disguised, costs than with a carbon cap or tax.... Thus the opposition among other Democrats and environmentalists to accepting the Lugar approach as a compromise — and Mr. Reid’s difficulty in finding 60 votes for it....
Robert Stavins, the Harvard economist, told me he would actually prefer a bill that cut emissions less in the short term but created a template for much bigger cuts in the future. “Success, to me, would be the beginning of political acceptance of carbon pricing,” he said. I’ll confess to being torn about these arguments. A utility-only cap, even a flawed one, really would represent a whole different kind of progress than a souped-up version of fuel economy rules. A cap — any decent cap — remains the best benchmark of success. Yet if the Lugar approach were the only one that could pass, should we be so confident that it would put off further action? It’s not clear to me how another failure on energy policy will somehow make success more likely in the future.
All of this will be decided in the next few weeks, before the Senate breaks for its August recess, or in September, before the midterm election campaign takes over. Meanwhile, the temperature in Washington this week is supposed to hit 99.
