What The Mass Exodus From The Chamber Of Commerce Means

Josh Marshall is right to underline this as a big story. With so many of the problems we face, there is no way we're going to get anywhere unless big business, which effectively controls our government, would come aboard for a solution. In many cases it's in their best interests. Businesses in America struggle to compete globally because they're the only group in the industrialized world shouldering the burden of health care costs. Businesses, especially insurance interests, will just get wiped out if global warming is allowed to continue unchecked, causing mass disasters; energy companies seek stability in pricing and want the added security of using renewable products instead of a rapidly depleting resource; and entrepreneurs can benefit greatly from increased investment in green technologies. In fact, energy efficiency and renewables can dramatically lower the operating costs of practically every business. Not to mention what Marshall cites, in writing about Nike and now Apple dropping out of the anti-science US Chamber of Commerce:

It's not hard for instance to understand why a company like Nike, which markets overwhelmingly to a younger demographic and to some degree is in the business of marketing cool, would not like to be associated with anti-climate change science extremism. Similar things could be said about Apple, which markets to generally wealthier, more educated and I suspect -- though I don't know this specifically -- generally more progressive people.

There's simply mass awareness and politicization on this issue in a way there's not about most high stakes political questions. I also wonder whether some companies may not be sensitive to the impact on their reputation on an international trade, those doing a substantial amount of international trade. But the mass politicization and company's sensitivity to domestic brand damage strikes me as the key takeaway for now.

In this sense, Al Gore's campaign to raise awareness about the climate crisis was successful to an extent, because it put the concept of going green near the top of people's minds, in an almost unconscious way, that led all kinds of retail brands to rush to put out the most "green" products and burnish their corporate image. Some of it is greenwashing, but if it has the same practical effect of making it easier for government to maneuver and actually pass a cap and trade bill, then greenwash away, I say.

President Obama, a brand in his own right, has jumped on board with this strategy by clarifying rules for federal employees:

The Executive Order, Federal Leadership in Environmental, Energy, and Economic Performance, will require agencies to set, no later than 90 days from now, sustainability targets for 2020. It will require serious efforts to measure, manage, and reduce greenhouse gas (GHG) emissions. Here are some of the explicit targets laid out within the Executive Order:

• 30% reduction in vehicle fleet petroleum use by 2020;

• 26% improvement in water efficiency by 2020;

•50% recycling and waste diversion by 2015;

• 95% of all applicable contracts will meet sustainability requirements;

• Implementation of the 2030 net-zero-energy building requirement;

• Development of guidance for sustainable Federal building locations in alignment with the Livability Principles put forward by the Department of Housing and Urban Development, the Department of Transportation, and the Environmental Protection Agency.

With millions of employees, the federal government is the largest energy consumer in the US economy, so their move to sustainability carries a lot of tangible weight.

We can accomplish very dramatic climate goals with little disruption to the overall global economy. All that we need is political will. Seeing business moving away from the status quo and toward change is a major step along that long road.

Kerry-Boxer Released

Color me surprised that the Kerry-Boxer climate change draft bill actually improves upon the version that passed the House.

The Senate's environment committee will take up an energy and climate-change bill today that calls for a 20% cut in U.S. greenhouse gas emissions by 2020, according to a draft copy of the bill.

The measure, co-sponsored by Sens. Barbara Boxer (D-Calif.) and John F. Kerry (D-Mass.), will serve as the starting point for what promises to be a long and complicated series of negotiations. The Senate may not produce a final bill until next year.

A House measure passed this summer calls for a 17% reduction in greenhouse gases.

It's not consistently better - the permits for polluting industries are free to begin with, and more are given away than in the Waxman-Markey bill. And the big bipartisan handout here is major incentives to build nuclear power plants - you won't hear Republicans say this, but probably nothing else in the bill will be as costly to taxpayers. However, it does preserve the EPA's ability to regulate greenhouse gases, the back-up plan to climate legislation. There are also lots of incentives for mass transit and bicycling.

