Jonathan Chait

Republicans vs. Markets

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One of my favorite sub-genres of liberal opinion journalism is finding areas of public policy where Republicans oppose the free market solution when markets are hostile to established business interests. I've been reading cases like this for some two decades. Yesterday's great Politico story on the GOP and energy reported:

Republican leaders counter that they've pitched their own alternatives -- more nuclear power, incentives for electric cars -- that are much less expensive but that could make a sizable shift in the nation's energy future. The fate of big-ticket climate legislation, Republicans say, rests on the Democrats and not their members.

Dave Roberts explains:

The whole point of pricing carbon is that it pays for all the incentives. The Waxman-Markey bill and the Senate climate bill would both reduce the deficit; Republican alternatives (and Bingaman's weak-ass energy bill) would increase it. Good climate policy is good fiscal policy.

Republican plans to lavish the industries and technologies they favor with subsidies -- which is called "picking winners" when Democrats do it -- are new spending that's not paid for. They are, by definition, "more expensive" than alternatives that are paid for.

The Democratic position in this debate is to establish a price on carbon and let the market find the most efficient way to provide clean energy alternatives. The Republican position is to have the government determine which technologies and industries should provide clean energy, and subsidize them. It can't stand up to any economic scrutiny. But it suits GOP needs by avoiding a direct tax, and allowing the party to directly subsidize favored industries like nuclear power that would otherwise have to compete on even terms.

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