Paul Krugman’s most recent blog post has a great chart highlighting Bush’s dismal record of job creation, comparing it to job creation during the Clinton administration:

This chart alone is striking. Job growth under Bush was abysmal, when compared to the eight previous years of steady increase. Taking Krugman’s chart a step further, David Madland of the Center for American Progress compares Bush’s performance on job creation not just to Clinton, but to the other 41 American presidents who have come before him. Madland concludes that aside from Herbert Hoover — the only American president to ever LOSE jobs during his term in office — Bush has the worst record on job creation in this country.Now going back to Krugman’s, and Dean Baker’s point, we agree that it is absurd to suggest that McCain’s economic plan is more committed to job creation than that of his competitor. If the Washington Post is going to discuss McCain’s “emphasis on job creation,” then it would be disingenuous to leave out the other hallmark of his proposal: a continuation of the Bush tax cuts with particular weight on reducing corporate taxation.

According to a study by the non-partisan Congressional Budget Office on policy responses to short-term economic weakness, the focal point of McCain’s plan, a cut in the corporate tax rate, is fundamentally flawed:

The most common form of a general cut in business taxes is a reduction in the corporate tax rate. This approach, however, is not a particularly cost-effective method of stimulating business spending: Increasing the after-tax income of businesses typically does not create an incentive for them to spend more on labor or to produce more, because production depends on the ability to sell output.

So let’s connect the dots. McCain wants to follow Bush’s lead on tax cuts — not only extend them past their 2010 expiration, but deepen them further by cutting the corporate rate from 35 percent down to 25 percent. A cut in the corporate tax rate is not only an inefficient means of creating jobs, but as Krugman and Madland point out, the Bush tax cuts for the wealthy have resulted in embarrassingly low levels of job creation.

So unless John McCain is running against Herbert Hoover in the fall, any competitor will find themselves with greater “emphasis on job creation” than the Maverick from Arizona.

Our guest blogger is Adam Jentleson, the Communications and Outreach Director for the Hyde Park Project at the Center for American Progress Action Fund.

Much has been made about John McCain’s efforts to court women voters. Those efforts are not going so well. As today’s Gallup poll shows, McCain’s support among women is falling fast.

As Disco Stu said, “If these trends continue… Ayyy.” And it’s a safe bet that they will – because the more women learn about McCain’s policy positions, the less they’re going to like him. Consider:

– McCain opposes efforts to ensure that women get paid equal wages for equal work. Women make 77 cents for every dollar men earn, adding up to hundreds of thousands, sometimes millions of dollars over the course of a career and retirement. But McCain recently skipped a vote on a critical bill needed to advance women’s right to equal pay because he thought “it would lead to more lawsuits”; he told a 14 year-old girl who asked about it, “I don’t believe that this would do anything to help the rights of women, except maybe help trial lawyers and others in that profession.”

– McCain supports a Constitutional Amendment banning abortion. On “Meet the Press” in 2000, McCain repeatedly told host Tim Russert that he supported a Constitutional ban on all abortions. Russert pressed:

MR. RUSSERT: But, Senator, women across the country would say, “Senator McCain, prior to Roe vs. Wade, hundreds of thousands of women a year went to the back alleys to have abortions.”

SEN. McCAIN: I understand that.

MR. RUSSERT: Many died.

SEN. McCAIN: I understand that. [NBC, Meet the Press, 1/30/00]

– McCain thinks Roe v. Wade should be overturned. Sen. McCain’s 2008 presidential campaign website states that he “believes Roe v. Wade is a flawed decision that must be overturned.”

– McCain supported limits on access to contraceptives. McCain supported limits on access to contraceptives. In 2003, McCain opposed legislation to expand access to emergency contraceptives. And in 1994, he voted for an amendment put forward by former Sen. Jesse Helms (R-NC) to prohibit distribution of condoms, contraceptives, or drugs financed by federal aid without parental consent. In 2003, McCain opposed legislation to expand access to emergency contraceptives. And in 1994, he voted for an amendment put forward by former Sen. Jesse Helms (R-NC) to prohibit distribution of condoms, contraceptives, or drugs financed by federal aid without parental consent.