The interesting piece of the legislation is something called a carbon collar.

Still, environmentalists hailed the bill as an ambitious effort to address global warming while providing some reassurances to the U.S. business community. It includes provisions aimed at curbing speculation in the carbon market -- a concern of senators such as Byron Dorgan (D-N.D.) -- and would reserve some carbon allowances in a market-stability fund that would help ensure that the price of those allowances would not exceed $28 per ton. This provision, known as a "carbon collar," would not be likely to kick in for some time, since the Congressional Budget Office has predicted that the cost of carbon under a cap-and-trade system would probably be $26 per ton by 2019. That is what a company would pay to compensate for each ton of carbon pollution it emits.

Daniel J. Weiss, a senior fellow at the Center for American Progress, a liberal think tank, said the provisions amount to "a safety net to ensure that cleanup costs remain affordable. The draft Boxer-Kerry bill provides a solid foundation for Senate action on clean-energy-jobs legislation."

Adam Siegel praises the potential of this provision, with its floor and ceiling caps for allowance auctions. It provides a lot of stability for businesses to prepare for a shift to less carbon-intensive sources of energy. Joe Romm likes it too.

The bill makes a monumental improvement over the House bill by adopting a version of the carbon collar …

The floor price is $11 (the draft bill above is, as I say, not final) and the ceiling is $28 — and they both starting rising 5% plus inflation each year. The draft bill adds an excellent twist — from 2018 on the ceiling rises 7% plus inflation each year. …

Fence-sitting Senators and industries can legitimately see the Carbon Collar as achieving stronger cost-containment protection than their analysis suggests the House bill now provides, including protection against speculators running the permit price up, while progressives can legitimately see it as achieving better environmental outcomes than their analysis suggests the House bill now provides.Win-win.

There are possible problems with implementation, but in theory, having a floor will spur emissions cuts among businesses which may not otherwise bother.

As Paul Krugman noted this week, we cannot really wait until better legislation comes along. The House has passed their version, and Kerry-Boxer is the primary legislation in the Senate. There's a lot riding on this, and despite its lower profile right now, you can bet that industry will line up to take whacks at it. But we cannot afford to see it fail.

Here's the bill, called the Clean Energy Jobs and American Power Act (CEJAP?). It could have as many as three other committees to go through, so this is just a starting point.

Bullet Dodged

Lisa Murkowski's effort to stop the EPA from regulating greenhouse gas emissions at power plants failed yesterday, which is a boon for the public. The EPA is complying with a Supreme Court ruling to regulate carbon, and if Republicans don't like it, they can write their own legislative guidance for how to do so. Even my Senator got this one right:

Sen. Feinstein (D-CA) smacks down Murkowski at great length, saying “we can’t afford to bury our heads in the sand on climate change” and if you don’t want the EPA to take action, then the only alternative is cap-and-trade. “Global warming is real…. it’s happening all over the world.” Attacks the “Flat Earth Society” who opposes action.

Murkowski has vowed to bring this back up, but she could also work to pass a real climate bill. The EPA's jurisdiction on setting their own rules is the proverbial gun to the head to force something to get done, and Murkowski may not like it, but her only recourse is to take action.

I don't know what that action will be. Jeff Bingaman is talking about splitting cap and trade from the renewable energy standard. But hopefully we can get something, and failing that, the EPA will be able to carry out its mission.

Making Her Blanche

I wrote over the weekend about how the road to tying down Chuck Grassley and Max Baucus ran through their individual states. Another "Democrat" who has been out front in slow-walking anything that deviates from the status quo, who is also up for re-election next year, is Blanche Lincoln. They have a racket in Arkansas where the two parties almost never challenge each other in general elections - and considering that both party stalwarts do the bidding of their corporate contributors, why should they? In addition to her changing statements on the public option, which drew a round of ads from Blue America, Lincoln thinks the climate change bill should be dumped.

