Concerning the history of the Waxman-Markey cap and trade bill, Megan writes:
Now, everyone on the left was united in favoring auctions over giveaways. Auctions also had a fair amount of support on the right, mostly from people who hate corporate welfare even if they also oppose cap-and-trade. ...[B]ut the fact is that at the end of the day, you couldn't do this perfectly obvious thing that has surprisingly broad support among the policy elites of both parties. Instead, the bill was passed in a form that makes it more expensive, and almost totally ineffective.
I agree with Megan that auctions were a perfectly obvious thing to do. Still, I have a question for her: What's the connection between the the fact that the permits are being given away and the fact that the bill is now "almost totally ineffective"? I'm not sure I see a connection between these things.
A little plagiarism from last week: Waxman-Markey has warts, and in many ways a carbon tax would be simpler and fairer than a cap and trade system. Nonetheless, it seems to me that C&T does have one feature that is a nice bulwark against the harms of lobbying: It puts a strict cap on emissions. This means that industry lobbyists can affect how permits are distributed -- who gets them and when -- but changing the permit distribution process cannot raise the overall level of emissions that will occur.