A Long, Hard Road to “Yes”

Passage of the Inflation Reduction Act, which includes $392 billion of federal investments in energy and climate policies, reflects a complex political evolution over recent decades, as described in this Washington Post article.

Multiple Political Changes

The bill was adopted on a purely party-line vote, with all Democrats voting in favor and all Republicans opposed.

There used to be bipartisan support for environmental policies.  President Richard Nixon signed the bill creating the Environmental Protection Agency.  President George H.W. Bush “signed the United Nations Framework Convention on Climate Change and created the U.S. Global Change Research Program.”  Senator and presidential candidate John McCain supported a cap-and-trade policy.  But Republican support for major energy and climate initiatives is no more.

Democrats have long supported environmental policies but have not been able to enact major legislation combating climate change.  The article notes that President Jimmy Carter framed energy policy as a “moral crusade,” which failed to garner sufficient support to adopt his proposals.  During the Obama Administration, the House of Representatives passed a major climate change bill, only to see it die in the Senate.

Part of the proponents’ problem was the structure of the proposed policies.  Although economists in both parties favored a carbon tax as the most efficient mechanism to achieve carbon-reduction goals, creating a new tax was politically impossible in an environment where Republicans opposed virtually all tax increases.  There had been some bipartisan support for a cap-and-trade system, but not enough to put a bill on the president’s desk.

By contrast, the new bill “treats climate change as a pragmatic pocketbook matter of consumer rebates and corporate tax incentives.”  The bill is a “hodgepodge” of numerous specific benefits, presumably designed, in part, to attract support from lots of stakeholders. The energy industry didn’t oppose the bill, which is full of carrots, not sticks.  The Biden administration worked hard to gain support from both business and labor.

Public opinion has changed over the decades.  The news is full of reports of extreme weather events, including record-breaking heat around the world this summer.  Climate change deniers’ arguments can’t overcome people’s everyday experiences as well as the constant stream of news reports about deterioration of our planet.

Across the political spectrum, younger people are increasingly demanding action on climate change, according to polls.

Perils-of-Pauline Negotiation Within the Democratic Party

Enactment of the bill is the climax of almost two years of negotiation within the Democratic Party.  During the 2020 campaign and at the beginning of this Congress, progressives advocated a comprehensive “Green New Deal.”  This was way too ambitious for some lawmakers, particularly Senators Joe Manchin and Kyrsten Sinema, whose support was needed because of the 50-50 split in the Senate.  There were on-again, off-again negotiations with numerous near-death experiences for this legislation.

Although Democrats can count this bill as a success, it came at a significant political cost.  The drawn-out Perils-of-Pauline negotiations created an image of Democrats as ineffective, and this probably has contributed to President Biden’s declining poll ratings.  If Democrats had reached agreement six or twelve months ago, it would have strengthened them politically and cleared their agenda to focus on other initiatives.  The fact that Democrats control the presidency and both houses of Congress disappointed supporters and emboldened opponents, which presumably damaged Democrats’ electoral prospects in the midterm elections.

They were desperate to reach agreement.  Most experts have expected the Democrats to lose control of the House of Representatives in the midterms, so there was a strong, shared interest in enacting everything they could before they might lose control.

Fundamentally, all the Democrats in Congress want to enact effective government policies and are pragmatic negotiators.  Progressives recognized that they would have to limit their expectations to get an agreement, pretty much accepting whatever Senators Manchin and Sinema demanded.  These two senators had similar but somewhat different priorities, so it would have made sense to negotiate with both of them together.  Yet news reports suggested that, for months, Democratic leaders negotiated with them separately, which caused confusion, consternation, and delay.

Given the Democrats’ strong shared interests, I’m puzzled why this negotiation took so long and was resolved only at the 11th hour.  In many negotiations, it’s not unusual for negotiators to seek advantage by holding out until close to a deadline.  It makes less sense in this case.

This Negotiation as a Case Study

While we can analyze this as an ultimately successful negotiation, it’s also important to understand why it was as hard and long as it was.  Now that the negotiation is over, presumably there will be journalistic and academic post-mortems that do just that.

We should assess try to the law’s effect on the midterm elections and political dynamics in the next Congress and presidential election campaigns, which may start soon after the new year.  This may be difficult because of the many possible contributing factors.

Most importantly, we need to see how well it achieves its policy goals.  That won’t be immediately apparent because it takes time for the provisions to take effect and the benefits are spread over 10 years.

Stay tuned.

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