The U.S. Senate should abandon efforts to pass legislation curbing greenhouse-gas emissions this year and concentrate on a narrower bill to require use of renewable energy, four Democratic lawmakers say.

“The problem of doing both of them together is that it becomes too big of a lift,” Senator Blanche Lincoln of Arkansas said in an interview last week. “I see the cap-and-trade being a real problem.”

I remarked to Digby last week that maybe we should rerun the Harry and Louise-type ads against Lincoln, only with two polar bears at the kitchen table instead of the couple.

Maybe that's something that Arkansas State Senate President Bob Johnson can use when he challenges Lincoln in a primary.

Arkansas Senate President Bob Johnson said Friday that he's considering challenging incumbent Democrat U.S. Sen. Blanche Lincoln in next year's primary.

Johnson told The Associated Press that's he's been encouraged to challenge Lincoln, who is seeking a third Senate term next year. Johnson said he doesn't have a timeline for deciding whether to challenge Lincoln.

"I'd be less than honest if I told you it hasn't surfaced in a number of circles," Johnson said. "I am weighing it very carefully."

Let's not harbor any illusions. Johnson is "running as a conservative Democrat" against Lincoln. He actually sounds like a scoundrel. But in a primary, someone will have to play to the base, where primary voters live. And that could help Lincoln get over her reticence on health care and climate change legislation.

In even better news, Howie Klein says that Jim Cooper's going to get a primary challenge, on the heels of his pathetic approval ratings on the health care issue.

There's enough anti-Washington sentiment in the country that a lot of lawmakers ought to be looking over their shoulders.

The Fight Over Border Adjustment

So the President, who during the 2008 campaign traipsed through Ohio turning into a second coming of Paul Wellstone, vowing to tear up every free trade agreement and ensure they under his Administration complied with labor and environmental statutes, wants you to know that elements of the Waxman-Markey bill are protectionist.

President Obama on Sunday praised the energy bill passed by the House late last week as an “extraordinary first step,” but he spoke out against a provision that would impose trade penalties on countries that do not accept limits on global warming pollution.

“At a time when the economy worldwide is still deep in recession and we’ve seen a significant drop in global trade,” Mr. Obama said, “I think we have to be very careful about sending any protectionist signals out there.”

He added, “I think there may be other ways of doing it than with a tariff approach.” [...]

The House bill contains a provision, inserted in the middle of the night before the vote Friday, that requires the president, starting in 2020, to impose a “border adjustment” — or tariff — on certain goods from countries that do not act to limit their global warming emissions. The president can waive the tariffs only if he receives explicit permission from Congress.

The provision was added to secure the votes of Rust Belt lawmakers who were wavering on the bill because of fears of job losses in heavy industry.

In the floor debate on the bill Friday, one of its authors, Representative Sander M. Levin, Democrat of Michigan, said, “As we act, we can and must ensure that the U.S. energy-intensive industries are not placed at a competitive disadvantage by nations that have not made a similar commitment to reduce greenhouse gases.”

In the interview on Sunday, Mr. Obama said American industries like steel, aluminum, paper and glass had legitimate concerns about competition from developing nations. But he warned that trade sanctions based on the extent to which other countries curbed carbon dioxide emissions might be illegal and counterproductive.

You can read the transcript of these remarks here.

The thing about global warming is the word "global." More than that, the policy objective of cap and trade is to limit greenhouse gas emissions used by people in this country. Energy companies have already made the threat that, in the event of Waxman-Markey taking hold, they would simply process fuel and coal offshore and bring it to the United States to avoid the emissions cap. Border adjustment is a perfectly reasonable way to avoid that outcome, as Paul Krugman explains:

The truth is that there’s perfectly sound economics behind border adjustments related to cap-and-trade. The way to think about it is in terms of a well-established theory — the theory of non-economic objectives in trade policy — that owes its origins to Jagdish Bhagwati, who certainly can’t be accused of being a protectionist. The essential idea is that if you have a non-economic objective, such as self-sufficiency in food production, you should choose policy instruments to align incentives with that objective; in normal circumstances this leads to consumer or producer intervention, rarely to tariffs.