– McCain said he will appoint “clones of Alito and Roberts.” The effect of a conservative judiciary would not just be limited to choice and privacy. Over the past two decades, there have been a large number of 5-to-4 decisions limiting the reach of civil rights statutes. We’d feel the effects of having Alito/Roberts clones on the Supreme Court, as well as on lower courts, for generations to come.

As our new report outlines, these are just some of the extreme positions McCain has taken. He has also opposed health care for poor children, voted against the minimum wage seven times (most minimum wage workers are women), and has proposed no solutions for bringing America’s family and medical leave policies into the 21st Century to help working women balance the demands of work and family.

Of course, these issues don’t just impact women – but if McCain is looking to get them on his side, he’s got a tough sell ahead of him.

Our guest bloggers are Center for American Progress Action Fund fellows Robert Gordon and James Kvaal.

The highly respected Tax Policy Center (TPC) has posted a new side-by-side analysis comparing the McCain and Obama tax agendas. If accurate, this post indicates that the McCain team has described to TPC policies that differ dramatically from policies that remain on McCain’s website and, in one instance, were reiterated by McCain just yesterday.

Alternative Minimum Tax. Yesterday, McCain said he supports “a phase-out of the Alternative Minimum Tax.” His website still says he will “permanently repeal the AMT.” TPC says, however, that McCain wants to “[e]xtend and index 2007 AMT patch, further increase exemption by 5 percent in excess of inflation after 2013 (temporarily).” That’s relief from the AMT, but well short of “permanent repeal” or “phase out.”

Corporate Expensing. McCain’s website still features his proposal “to permit corporations to immediately deduct the cost of equipment investment, providing a valuable pro-growth investment incentive.” That is enormously costly. In a fact sheet also still available on the website, the McCain campaign compares this proposal to a “modest” partial expensing measure scored by the Treasury Department as costing $1.2 trillion over 10 years. But TPC says that McCain is now proposing only to “allow first-year deduction of 3 and 5-year equipment,” and that McCain also wants a complementary repeal of the interest tax deduction. The TPC also says that McCain’s proposal “expires.” With these modifications, the proposal’s cost will be less than 2% of the proposal that McCain once deemed “modest.”

Substantively, these changes are mostly (modest) moves in the right direction — although they also show McCain manipulating phase-ins and phase-outs just as President Bush has done for the last eight years. But our first question is: What is the McCain policy–what’s on their website, or what they seem to have told TPC?

Our guest blogger is Adam Jentleson, the Communications and Outreach Director for the Hyde Park Project at the Center for American Progress Action Fund.

Today on CNN, senior McCain advisor Carly Fiorina was asked to explain why McCain’s answer to these tough economic times is to double Bush’s tax cuts with another $300 billion in cuts that go mostly to the wealthiest Americans, and give ExxonMobil a $1.2 billion per-year tax cut.

Her response:

I don’t know where he gets those numbers. It was $300 billion, it was $1.2 billion. … I can’t make Barack Obama’s numbers add up.

Watch it:

Mystery solved! Those numbers come from our analyses, which document McCain’s hugely expensive and highly regressive tax proposal, and show that his tax plan amounts to a nearly $4 billion-a-year windfall for the top 5 oil companies in the U.S. – including $1.2 billion for ExxonMobil.

If today’s interview is a sign that Carly Fiorina has been willfully ignoring the facts about the tax plan she’s shilling for, here are some other numbers with which she may want to acquaint herself:

– $175 billion: The amount of money that would go directly to corporations each year under McCain’s tax plan.

– $12.7 trillion: The size the deficit will be after two terms of McCain’s fiscal policies.

– $267 billion: The number of dollars in savings McCain still has to account for in order to pay for his massive, $300 billion tax cut.

– Top 1%: The taxpayers who will get more than half of the benefits under McCain’s tax plan – more than they got under Bush’s.

So Ms. Fiorina, next time you need a citation in a pinch, remember that our Resource Library is just a click away.

Our guest bloggers are Center for American Progress Action Fund fellows Robert Gordon and James Kvaal.

Sen. John McCain, in September 2005:

I follow the course of a great Republican, Teddy Roosevelt, who talked about the malefactors of great wealth and gave us the estate tax. I oppose the rich passing on fortunes.

