  We present a consistent low energy effective field theory framework for
parameterizing the effects of novel short distance physics in inflation, and
their possible observational signatures in the Cosmic Microwave Background. We
consider the class of general homogeneous, isotropic initial states for quantum
scalar fields in Robertson-Walker (RW) spacetimes, subject to the requirement
that their ultraviolet behavior be consistent with renormalizability of the
covariantly conserved stress tensor which couples to gravity. In the functional
Schr\"odinger picture such states are coherent, squeezed, mixed states
characterized by a Gaussian density matrix. This Gaussian has parameters which
approach those of the adiabatic vacuum at large wave number, and evolve in time
according to an effective classical Hamiltonian. The one complex parameter
family of $\alpha$ squeezed states in de Sitter spacetime does not fall into
this UV allowed class, except for the special value of the parameter
corresponding to the Bunch-Davies state. We determine the finite contributions
to the inflationary power spectrum and stress tensor expectation value of
general UV allowed adiabatic states, and obtain quantitative limits on the
observability and backreaction effects of some recently proposed models of
short distance modifications of the initial state of inflation. For all UV
allowed states, the second order adiabatic basis provides a good description of
particles created in the expanding RW universe. Due to the absence of particle
creation for the massless, minimally coupled scalar field in de Sitter space,
there is no phase decoherence in the simplest free field inflationary models.
We apply adiabatic regularization to the renormalization of the decoherence
functional in cosmology to corroborate this result.