But in this case the non-economic objective is to reduce greenhouse gas emissions, never mind their source. If you only impose restrictions on greenhouse gas emissions from domestic sources, you give consumers no incentive to avoid purchasing products that cause emissions in other countries; as a result, you have an inefficient outcome even from a world point of view. So border adjustments here are entirely legitimate in terms of basic economics.

And they’re also probably OK under trade law. The WTO has looked at the issue, and suggests that carbon tariffs may be viewed the same way as border adjustments associated with value-added taxes. It has long been accepted that a VAT is essentially a sales tax — a tax on consumers — which for administrative reasons is collected from producers. Because it’s essentially a tax on consumers, it’s legal, and also economically efficient, to collect it on imported goods as well as domestic production; it’s a matter of leveling the playing field, not protectionism.

And the same would be true of carbon tariffs.

If the WTO can look at border adjustments and offer its blessing, surely the United States can. The dirty little secret is that countries use very real protectionist policies all the time - it explains the existence of Toyota. In this case, the goal is simple to avoid unintended consequences from the policy. I assume Barack Obama does want to reduce greenhouse gas emissions. This is the way to ensure that cap and trade doesn't simply result in leakage. In addition, making China concerned about a trade war is a good way, perhaps the only way, to get them on board with global climate change talks.

In addition, there's that dirty little secret about the Congress and also this nation: we have a lot of fair traders, enough to scuttle the bill:

First, I may be wrong on this, but given the closeness of the vote, is anybody sure that Waxman-Markey would've passed without the border adjustments? I'm not, and, I'm also pretty sure that nothing passes the Senate without them (maybe not even with them), so this surely deserves much larger weight on the 'pro' side of the ledger than people seem to be granting.

Second, the potential scale of losses from leakage don't sound trivial to me. A report by RFF says that the benefits of unilateral US carbon pricing are reduced by 25% if nothing is done to stop leakage. And, comparing border adjustments to other ways to curb this leakage while we wait on an international agreement make them look pretty good to me.

I am not very sanguine about the politics of losing a quarter of the benefits of an incredibly hard-fought legislative win every year while we wait on an international agreement - how durable do people think the WM win will be if opponents can come back every year with (not totally in-credible) estimates of how many jobs we've lost to trading partners because of it? The border adjustment in WM buys more than a decade to reach an agreement before it kicks in. This seems entirely reasonable to me.

Third, where I think Krugman is most right about this stuff is how bizarre it is that a (literally) textbook economics solution (albeit a second-best one) to this problem (that is probably even allowed under existing international trade law) has inspired such ferocious hand-wringing about protectionism, coercion, and making other countries furious. There is no rational reason at all why a carbon tariff that any country can unilaterally disarm through its own actions should be a serious hold-up to an international agreement.

Nobody wants to talk about the populist elements of the House, which is this case are the only ones who get the economics of the situation, IMO. But they must be reckoned with.

Welcome to 2007

The Blue Dogs and the Energy and Commerce Committee have finally reached agreement on an energy and climate bill, says Jay Newton-Small:

Ending a turf war, Waxman – whose committee has jurisdiction over the Environmental Protection Agency -- allowed the Agriculture Department, not the EPA, to oversee a potentially lucrative program of energy offsets for farmers (Peterson allowed that the Obama Administration could weigh in on the EPA's role in the issue, if any). And Waxman agreed to bar the EPA for five years from calculating how much greenhouse gas emissions are generated when forests are converted to crop fields for ethanol and biofuels. The move helps get ethanol and biofuels counted as renewable energies, thus benefiting from a big renewable investment in another part of the bill that aims to see 20% of U.S. energy derived from green sources by 2025.