McCain today:

The estate tax is one of the most unfair tax laws on the books.

McCain also continues to claim that full repeal of the Alternative Minimum Tax will be a tax cut for “25 million middle-class families.” This is false. Compared to existing policy — the comparison McCain always makes when he tallies up the cost of his program — McCain’s proposal will provide a tax break for fewer than 3.6 million taxpayers, and nearly half of them make more than $500,000 a year.

On Sunday, the national average price for a gallon of gas reached a new, previously unthinkable milestone of $4.00/gallon. Americans are struggling — and drivers in some parts of the US are spending up to 16% of their income on fuel.

But we didn’t just wake up one morning to find gas prices this high. Although the cost of a gasoline can be attributed to a variety of factors, we sometimes forget that in 2000 when George Bush took office, gas was only $1.51/gallon. It is also remarkable just how thoroughly out of touch Bush has been on this issue, and how little substance he has put forth to deal with it over the years.

In 2000, Bush assured Americans that he would “bring down gas prices through ‘sheer force of personality.’” Lo and behold, the initial jump in fuel costs occurred during Bush’s first term.

Fast forward four years to 2004 when gas prices passed the $2.00 mark — sending shock waves through the economy. Former Treasury Secretary John Snow acknowledged the problem but had little to offer in the solutions department. “Higher gas prices are creating a financial hardship for millions and millions of Americans,” he says. “We know that. Those higher gas prices, in a way, are becoming a proxy for how they feel about the economy.”

Push ahead now to 2006 — two years ago and two years into Bush’s second term. According to the AAA Fuel Gauge Report, gas prices rose 97% between 2006 and Bush’s first inauguration. At that point, American consumers were paying on average $2.91/gallon, Bush’s approval rating dropped to 32 percent, and the vast majority of Americans agreed that the rising gasoline prices were causing severe or moderate hardships. In April of 2006, the president’s stance was still one of inaction. “I know gas prices are high. There’s no magic wand to wave. We’ll make sure the energy companies are pricing their products fairly.”

And here we are today — $4.00 gas with $5.00 on the horizon. George Bush was shockingly unaware of how high gas prices had climbed as recently as last February. In a White House press conference, Bush had an interesting conversation with CBS news Radio Correspondent Bill Maer:

MAER: What’s your advice to the average American who is hurting now, facing the prospect of $4-a-gallon gasoline, a lot of people facing …

BUSH: Wait, what did you just say? [...] You’re predicting $4-a-gallon gasoline?

MAER: A number of analysts are predicting $4-a-gallon gasoline.

BUSH: Oh, yeah? That’s interesting. I hadn’t heard that. [...] You just said the price of gasoline may be up to $4 a gallon — or some expert told you that. That creates a lot of uncertainty.

It’s too bad, for his own sake, that President Bush that he didn’t pay more attention — he might have noticed that as the price of gas increased, his approval rating plummeted.

Our guest bloggers are Center for American Progress Action Fund fellows James Kvaal and Robert Gordon.

Apparently the McCain campaign is feeling the sting of comparisons to George Bush. McCain describes himself as the strongest support of the war in Iraq. His answer to $4.00 gasoline is to cut oil company taxes by $4 billion a year. And McCain has embraced a Bush proposal to radically change our health care system. (These and other similarities are described in a memorandum released today by the Center for American Progress Action Fund.)

Swimming upstream, McCain policy advisor Douglas Holtz-Eakin now argues that it is Senator Obama – not McCain – who wants to continue Bush’s fiscal policies. Obama’s budget “is dedicated to the recent Bush tradition of spending money on everything,” he said.

This is exactly backwards. Consider:

– Like Bush, McCain has proposed massive tax cuts that primarily benefit high-income households. McCain’s $300 billion a year in tax cuts – over and above the cost of extending the Bush tax cuts when they expire in 2010 – would essentially double the size of the Bush tax cuts and make them even more regressive.

– Like Bush, McCain’s massive tax cuts and spending on security leaves little for other priorities. Over the past eight years, other types of discretionary spending have remained essentially unchanged after inflation and population growth. McCain would continue the pattern of putting huge tax cuts and defense spending ahead of other needs, like preschool and renewable energy.

