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Marketplace Scratch Pad

Morning Reading

Scott Jagow Jun 26, 2009

The story of the day may well be a House vote on the energy bill. A new poll finds that 75% of Americans believe the government should regulate greenhouse gas emissions. But the split is 50-50 on the cap-and-trade idea. Let’s hear both sides:

Cap-and-trade would set limits on pollution and leave it to the market to figure out the best way to meet those limits. In the Houston Chronicle, the president of the Environmental Defense Fund and the CEO of Dow Chemical write a column praising the bill:

Opponents claim that this bill will result in higher energy costs. They are confusing price with cost. Although this legislation will lead to modestly higher energy prices, this, in turn, will lead to greater energy efficiency and new, cleaner energy technologies. This will, in all likelihood, result in lower overall energy costs. A true win, win, win — lower energy costs, greater energy security and fewer carbon emissions!

Investor’s Business Daily takes up the opponents’ argument:

The 1,000-plus-page American Clean Energy and Security Act (H.R. 2454) is being rushed to a vote by House Speaker Nancy Pelosi before anyone can seriously object to this economic suicide pact…

Its centerpiece is a “cap and trade” provision that has been rightfully derided as “cap and tax.” It is in fact a tax on energy everywhere it is consumed on everything it is used to make or provide.

It is the largest tax increase in American history — a tax on all Americans — even the 95% that President Obama pledged would never see a tax increase.

For more on the bill, I recommend reading or watching the debate on PBS’s Newshour last night. You can get that here.

And this is a must-see. Paddy Hirsch’s latest WhiteBoard Video is about cap-and-trade:

Meet Cap ‘n Trade from Marketplace on Vimeo.

But if you’re feeling helpless about what’s going on in Washington, commentator Robert Reich has some suggestions:

People who voted for Barack Obama tend to fall into one of two camps: Trusters, who believe he’s a good man with the right values and he’s doing everything he can; and cynics, who have become disillusioned with his bailouts of Wall Street, flimsy proposals for taming the Street, willingness to give away 85 percent of cap-and-trade pollution permits, seeming reversals on eavesdropping and torture, and squishiness on a public option for health care.

In my view, both positions are wrong. A new president — even one as talented and well-motivated as Obama — can’t get a thing done in Washington unless the public is actively behind him. As FDR said in the reelection campaign of 1936 when a lady insisted that if she were to vote for him he must commit to a long list of objectives, “Maam, I want to do those things, but you must make me.”

Also today, President Obama meets with German Chancellor Angela Merkel. Merkel, of course, has been beating the inflation drum of late. She’s very critical of the US government’s spending. NPR had a story this morning about the origins of Merkel’s fears:

Josef Joffe, editor of the German newspaper Die Zeit, says concern about inflation is in the German DNA. He worries there’s just too much money in the economy.

“[U.S. Treasury Secretary] Tim Geithner and [Fed Chairman Ben] Bernanke and the president and [National Economic Council Director] Larry Summers think they can soak it up again when the time comes,” Joffe says. “But meanwhile, they are pumping unprecedented liquidity into the American global system. And I just can only say, ‘Good luck, Mr. President, in soaking up that excess liquidity.’ And I think that’s what Mrs. Merkel reacted to. If the Germans believe in one god, it’s the independence of the central bank.”

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