When asked Peterson said he believed the bill would enjoy “broad support” and even “draw a few Republicans.” Peterson's changes will be added as an amendment when the 900+ page bill reaches the House floor Friday.

I know that Waxman has throughout this process focused on the cap, and the need to reduce greenhouse gas emissions, and he's been willing to bargain around the edges to bring that cap into reality. But these are really abominable changes. For example, by enabling farm-state Dems through holding off the calculation of biofuel land use in emissions, Waxman keeps in place the failed structure of corn-based ethanol, which takes up more energy to produce than it saves. And keep in mind that the bill out of the House is likely to be BETTER than the craptastic bill that will emerge from the Senate.

This sounds like something the Democrats would do two years ago, when they held the House and would go through compromise after compromise to get something through on an agenda item, only to see the Senate do nothing with it. What's the point?

The EPA had a good analysis of the consumer implications of the bill (it would probably lower electricity costs for most people), and the energy efficiency standards are still pretty good. But at some point, "revolutionary in its intent" just doesn't cut it. And even Podesta, in the previous link, admits the Senate bill is unacceptable. Some advocacy groups like the League of Conservation Voters are going to the mattresses, saying that "In light of the tremendous importance of this legislation, LCV has made the unprecedented decision that we will not endorse any member of the House of Representatives in the 2010 election cycle who votes against final passage of this historic bill. "

Is the bill historic? I guess, but it won't come close to doing what is needed, and furthermore the pressure needs to be exerted in the Senate. Combine the sketchy work from the enviro groups, the endless willingness to compromise from liberals, the plain old avarice from Blue Dogs and farm-state Democrats, and the sloth of the Senate, and you have a bill that won't do what's necessary to mitigate the worst effects of climate change. We'll be switching to an adaptation strategy - climate-controlled plastic bubbles for everyone - within half a decade.

Still Time To Strengthen Waxman-Markey

Henry Waxman will suffer the endless string of GOP amendments to his climate and energy bill only until today, before he puts the hammer down and moves the bill out of committee. He's even hired a speedreader in case the GOP wants to delay the bill some more by having the whole 900-page behemoth read in full. Waxman wants the bill out of committee rather than being held up by procedural silliness and self-serving amendments. You can watch this thing drag on over at C-SPAN 3.

But of course, once the bill leaves committee, that's not the end of the story. While the Chairman believes he has the votes, and the Energy and Commerce committee is generally more conservative than the House as a whole, the bill has plenty of other hurdles. Charlie Rangel and the Ways and Means Committee wants his hands on it, and he will prioritize health care well before this bill. Collin Peterson over at Agriculture wants a piece of it as well. And Waxman wouldn't commit yesterday to this bill even reaching the House floor before August.

My point in bringing this up is that there are months to go before the final bill takes shape. Various fiefdoms in the Congress want to put their fingerprints on it, and nothing will happen quickly. This is important, because there's substantial debate over whether this bill represents a true compromise that everyone can live with, or a flawed bill that would not have the kind of impact that makes it worth the many giveaways involved. Brad Plumer at TNR highlights the biggest, but by no means the only, compromise.

One of Waxman's biggest compromises, the one attracting the most attention, was that roughly 85 percent of the pollution permits under the bill's carbon cap-and-trade system will be given out to companies for free, rather than auctioned off by the government [...]

If Congress auctioned off all or most of the pollution permits under a cap-and-trade system, companies would have to pay more for the allowances, and the U.S. government would raise more revenue. That'd be money Congress could then rebate directly back to consumers to soften the blow of higher energy prices; or it could spend some of the money on clean-energy research or efficiency projects (many of which won't necessarily come about just because there's a price on carbon). Right now, there's less money in Waxman-Markey for both of those things.

Ultimately, Plumer believes that, while the bill is flawed, it would still represent a step forward and progressives ought to support it. The Economist appears to disagree, noting the looser cap on emissions (now 17% below 2005 levels by 2020 instead of 20%). Adam Siegel calls it a coal subsidy bill because it subsidizing the fossil fuel industry far more than renewables. The bill is so large and includes so many competing measures that it's impossible to really divine what it would do at this point. But there are many months left to make that determination and find the points where it can be improved.