– Like Bush, McCain rails against wasteful spending in the abstract but fails to target any actual programs. His promises to eliminate earmarks and freeze spending could save $30 billion a year or even less. That leaves him short the quite noticeable sum of $270 billion a year. (Holtz-Eakin told Bloomberg that McCain has a secret plan to balance the budget, but he hasn’t shared it with the Concord Coalition — or those of us at the Center for American Progress Action Fund, for that matter.)

– Like Bush, McCain is likely to drive up the national debt by trillions of dollars. Bush took a debt of $3.4 trillion – and headed down – up to $5.4 trillion. McCain’s budget plan would drive the deficit to $12.7 trillion.

Obama also has expensive proposals, such as his health care coverage plan and middle-class tax cuts. But he is clear where the money is coming from: higher taxes on high-income families, ending the war in Iraq, selling the right to emit greenhouse gases, and cutting subsidies to oil and gas companies, health insurers, drug companies, and the student loan industry.

That’s why the Wall Street Journal concluded that Barack Obama’s budget “adds up, probably.” But McCain’s plan, it concluded, “would either cause the federal deficit to explode or would require unprecedented spending cuts.”

Digg It!

Our guest bloggers are Jason Walsh and Van Jones from Green for All.

This morning, Senate debate on the Lieberman-Warner Climate Security Act came to an end. It was a missed opportunity to robustly debate a critical issue facing the country. The bill had the potential, particularly if strengthened during the amendment process, to affect profound and positive change for both the American people and the planet.

It is a shame that political gamesmanship paralyzed the Senate on such a crucial piece of legislation. Many of the arguments against the legislation were patently false. It was particularly ironic that some senators chose to argue against this bill on the basis that it does not protect those less fortunate; their voting records clearly indicate that the poor are not the constituents with whom they are most concerned.

Hypocrisy aside, the claim that the bill hurts the underserved ignored the assistance for low-income families and workers already in the legislation — which could and should have been strengthened by an amendment filed by Sen. Sheldon Whitehouse (D-RI) — and the critical investments that the bill makes in providing economic opportunities for low-income workers and building the wealth and health of low-income communities.

The fact of the matter is that this issue is far too important to employ scare tactics and play politics with. The effects of global warming, which hit low-income people first and worst, are real and they warrant a genuine discussion and substantive action.

We do, however, want to commend Senator Barbara Boxer (D-CA). She has proven herself to be the national leader and voice that we have been longing for in the Senate. She is a true heroine, and the nation will owe her an incalculable debt when we finally win sane climate policy in the United States.

We hope to continue the conversation, and insist that any federal climate legislation must: Read more

On Wednesday’s edition of Your World with Neal Cavuto, Sen. Joe Lieberman (I-CT) defended John McCain’s fiscal intentions:

LIEBERMAN:…I think he favors a strong dollar and he favors a balanced budget, but he wants to see all the Bush tax cuts extended.

Watch it:

[flv http://video.thinkprogress.org/2008/06/LiebermanTaxCuts.320.240.flv]

But even if McCain “favors” a balanced budget (just like President Bush does), he clearly favors tax cuts for corporations and wealthy CEOs even more.

McCain not only wants to extend Bush’s tax cuts for the rich, he wants to double them by cutting corporate taxes, creating new loopholes for big business, and ignoring the middle class.

Far from balancing the budget, McCain’s plan would create the largest deficits in 25 years and the largest debt since World War Two.

As McCain’s own Chief Economic Advisor Douglas Holtz-Eakin said on deficits: “You have to pay for that somehow or you’re George Bush III.”

Yesterday, the Center for American Progress released a report by American Worker Project director David Madland comparing the US economy during the presidencies of George W. Bush (2001-2007) and Herbert Hoover (1929-1932). Although today’s economy cannot technically be labeled a recession (whereas Hoover presided over a stock market crash followed by four straight years of economic deterioration), a close inspection of the economic track records and ideology of these two presidents reveals that they are quite similar. Here are some highlights from the study:

Comparison #1: Housing

Under both presidents, housing foreclosures rose rapidly—even more rapidly under Bush than Hoover. Housing starts also fell significantly, though to a much greater degree under Hoover than Bush.

