2009 - %3, February

Countercyclical Capping

| Sat Feb. 28, 2009 1:10 PM GMT
A few days ago I suggested that although Barack Obama's revenue projections for his greenhouse gas cap-and-trade plan might be a little optimistic, they were "in the right ballpark."  Partly this is because the plan won't take effect until 2012, and I suspect that demand for energy will rise by then, increasing the auction revenue for permits enough to generate $80-100 billion per year.  Megan McArdle disagrees:

I doubt economy-driven demand will have recovered by 2012.  The major economies are crashing so hard that it will take years of growth to get demand back where it was, and the big developing countries that drove demand past capacity are in worse shape than we are....

[In addition] I think it is decidedly iffy whether congress actually passes any cap and trade system with teeth.  For a cap and trade system to work, it will have to make energy more expensive at a time when incomes are declining.  This will be very, very, very unpopular.

These are reasonable points, but my guess is that (a) demand will have largely recovered by 2012 and (b) the initial permit price will be low enough not to have a huge effect on the price of energy at first.  So it won't be all that unpopular.  Beyond that, though, there's another point buried here that's worth unpacking a bit.

In my magazine piece (which you should read!) I go into a little more detail about the difference between cap-and-trade and a carbon tax, but the nickel version is simple: Financial folks generally prefer a tax because it's predictable.  You know exactly how big the tax is now and how big it will be in the future, and that allows you to plan your investments.  Conversely, you don't really know what effect any particular tax rate will have on carbon emissions.  You have to take your best guess.

A cap-and-trade system is similar to a tax in the sense that you have to buy a permit for every ton of carbon you emit, but the predictability is exactly the opposite.  There's a firm cap, so you know exactly what effect the plan will have on carbon emissions, but you don't know for sure what the permit price will be at any given time.  If demand for energy rises, the price of permits gets bid up.  If demand goes down, the world is awash in permits and the price goes down.

There are pros and cons to both a carbon tax and cap-and-trade, but here's one of the pros of cap-and-trade: The price of permits is likely to go up in good times, when energy demand is high, and down in bad times, when energy demand drops.  In other words, it's countercyclical.  During recessions the effective tax rate goes down, and it does so automatically.  Macroeconomically speaking, that's good.  So that's a point in favor of cap-and-trade.

As for whether Congress will pass a plan with teeth?  Good question.  As with a tax, there are lots and lots of opportunities for special interest tinkering in a cap-and-trade plan.  Auctioning 100% of the permits, rather than giving some of them away to existing polluters, is the key issue to insist on, but there are others too (it's point #9 in my article).  Later this year we'll see if Obama can keep the sausage factory on the straight and narrow.

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| Sat Feb. 28, 2009 12:12 PM GMT
Mike Huckabee says that Barack Obama is midwifing the birth of a "Union of American Socialist Republics" in his new budget.  "Lenin and Stalin would love this stuff."

"If a prominent Democratic office holder, in 2005, delivered a speech referring to George W. Bush's agenda as 'fascism,' comparing his administration to totalitarian regimes, and casually throwing in a reference to Hitler," says Steve Benen, "that Democrat would have a very difficult time being taken seriously by the political establishment moving forward. Presidential ambitions would be largely out of the question."

"Why Huckabee thinks that federally funded research into determining which medical treatments are effective is similar to being a totalitarian mass-murderer is a bit beyond me" says Matt Yglesias.  "But it’s par for the course in the uglier corners of conservatism, they’re just not corners Huckabee’s been known for dwelling in."

"Either Huckabee is losing his ear or this is what you really have to say to get the Republican Presidential nomination in 2012," says Mark Kleiman. 

I'd say (a) yes, Huckabee really believes this stuff, (b) no, a Democrat couldn't get away with something like this, (c) yes, it's what you have to do to win the GOP nomination these days, and (d) no, nobody really cares because talk radio has inured us to this kind of stuff.  Boys will be boys.  He's just warming up the crowd.  Etc.

And the good news?  It demonstrates that things are going to get worse for Republicans before they get better.  "The party of Lincoln is now the Party of Limbaugh," says Paul Begala, and he's right.  Like most parties that have lost their way in the past, it's now clear that they'll spend at least four years insisting that what America really wants is an even more extreme version of what they voted against in 2008.  Cooler heads will eventually prevail, but not until 2016 at the earliest.  Maybe not until 2020.  Obama's really got some running room in front of him.

Epistemological Modesty

| Sat Feb. 28, 2009 11:39 AM GMT
This is apropos of nothing in particular, but I'd just like to mention that the past year has been an intellectually humbling one for me.  As a general purpose blogger I'm accustomed to spouting off on topics I know only a little bit about, but all that spouting has become more difficult lately.  There's just too much stuff I'm really not sure what to think about.  For example: I don't know if we should send more troops to Afghanistan.  I don't know if fiscal stimulus will work.  I don't know what to do about Pakistan.  I don't who or what is really responsible for our financial meltdown.  I don't know if we need to nationalize some banks.  I don't know the best way to handle detainees at Guantanamo.  I don't know whether it's a good idea to bail out Detroit.  I don't have even the slightest clue how to pursue peace in the Middle East.