Progressives will either have to eat these compromises or reject anything this mushy, depending on the political movement that grows up around the issue, and right now, that movement is relatively silent.

There are two ways to overcome the political hurdle. Either cut deals with the coal, oil, auto and utility industries that weaken (but hopefully don't completely undermine) the legislation. Or convince voters in those areas that their interests are not the same as those of fossil fuel CEOs, motivating them to take action and putting public pressure on key congresspeople to back stronger climate protection legislation.

Cutting deals can be handled behind closed doors in the halls Congress. Generating public pressure requires major grassroots mobilizing.

The political reality Reps. Henry Waxman and Ed Markey had to face is there has been no major grassroots mobilizing in the broader progressive movement. While poll numbers show strong support for strong legislation, there has been no grassroots intensity to back that up, to convince skittish politicians that the public is demanding action immediately, and will hold politicians accountable if they don't follow through.

...broad, deep, relentless and coordinated grassroots mobilization is the only thing that can put a wedge between special interest lobbying and Congress. If we aren't present in the halls and offices of Congress, you better believe every day corporate lobbyists are.

Bill Scher is absolutely right. But there's a larger question about political capacity here. All these problems hitting at once really dilutes the energy that can be put to any one topic. We have a couple wars, a financial meltdown, major health care legislation and about 100 other things going on. The President prioritized health care and that's what has gotten much of the activism. The enviro groups haven't done their job of building a movement outside of throwing a couple ads on the air. But I wonder what they really could have done. And I also wonder if there won't be possibilities for movement pressure down the road. We're at the beginning, not the end, of this fight.

...Just to be clear, I think the bill should be improved. Giving away pollution credits will put the burden of transforming the energy sector on the poor and not save anyone on their electric bills. The renewable energy standard ought to be strengthened up to at least 25%. My point is we have a lot of time to do this, but the enviro groups have to take the lead.

Compromise of the Art

Paul Krugman writes today about the watered-down climate bill, but more specifically the difficulty among the progressive movement to figure out the tipping points in the face of all the compromising and atom-splitting:

In a way, it was easy to take stands during the Bush years: the Bushies and their allies in Congress were so determined to move the nation in the wrong direction that one could, with a clear conscience, oppose all the administration’s initiatives.

Now, however, a somewhat uneasy coalition of progressives and centrists rules Washington, and staking out a position has become much trickier. Policy tends to move things in a desirable direction, yet to fall short of what you’d hoped to see. And the question becomes how many compromises, how much watering down, one is willing to accept.

We can apply this to a lot of legislation coming out of Washington, but Krugman specifically looks at the climate bill. We all knew that the initial Waxman-Markey bill would represent the leftward bound of the policy. Predictably, coal-state Dems reacted unfavorably, and sought concessions, the most important being the softening of both the cap on carbom emissions and the renewable energy standard, as well as the inclusion of emissions allowances to polluters, instead of selling off all allowances 100% at auction. Not only will this giveaway to polluters push more of the costs of implementation onto the poor and give a windfall to groups like coal plant executives, but it won't stop electricity producers from raising their prices even though that's the entire point of the allowances. What's more, this doesn't seem to be enough for Senate Democrats:

Another senior aide said Waxman’s “pragmatic approach … will be appreciated in the Senate” but cautioned that the deal is unlikely to fully satisfy Senate moderates who are looking to temper the bill even more.

“Rick Boucher does not equal Evan Bayh does not equal Debbie Stabenow,” the senior Senate Democratic aide said of the Democratic Senators from Indiana and Michigan, respectively. Bayh and Stabenow have expressed reservations about cap-and-trade provisions, which would cap emissions and allow industries to trade for pollution permits.

