Last week Senator Majority Leader Harry Reid (D-NV) announced that he would bring to the floor a slimmed-down energy bill that omitted a cap-and-trade scheme for carbon emissions. 

I was on a webinar panel a few weeks ago and was asked whether Congress would pass a cap-and-trade bill in 2010.  I said then that it was very unlikely and that public opposition to the topic, just a few months away from mid-term elections, would force Congressional Democrats to drop controversial topics like cap-and-trade. 

News to the development was mixed.  Carbon credits on the voluntary Chicago Climate Exchange fell to almost zero (reflecting the belief that a mandatory cap-and-trade scheme was unlikely in the near term). 

Obama apologist Paul Krugman said that the failure to pass the bill was "greed and cowardice."  He argued that, although EVERYBODY knows that global warming is real, there were some scientists who were paid by the oil industry to argue otherwise.  (That's the greed party).  There were also evil Republicans who opposed the bill and among them he names John McCain for switching his position against the bill.  (That's the cowardice party).

It's far too facile to blame Republicans, though.  President Obama's party still holds a commanding majority in the House and a 60-40 majority in the Senate.  If the President could get his own party together he ought to be able to easily pass any bill he wants.  (ObamaCare proved that point.)

The reality is that the public remains skeptical on global warming.  Democrats may not be, but they know they will have to answer to voters in November.  After passing legislation that flew in the face of public opinion for most of 2009 and the first half of 2010, Democrats are trying to make nice to the majority of Americans now to minimize their losses in the mid-terms.

The marketplace has no conscience, however, and predicts the future far more reliably than any pundit.  Carbon futures are nearly worthless now because the marketplace anticipates a Republican takeover of the House in November, making cap-and-trade legislation extremely unlikely at least through 2012. 

Speaking off the record after a private session with White House officials, Democratic Governors are confirming that they warned the President against pursuing his lawsuit against the State of Arizona over immigration, according to reporting in the New York Times.

Gov. Phil Bredesen of Tennessee, a Democrat, said that his party wanted to focus on the economy and improving employment but that the immigration debate was a "toxic subject." 

At a meeting of the National Governors Association, Republican Governors rallied around Arizona Governor Jan Brewer, a supporter of the Arizona law at issue in the litigation.  Republican Governors argued that the Arizona law was necessary for that state to resist illegal immigraiton that the federal government had been unable to stop.  They also argued that the lawsuit, which seeks to strike down the Arizona law as unconstitutional, was an infringement over states' rights.

Democratic Governors warned that the lawsuit would distract attention from the economy and could undermine Democratic attempts to win mid-term elections, especially in the west.

President Obama's approval has fallen in every demographic, especially among independent voters, but one of the few areas of support has been among African-Americans.

Within the past few weeks, Obama's increasingly partisan political remarks have appeared aimed at enlivening his base in the hope of motivating turnout for the mid-term elections.

A piece in today's Washington Post suggests that this effort is unlikely to bear fruit.  

One Democratic speaking pollster in th context of the Senate election in Missouri said, "These are Obama voters.  They are not Democratic voters."  So far, African-American support for Obama has not translated into support for Democratic candidates, even when Obama has personally campaigned for them. 

If the mid-term elections turn out to be a rout, President Obama will need to blame himself.  If he had lived up to the "post-partisan" rhetoric he used so much during the 2008 campaign he might have held more of his support with independents.  By abandoning the middle, though, and ruling from the left, he has narrowed his support to his own base.  If his personal popularity fails to carry through to support for his candidates in November, he will have little chance to move his agenda forward. 

John Fund's piece on the Obama-Pelosi Lame Duck Strategy got a lot of tongues wagging.  He brought out into the open the administration's plan to bring back Congress after the November elections and before new members of Congress are sworn in to adopt legislation that members would be afraid to take up before the election.

It really is a jaw-dropping proposition.  Members know that the public doesn't want a piece of legislation so they wait until they've been voted out of office (or safely ensconced for another 2 or 6 years) to then take it up. 

I've been writing alot about economic uncertainty and how Obama's approach to legislation so far (lengthy bills introduced at a rapid speed with little detail on implementation) has increased economic uncertainty.  Economic uncertainty, I've argued, is by far the greater evil when it comes to economic growth because uncertainty makes business decision-makers postpone investment decisions, thereby prolonging the recession. 

Yesterday, Tennessee Senator Bob Corker connected the Obama-Pelosi lame duck strategy to greater economic uncertainty. 

"I think one of the great things the administration can do to cause people to settle down is to say, absolutely, that they would oppose any great activity in a lame-duck session," he said.

Importantly, what breeds the uncertainty is not the legislation that would be adopted in a lame duck session, but rather the potential carried by the lame duck session to adopt legislation that is unknown, unbounded, unclear and undefined today.   Fortune 500 CEOs who might consider investing in a new line of business today will postpone that decision if they think that a lame duck Congress might impose new costs on their business (whether in the form of card-check, cap-and-trade or higher taxes). 

If the President really wants to move the needle in a positive way on unemployment before November, the best thing he could do would be to pledge no substantive legislation would be taken up in a lame duck session.

Thomas F. Cooley, writing in Forbes, also faults the Obama administration for increasing economic uncertainty.  In his words, "the worst thing is that we don't have a plan."

The U.K. has announced an austerity budget that will slash more than $100 billion from their budget.  It's painful but necessary and the U.K. government made its plans in only a few months.

In contrast the Obama administration created a commission to make recommendations, but those recommendations won't be made until after the mid-term elections, effectively punting the hard work of making decisions into 2011. 

The longer we allow the future to remain undetermined the greater the uncertainty in our economy.  The greatest threat facing our fledgling recovery is the uncertainty of our economic future.  By delaying the inevitable, our President is making it worse.