McGinn's argument, as PubliCola reported in early September, is pretty straightforward: The city needs revenue, and downtown meter parking (not to mention meter parking throughout the city) is currently far below market rate. (The market rate in downtown Seattle, for example---that is, the amount drivers pay to park in private lots---is $7 an hour). Therefore, it makes sense to increase the cost of on-street parking to something closer to market rate.
Businesses complain that increasing the cost of parking will send drivers fleeing to places like Northgate and Bellevue, where parking is free. However, the city's own experience with the commercial parking tax has shown clearly that that isn't the case. Since the city council implemented a 10 percent tax on commercial parking lots in 2007, it has seen no drop-off in parking downtown; in fact, revenues from the parking tax have come in significantly higher than expected.
What about people who want to park on the street? Compared to that $7-per-hour lot, meter parking will still be an incredible deal. And as long as people are willing to pay astronomical prices to park in private lots (the one just outside my office window, for example, costs $10 for the first half-hour), I'm betting they'll be willing to pay a little more to park on the street. If anything, given the extent to which driving is subsidized (largely by non-drivers) in Seattle, McGinn should have proposed raising parking meter rates even higher.
Business leaders love to talk about letting "the market" determine how much it costs to pay for. For example, today, Seattle Business Association head Joe Quintana argued that the city should contract out its call center services to private companies (allowing those contractors to profit and thus stay in business), rather than letting bloated city government do the job. So it stands to reason that they should feel the same way about the converse: If city government can provide a service more cheaply than the private market while still making some money off the deal, why should businesses complain about that profit?