Given that most of Alan Meltzer's column this morning consists of rote repetition of conservative talking points -- are you aware that permanent tax cuts solve all problems? -- it's not really worth engaging, except for this relatively salient point:
The president asks for cap and trade. That's more cost and more uncertainty. Who will be forced to pay? What will it do to costs here compared to foreign producers? We should not expect businesses to invest in new, export-led growth when uncertainty about future costs is so large.
Indeed, it's hard to imagine businesses will invest in an uncertain future, but Meltzer doesn't appear to be curious about the source of this uncertainty. I am! The problem here is Congress, and the Senate Republicans who obstruct everything on the president's agenda.
You may remember that the House of Representatives passed a comprehensive energy-reform bill around this time last year, and if Republicans hadn't filibustered, oh, just about everything (three filibusters and counting on financial reform, to name one bill) it's possible that the Senate could have acted on energy and other issues by now, providing certainty for business. However, the Republican electoral strategy of procedural obstruction has a major side effect -- uncertainty about future economic policy. No one is really confused about what a cap-and-trade policy would look like -- they just don't know if it'll become law and what kind of loopholes will be required to get the necessary votes.
-- Tim Fernholz
