In 2008, Republican candidate John McCain was the Senate's leading promoter of global warming alarmism and of cap-and-trade legislation, while junior Senator Barack Obama had never shown much interest in environmental issues. During the campaign, McCain kept quiet about his views in order to try to hold on to the Republicans' conservative base, while Obama adopted standard green positions in order to keep the Democrats' base happy. As a consequence, neither candidate was in a position to take advantage of public outrage over high gasoline prices, which was the hottest issue early in the campaign, before the Wall Street panic in August crashed the economy and caused oil prices to plummet.

Candidate Obama quietly made two candid comments about his energy agenda. He told a San Francisco newspaper in January 2008: "Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket." And when gasoline prices peaked at over $4 a gallon in June of that year, Obama said that the problem wasn't that prices were so high, but that they had gone up too quickly for people to get used to them. He said, "I think that I would have preferred a gradual adjustment."

Those two comments contain the seeds of everything that Obama has done since being elected president. With huge Democratic majorities in the House and Senate in 2009 and 2010, Obama first pushed for cap-and-trade legislation that would tighten greenhouse gas emissions by raising prices of conventional energy from coal, oil and natural gas. Higher prices force consumers to use less and make more expensive alternatives — such as wind, solar and biofuels — more competitive.

Cap-and-trade legislation, similar to the EU's Emissions Trading Scheme, was narrowly approved by the House of Representatives in June 2009. Americans across the country, but especially in the heartland states that depend on energy-intensive industries, reacted overwhelmingly against the House vote. When senators returned to Washington after a week back in their states meeting with constituents, they decided not to take up the House bill, but instead turned to healthcare reform legislation, which enjoyed broader public support.

Cap-and-trade has been dead ever since. For a while, proponents tried to push cap-and-trade by calling it something else, such as "pollution reduction and investment incentives", but people weren't fooled. They now understood that these were just polite names for imposing a big, new indirect tax on them.