Look at the per capita GDP (in constant dollars). The US in the 1980's was where the Dominican Republic is today. In 1900, the US was far below even the poorest of today's nations. You can also look at carbon emissions: pre-1900, they were less than 1/10th of what they are today; that takes us into the territory of Indonesia, Vietnam, and Morocco. Do you think Americans would be willing to go back to those standards of living? What do you think that would do to Silicon Valley or our other high tech industries?
You are assuming a direct correlation between carbon emissions and GDP that does not exist. CO2/capita in the U.S. has been flat since 1990 while GDP/capita has nearly doubled. Furthermore, the increase in standard of living since 1980 has been driven in large part by advances in computing, which will not go away if fossil fuels are restricted. (Unless your router runs on gasoline?) I haven't been to the Dominican Republic, but American standards of living in 1980 were far from third world, even by today's standards. As for Silicon Valley, I work in the semiconductor industry and I can tell you that semiconductor companies A) do not burn coal in their fabs, and B) are (somewhat) advanced when it comes to environmental friendliness to begin with.
Here's average CO2 emissions in tons per capita for each of the G7 nations (plus Australia for fun) in 2006, the last year before the financial crisis:
Nation CO2 GDP
U.S. 18.8 44623
U.K. 9.1 40481
Canada 16.8 39250
Australia 18 35992
France 5.9 35457
Germany 9.9 35238
Japan 9.7 34102
Italy 7.9 31777
[Slashdot formatting sucks
If you plot this, you do indeed get a correlation (R=0.75 for the G7 alone, 0.61 with Australia). But note that it's pretty shallow, and there's a huge variability in carbon emissions. The U.K. has less than half the CO2/capita of the U.S. despite GDP/capita being only 10% lower. France and Germany have nearly indistinguishable GDP/capita but France's emissions are 40% lower. (They have similar population sizes and are right next to each other, too!) Australia has 20% lower GDP than the U.S. despite having similar emissions. None of these countries are bad places to live. If you look at the full list you'll see some of low- to mid-tier countries in the top 20, and some nice developed nations further down.
On top of that, you have the complicating factor of wealth distribution in the U.S., so while GDP per capita has gone up, income per capita for most of the population hasn't. That's mostly an orthogonal issue, but also has a big effect on standard of living.
Nobody has produced a realistic plan for a reduction to 1980's emission levels, let alone pre-1900 emission levels.
We could impose limits through regulation or ramp up a carbon tax over time, but the methods for reducing fossil fuel dependence are left to the private sector, just like they are with e.g. car mileage standards. Governments should set and enforce the goals, but stay out of the details.
And without a firm commitment from China, India, and other developing nations, nothing the US and Europe do would make any significant difference.
North America and Europe account for a third of world CO2 emissions. Making a big cut in that would be a big start, at the very least. Also, the U.S. and Europe are best equipped to develop sustainable technology, so the rest of the world can ride along on our coattails as we figure things out.
If climate change has the impact people claim it has, risk will gradually increase and property values will gradually decline in some areas and increase in others, and people will buy, sell, and move accordingly, with hardly any losses.
Calculable risk might increase gradually, but it's perception of risk that drives the markets. When it comes to disasters, awareness tends to change very suddenly and result in panicked overreaction. (See also: 9/11)
We're talking about climate change here, not other environmental issues
Because they go together. Burning fossil fuels produces both CO2 and various gasses and particulates that are directly harmful to humans. Addressing one problem implies addressing the other. Air pollution is causing immediate harm to individual people today, which is a very good reason to fight it.
The US could easily cut its greenhouse gas emissions in half without any risk by building modern nuclear power plants. Solar and wind have made great progress due mostly to technologies developed by the private sector unrelated to government programs.
Could, but hasn't. Which is my point -- the ability means nothing if the short-term incentives for doing it are wrong. (By "wrong", I mean distorted by the fact that the long-term harm to other people is not accounted for.)
The doom-and-gloom prediction for government-driven innovation is that it develops costly, impractical technologies, leads to massive ties and corruption in the relationship between government and industry, and leads to the technologies being misapplied; in short, just what our military-industrial complex is doing, including wars we shouldn't be engaging in.
I agree with you about the MIC causing problems, but despite some high-profile failures their hardware does regularly push the bounds of e.g. aerospace technology. NASA did get to the moon. ARPA did sow the seeds of the internet. That being said, I'm not advocating any open-ended commitments. There need to be quantifiable goals with deadlines. And again, the private sector would do most of the development work, with basic research aided by government funding.
And the doom-and-gloom prediction for overregulation and government intervention in the economy are slow growth, job losses, and outsourcing. Both of those happen to be just what we are experiencing and what progressives themselves are complaining about.
We disagree on the causes, of course. (GDP growth varies wildly independent of the regulatory regime, regulations were loosening for many years prior to the financial crisis, job losses are due to inadequate stimulus, reducing regulations won't help Americans compete with people who live 15 to a house on pennies a day, etc., etc.) But I'm sure you've heard all that before, and it's really a separate conversation.
On the other hand, what clearly hasn't happened is any of the massive gloom-and-doom predictions of environmentalists or people advocating sustainability: hunger and poverty have decreased greatly since WWII despite growing populations, and health and longevity have greatly increased.
Whether it's environmental catastrophes, epidemics, or network security breaches, if people do their jobs right, the doom-and-gloom never happens. The goal is prevention, after all. So far, many predictions of doom have been avoided because people have taken action -- acid rain, the ozone hole, (more) massive air and water pollution, endangered species, take your pick. Where people have been complacent, there's been a lot of damage to show for it.