Comparison #2: Employment

Bush has presided over the worst annual job creation record since Hoover, the only president to ever preside over an economy that has lost jobs. Although Bush has created jobs at an annual rate of .07 percent, most presidents in the 20th century have boasted a 2 to 4 percent increase.

Comparison #3: Income

While the drop in average income during Bush has been less severe than that of the Hoover era, it is one of only three instances since the end of the Great Depression in which average income for most Americans has decreased during a president’s tenure. In contrast, income inequality in the Bush years has grown to levels above even those during the Depression era.

Read the full report.

As the 2008 election has heated up, and George Bush’s approval rating has continued to drop, John McCain has been on the lookout for ways to differentiate himself from the president. Seems like he’s finally found the issue: international labor and environmental standards. Bush likes them and McCain doesn’t.

On May 10, 2007, President Bush reached an agreement with Congressional trade committee leaders on specific stipulations for any future international trade deal signed by the United States. With particular emphasis on strengthening labor and environmental standards, this announcement showed the first step in bipartisan agreement in US trade policy. Under the new regulations:

– Free trade agreement countries would be committed to adopting and enforcing laws that abide by basic international labor standards, such as child labor, the right to collective bargaining and the elimination of employment discrimination

– Countries that reach trade agreements with the United States would have to adopt and enforce laws that are in line with seven major multilateral environmental agreements.

– The US would have full, non-challengeable authority to prevent foreign companies from operating U.S. ports, based on national security concerns.

John McCain, however, has a very different stance on these types of standards. He doesn’t believe in them at all:

McCain would reject the use of labor and environmental issues to block trade, said Douglas Holtz-Eakin, McCain’s chief economic policy adviser. His preference would be to monitor trading partners in order to determine if they are improving their standards, he believes this approach would be far more effective than requiring labor and environmental standards in trade agreements.

McCain’s rhetoric on labor and environmental standards extends into his long Senate voting record, as well. In the deeply contested 2000-2001 debate on China’s accession into the World Trade Organization, McCain repeatedly voted down measures forcing China to change their policies towards civil and humanitarian rights before gaining acceptance into the WTO. During the 2002 debate on presidential fast track authority, McCain’s votes were no different — he repeatedly voted against establishing labor standards in trade deals negotiated by the president:

I don’t believe in walls. I believe in freedom. If I were president, I would negotiate a free trade agreement with almost any country willing to negotiate fairly with us. Only risks to the security of our vital interests or egregious offenses to our most cherished political values should disqualify a nation from entering into a free trade agreement with us.

Kudos to McCain for finally finding an issue that separates him from the president. Unfortunately for his campaign, however, he picked one of the thing that he should be following Bush’s lead.

UPDATE: McCain seems to have divorced himself from his own position. In his May 12, 2008 speech on global warming, McCain said:

We will apply the same environmental standards to industries in China, India, and elsewhere that we apply to our own industries.

Or does McCain intend to lower the environmental standards of the United States to those of China and India?

Sen. John McCain has a strong record on taxes. In 2001 and 2003, he voted staunchly against tax cuts proposed by President Bush, calling them both a giveaway for the wealthy and unfair to low and middle-income wage earners. In 2001, McCain broke ranks and became one of two members of his party to vote against Bush’s most extensive tax cut plan. McCain explained on the Senate floor:

I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us at the expense of middle-class Americans who need tax relief.

Over the years, McCain has consistently advocated for middle class tax relief. He offered, and voted for, measures that gave savings to lower income tax earners by shrinking the cut in the top tax rate for the wealthiest individuals, allowed service members on active duty to qualify for tax relief as they sold their primary residence, and blocked a repeal of the estate tax.

But now, almost seven years to the day since the first Bush tax cut (which is set to expire in 2010), John McCain is singing a different tune in order to appease his GOP base. Over and over again, McCain has endorsed making Bush’s tax cuts permanent, directly contradicting his years of Congressional votes:

Well, I think the worst thing we can do right now is — we’ve got some shaky economic times — is to increase people’s taxes. And I think that what we need is more tax cuts. We need to make Bush tax cuts permanent. [3/08]

John McCain is a rare breed of politician — the kind that can wipe out an admirable legislative record that spans more than a quarter century with two years of opportunistic, self-serving rhetoric. Nobody said running for president was easy, but trading in long-standing beliefs for a presidential nomination is the worst kind of flip-flopping.

