Mr. Obama’s answer was puzzling because he gave credit where it isn’t due — and thereby undermined what could be a very effective Democratic line of argument.
In particular, Mr. Obama attributed to Republicans the idea that regulation can be flexible rather than a matter of “top-down command and control,” and in particular for the idea of controlling pollution with a system of tradable emission permits rather than rigid regulations.
Well, that’s not at all what actually happened — and the tale of what really did happen has a lot of relevance to current events.
It’s true that the first President Bush established a market-based system for controlling sulfur dioxide emissions, which has been highly successful at controlling acid rain. But by then the idea of markets in emission permits had long been accepted by economists of all political stripes.
And it had also been accepted by leading Democrats. The Environmental Protection Agency began letting cities meet air-quality standards using emissions-trading systems during the Carter administration — which also led the way on deregulation of airlines and trucking.
Furthermore, the sulfur dioxide scheme actually marked a sharp change in policy from the Reagan administration, which — committed to the belief that government is always the problem, never the solution — spent eight years opposing any effort to control acid rain."
Krugman makes the brilliantly stupid point that, surprise! Democrats have at times supported, and sometimes do support market-based mechanisms for environmental control. Probably everyone has at some point in their lives. But the simple fact is, that Democrats have historically, on average, tended to support command and control regulations over incentive-based. Although Republicans have been reluctant to enact environmental regulation, they simply are more likely to use incentive-based systems. But even if this were false, it still wouldn't matter. It wouldn't matter because the public perception is very definitely that Democrats tend to support more regulatory environmental controls, while Republicans support incentive-based schemes if they support environmental regulation at all. To this extent, Obama's statement is still a meaningful departure from the Democratic stance. In a democratic system where the public is God, public perceptions are all that matter.
Krugman needs to go rediscover logic, because apparently he forgot about it. Or perhaps it is the allure of being on Hillary Clinton's Council of Economic Advisors that has gone to his head. Or maybe the fear of the Chicago school that Obama would undoubtedly appoint.
