Yup, I have exactly the same fear. The best thing the Obama administration has in its favor right now is the total lunacy of some of the Republican front-runners.
The thing that really worries me about the EPA regulation cave-in is that the debate isn't even centering on whether the scientists' conclusions are correct. It seems to be centering on whether progress in public health is something that's okay to give up on. Dark days indeed.
Not that I think this necessarily reflects on President Obama's attitudes toward health and safety standards; I don't view this as a moral retreat. His economic advisors -
hmm, I wonder where a lot of them came from? - are probably telling him precisely that "uncertainty" is the great demon plaguing our economy, so best not to stir up the waters any more in the short term. Tucked within the assumptions of that worldview, the EPA compromise becomes more of a gray issue.
But as saltwater economists like Krugman and Reich point out, the problem could very well be that corporations are sitting on excess cash that needs to be spent on workers (or on capital, and by association, workers), so the demand side of the economy can pick up again. When you look at the world that way, there is a much stronger economic case in favor of tougher regulations as long as they force some kind of investment that can lead to additional employment.
I'm looking forward to what happens once Alan Kreuger is in place; he strikes me as being more on the radical side of economic theory judging from the coverage so far, so maybe he'll shake things up in a good way.