On the other hand, Social Security is still a minor problem, national healthcare would be better than our current jury rigged hodgepodge, torture is wrong, global warming is real, preventive war is a bad idea, gay marriage will have no ill effects on straight marriage, Sarah Palin is still an embarrassment, and Inkblot is still America's Cat1.  So there.

1Well, why not?  If the Dallas Cowboys can be America's Team and Rudy Giuliani can be America's Mayor, why can't Inkblot be America's Cat?

At CPAC, Conservatives Blame Others, Not Their Own Ideas (Video)

| Fri Feb. 27, 2009 6:41 PM GMT
Jonathan Stein has been covering the Conservative Political Action Conference for us: John Bolton's bad joke about nuking Chicago, Sarah Palin blaming the media for her own failure; Newt's extreme rhetoric, and Mitt Romney's love-in with the crowd. And I had the chance to go on Hardball to discuss the overall theme of the conference: there's nuthin' wrong with conservative ideas:

Video: Royksopp - "Happy Up Here"

| Fri Feb. 27, 2009 6:16 PM GMT

Norwegian duo Röyksopp are back with a new album, Junior, out March 23, and the first single, "Happy Up Here," is nice enough. It sort of feels like an update of their classic "Eple" (whose bleepy melody was charming enough to last as my ringtone for like 8 months) with some breathy vocals that sound a little like Air circa "Cherry Blossom Girl." Not exactly ground-breaking, but lovely. However, the video is a strange and wonderful counterpoint to the song's casual jauntiness: Space Invaders emerge from hiding in our flashy billboards to engage in battle with what looks like a Trabant. Is that Röyksopp there in the Trabant, and will they save us? Watch and find out...

Your Water Bottle Is One-Quarter Oil

| Fri Feb. 27, 2009 6:12 PM GMT






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Romney Treated Like a Savior at CPAC. Is He?

| Fri Feb. 27, 2009 5:50 PM GMT
Twelve months ago, Mitt Romney made a hero's entrance but a loser's exit here at CPAC. Trailing in the Republican Primary, but recently accepted as the far right's representative in the field, Romney entered the room to thunderous applause but used his speech to make a surprise withdrawal from the race, drawing gasps and cries of despair from the crowd. (For a full report from that day, including quotes from crushed Mitt followers, click here.) From that point forward, you'll remember, Romney became a political odd man out. He had to grovel before John McCain would allow him to be his surrogate on television.

Today, in the same ballroom in the same hotel, Romney made another hero's entrance. The CPAC attendees -- burned by a presidential nominee who did not share their far-right beliefs and disappointed in a Republican congressional leadership they see as providing no leadership at all -- embraced Romney warmly. Organizers were forced to open a second ballroom for overflow viewing. Romney's introducer, the head of the American Conservative Union and the official host of CPAC, called Romney "one of the family." Romney replied, "It feels like coming home, I gotta tell ya."

The Immortal Simpsons

| Fri Feb. 27, 2009 4:13 PM GMT

Fox announced yesterday that the network had renewed The Simpsons for two more years. Breaking the record set by Gunsmoke, which ran for 20 years, the animated show will become the longest-running prime time TV series in history.

Bart Simpson was my age (nine years old) when the show made its network debut in 1989. I'm 28 now, so in two years I'll be 30, only six years younger than Marge and Homer who will, of course, remain 36 years old. Like David Wooderson said in Dazed and Confused: "Man, I get older; they stay the same age."

CPAC: Republicans Strike Out on Health Care

| Fri Feb. 27, 2009 1:55 PM GMT
Sometimes CPAC makes it perfectly clear why Republicans are wandering in the wilderness.

In a seminar on health care held Friday morning, three conservative speakers were not able to articulate a clear alternative to the universal health care plan President Obama has promised to deliver. There was plenty of alarmist rhetoric. "Obama-care," said Michael Tanner, the moderator and a senior fellow at the libertarian Cato Institute, is "one of the greatest threats to our individual liberty that we can find." He paraphrased Reagan: you can't socialize medicine without socializing the doctors, and you can't socialize the doctors without socializing the patients. "That is clearly the agenda that Democrats are pursuing," he said.

Grace-Marie Turner of the Galen Institute argued that Obama's plan to introduce a government health care option that will allow every citizen to have health care coverage similar to what is currently enjoyed by members of Congress will "basically shove out private competition from the market." She suggested that universal health care will be a tool for Obama to consolidate power, and a corruption of the "best health care system in the world." Nothing about new ideas.

Friday Cat Blogging - 27 February 2009

| Fri Feb. 27, 2009 1:11 PM GMT
Today is closeup day.  Everyone is outside enjoying the (sorta) sunshine and pondering Portuguese water dogs.  Hmmm.  Are there Portuguese water cats too?  Inquiring felines want to know.  If you have inside information, enlighten the rest of us in comments.  In the meantime, have a nice weekend, everyone.