In a meeting on the economy in Washington this Monday, President Bush made a pointed speech arguing for the extension of his first-term tax cuts that are set to expire in 2010. Sounding more like a campaign event than a policy message, Bush was operating under the false premise that the 2008 candidates are calling for a full reform of his tax cuts, claiming that “overall 43 million families with children will face a tax increase of $2,323 on average.”

Watch it:

If Bush is going to talk about repealing the tax cuts bestowed upon a middle class American family of four making $50,000, in terms of the 2008 election, he’s the only one having that discussion. None of the three remaining presidential candidates — Senators Obama, Clinton and McCain — propose eliminating the tax breaks for those in the lower tax brackets.

CNN’s Ali Velshi hits the nail on the head by explaining that, “So while it was quite grand for President Bush to talk about the 43 million people getting hit by elimination of tax cuts, there’s nobody out there who’s thinking of eliminating those tax cuts for 43 million people.”

But that’s not all. In a roundtable discussion following the speech, Bush went on to state that:

The best way to deal with uncertainty is to let people keep more of their money [...] Tax cuts have been an engine for economic vitality. Given the fact that tax cuts have worked, what will be the Congress’ response?

Does Bush really consider the American economy to be full of “economic vitality?” The Bush presidency has been plagued with stagnant wage growth, increased household debt, a bleak job market and a sharp rise in personal bankruptcy filings. Maybe Bush has a different definition for a tax plan that “works,” because he seems to be ignoring the fact that American income disparity is comparable to what we saw in the years leading up to the Great Depression.

A story in this week’s edition of The New Republic points out an interesting policy contradiction between John McCain and his top adviser, Douglas Holtz-Eakin, on the line item veto. McCain, who is well known for his rhetorical crusade against earmarks and ‘pork barrel spending,’ had this to say about the controversial practice of allowing the top executive to scratch a single item off a spending or budget bill:

I will seek a constitutionally valid line-item veto to end the practice [of earmarking] once and for all.

It’s great that McCain is able to give such a straight talk statement on the line item veto, but maybe McCain should have checked in with Holtz-Eakin before he spoke so fervently on the record. As McCain’s chief policy strategist and former director of the Congressional Budget Office, Holtz-Eakin has a long history of opposing the line item veto as an ineffective way to reduce spending and balance budgets:

With few exceptions, simply granting the governor a line-item veto has little or no effect on spending over the long term [...] over time, in the hands of Republicans and Democrats alike, the line-item veto fails to cut spending. [New York Times, 2/88]

Analysis of a rich set of state budget data indicates that long run budgets are not altered by an item veto [...] These results suggest that adoption of the line item veto, in general, is unlikely to reduce the size of the federal government. [NBER, 3/88]

I don’t think there’s any evidence that this, in itself, is a powerful enough weapon to alter the path of spending. [CBPP, 3/06]

So what’s the problem here? Do McCain and Holtz-Eakin just disagree on this issue? Or did McCain, who admittedly knows little about the economy, forget to have a conversation with is top economic adviser about this contentious topic before taking another one of his bold, maverick stances?

Our guest blogger is Bracken Hendricks, a Senior Fellow with American Progress Action Fund and the founding Executive Director of the Apollo Alliance.

In today’s Washington Post and a parallel piece in Newsweek, Robert J. Samuelson gets it wildly wrong on federal policy for reducing greenhouse gas emissions, parroting a litany of falsehoods and misrepresentations concerning the Lieberman-Warner cap-and-trade legislation now being debated in the Senate. He writes:

The chief political virtue of cap-and-trade — a complex scheme to reduce greenhouse gases — is its complexity. This allows its environmental supporters to shape public perceptions in essentially deceptive ways. Cap-and-trade would act as a tax, but it’s not described as a tax. It would regulate economic activity, but it’s promoted as a “free market” mechanism. Finally, it would trigger a tidal wave of influence-peddling, as lobbyists scrambled to exploit the system for different industries and localities. This would undermine whatever abstract advantages the system has.

