Don't Believe the Doom Mongering About Obama's New Carbon Regs

| Mon Jun. 2, 2014 12:46 PM EDT

For deep coverage of President Obama's decision to roll out new limits on CO2 emissions from power plants, I commend to you the fine folks who cover the environment for us. Their real-time reporting on today's events is here.

For now, I'll just make a couple of points. First, EPA administrator Gina McCarthy sure is right about this:

McCarthy said critics who warn of severe economic consequences of the rules have historically decried all environmental protections. She described them as “ special interests” who “cried wolf to protect their own agenda. And time after time, we followed the science, protected the American people, and the doomsday predictions never came true. Now, climate change is calling our number. And right on cue, those same critics once again will flaunt manufactured facts and scare tactics.”

Before the rules came out, the U.S. Chamber of Commerce said it would cost the economy $50 billion annually and hundreds of thousands of jobs. Senate minority leader Mitch McConnell, from the coal-heavy state of Kentucky, called it “a dagger in the heart of the American middle class.”

You should basically ignore cries of doom from conservatives and business interests. They'll be producing reams of data showing that the new EPA regs will cost untold billions of dollars, millions of jobs, and thousands of plant closures. This is what they've done with every environmental regulation ever proposed. In virtually every case, they've been wrong. The cost of compliance turns out to be a lot lower than we expect, as does the impact on jobs and energy prices. Roughly speaking, this is because capitalism really does work, something these fans of capitalism always forget whenever it becomes inconvenient. But work it does: we invent new ways of compliance and new ways of generating energy, and it all turns out far better than the doom-mongers expect.

But you probably knew that already. So here's something else to ponder: What is Obama's real goal in announcing these new regulations? The reason I ask is that today's announcement is just the first step. We now have to go through the normal drafting and public comment phase, and this is a lengthy process—even if the courts don't get involved, something I wouldn't bet on. Obama may have directed the EPA to issue the final rule by June 2015, but that seems hopelessly optimistic to me. At a minimum, for a complex and powerful regulation like this one, I'd expect a minimum of two or three years.

In other words, it probably won't go into effect during Obama's presidency. And that makes me wonder if it's as much a bargaining chip as anything else. Back in 2010, when cap-and-trade was being considered in the Senate, Obama warned that if it didn't pass, he'd take executive action on his own. That wasn't enough to scare Republicans into supporting the bill, but now he's actually doing it, which means there's a concrete regulation to compare alternatives to. And I wonder if that isn't the main point: Produce something specific enough that it's possible to get some Republican support for an alternative. Even now, I suspect that Obama would be much happier with congressional legislation than with an executive action.

I'm just noodling here, and I might be entirely off base. God knows Obama has no reason to think that anything short of Armageddon will provoke any serious compromising from Republicans in Congress. Still, the timing certainly seems a bit peculiar. It's been four years since cap-and-trade failed. Why did it take this long to produce the EPA regs that he had threatened as the price of failure?