Samuelson is the one being “essentially deceptive.” Like most detractors of action on global warming, Samuelson continues to push the unsubstantiated notion that reducing emissions will tank the economy, and thus is not worth the effort. The problem with this argument is that it ignores the last three decades of science, misunderstands basic economic theory, and overlooks the enormous opportunity presented by the clean energy economy.

Inaction is by far the most expensive policy option. Global warming was correctly termed “the biggest market failure in human history” by Sir Nicholas Stern, a senior economic advisor to the government of Tony Blair. Establishing a price on emissions through a cap-and-trade system actually improves the efficiency of the economy by ensuring that market prices include the real social costs of pollution and inefficiency. This is a basic fact of economics, popularized in the early 1900s by economist Arthur Pigou and embodied by the contemporary “polluter pays” principle. Recent studies by the Intergovernmental Panel on Climate Change and even the Bush Administration itself confirm the high costs of inaction and the existence of a wide range of cost-effective actions to bring down carbon emissions and stimulate economic innovation.

The “abstract” advantages of cap and trade are real. Samuelson simultaneously argues that cap-and-trade is a backdoor carbon tax while deriding its advantages over a tax. One of the fundamental differences between a set tax and cap-and-trade is that while a carbon tax assumes the government knows the proper marginal cost of emissions, a cap-and-trade system lets the market set the price. In an economy like the U.S. that has been functioning without any effective greenhouse gas constraints, the initial cost of emissions reductions is likely to be quite low as we capture the low-hanging fruit of efficiency gains.

“Influence peddling” should be addressed in any system. As John Whitehead writes at the Environmental Economics blog, “Just like any government policy, both a carbon tax and cap-and-trade can be gamed through the political process. It is goofy to try to argue that one would be gamed more than the other.” Samuelson’s concern about influence peddling can be addressed by a commitment to auction 100% of the emissions permits, as advocated by the Center for American Progress. The opportunity for gamesmanship would be minimized by a full, transparent, permit auction instead of the free allowance giveaway advocated by most polluters.

Global warming is not just an environmental crisis — it is a public policy problem. Given the choice between an innovation economy that uses clean energy efficiently, and an economically devastating climate crisis, the choice is obvious. It is time for naysayers like Samuelson to stop pitting the economy against the environment, and recognize that a safe and sustainable environment is the bedrock of our prosperity. That is an idea worth investing in.

UPDATE: Ryan Avent at The Bellows writes:

Washington Post columnist Robert Samuelson has long impressed me as one of the most hackish economic columnists not associated with the Wall Street Journal and not named Ben Stein, but today’s piece on cap-and-trade is dismally, embarrassingly stupid. Its essential premise is that consumers and producers of energy don’t respond to price signals, something so incredibly, obviously wrong that even the dolt editors of the Post opinion section should have wondered what was up. Samuelson should be ashamed of himself.

Retro is back in style again — but this time it’s the four day work week, not bell bottoms, making a comeback. All over the country, employers and employees are seeing the benefit that the four day (ten hour/day) week has to both “employees and businesses bottom lines” by providing commuters with a little relief from high gas prices. City employees in Birmingham, AL, for example, are moving to the four day week because, as the mayor’s chief of staff explains: “We are doing it in an effort to help employees save some money on gasoline.” Counties in Texas, Pennsylvania and New York are following suit, estimating that cutting out two commutes per week could save employees 20% on fuel costs and 65 million gallons of gas per day.

First made popular during the late 1970′s when gas prices first rose to, at that time, astronomical levels, the four day work week is designed to help the 44% of people who report that gas prices have affected their commute. Unfortunately, the late 1970′s was one of the most badly faring economic periods in recent history recent US economic history in terms of inflation, unemployment and general economic unrest.

Although use of mass transit has skyrocketed to its highest ridership in 50 years, still only 5% of workers commute by public transit, and fewer than 20% of households have easy access to buses or trains. Paul Krugman rightly notes that many of our American cities are not equipped with public transportation systems, leaving millions of Americans with no choice but to drive long distances and depend on their employers, or schools, to administer these alternative commuting arrangements.

Although the four day work week might be a short term fix for high gas prices, America needs to make some long term changes both in infrastructure development and in energy consumption — because as much as workers may love the idea of the four day work week, nobody loves the idea of four day pay.