“There are a substantial number of moderate Democrats who are uneasy at best,” the knowledgeable Senate Democratic aide noted.

Basically, plenty of Democrats would rather see absolutely nothing pass.

Given all of that, as long as the cap is hard and cannot be gamed, this will drive down emissions, coupled with the new fuel economy standard for cars, not to mention all of the initiatives on energy efficiency and renewable standards in the bill). And if anyone can shepherd through a bill of this magnitude and make sure it doesn't get totally de-fanged, it's Henry Waxman. His policy style is to keep working on an idea and taking small victories until the full flower of the policy is realized. Obviously it's an open question whether Waxman-Markey will amount to enough of a victory to support.

And that's really the fault line in this debate. If you accept that voters care about climate change, and want to see real action, a light-as-a-feather bill could alienate the young voters who care about it the most, and frustrate those who see no way for Congress to deal with such an abstract yet devastating issue, especially given all the special interests seeking the destruction of the legislation (This, by the way, is why Republicans are backing a carbon tax, because they know it's politically impossible and an attempt to stop the main bill cold). Where is the tipping point, where do progressives draw the line? And since we really do have a short window for dealing with mitigating climate change until we're powerless to stop it, if the subsequent bill would fail to reach its intended goals, wouldn't it be used as a symbol of Democratic failure?

There are strategic issues in addition to policy issues at work here. It's hard to figure what's right.

What's 3% When The Planet Is Boiling Anyway?

Democratic leaders on the Energy and Commerce Committee and coal-state holdouts reached a deal on energy and climate legislation that lowered the threshold for the carbon cap to a level where I'm trying to determine its value.

House Democratic leaders are scaling back plans to curb global warming and make the transition to cleaner energy in the hopes that they can get a bill passed this year.

"We have resolved a good number of the issues," said (Henry) Waxman, who chairs the panel and has set a Memorial Day deadline for it to clear the committee. "I believe we will have the votes for passage of this bill next week." [...]

Initially, the bill called for electricity producers to generate 25% of their power from renewable sources like wind and solar by 2025. That target has been lowered to 15% by 2020, with as much as 5% coming from improvements in energy efficiency.

The deal also makes more modest cuts in greenhouse gases. The draft unveiled in March called for a 20% reduction by 2020 in the emissions blamed for global warming. The version that will be unveiled later this week will call for a 17% reduction from 2005 levels by 2020.

While that early pollution goal goes further than the president has called for, it still falls short of what other countries are calling on the United States to commit to by December, when a new international agreement to reduce global warming pollution will be negotiated in Copenhagen, Denmark.

Other details of the bill still need to be worked out, such as how the allowances to emit greenhouse gases will be distributed. Obama has called for a 100% auction and would use the billions in revenue to help fund renewable energy technologies and to offset higher energy prices for middle-class households.

Waxman said Tuesday that the Democrats on the committee had agreed to give 35% of the allowances away for free to local electricity distribution companies to help ease costs. Allowances will also be doled out to auto manufacturers to help them develop cleaner cars.

As expected, the original Waxman-Markey bill represented the most leftward option, and that already was pre-compromised a bit. Now we have a smaller cap, a smaller renewable mandate, and a greater amount of carbon credits handed to polluters. And that's just to get it out of committee in the House. To clear the full House might take another dent or two, and then to clear the Senate will require a whole other set of compromises.

I think by the end, the bill will require Al Gore to fly less and that's about it.

I'm wondering where the vaunted Obama organization is in all of this. They have started to ramp up an effort to pass Obama's health care bill, but only based on his "principles" and not on any specific language or hard issue, like a public option. On energy, supposedly just as key a pillar in the Obama agenda, they have been silent. Bills get constructed now, not at the end of the process when it turns to an up or down vote on the floor. Surely the details matter, unless the goal here is simply to get anything done that can be called "reform" in a moderately credible way. I fully recognize the "art of the compromise" rhetoric about politics, and as long as these bills are seen as beginnings and not endings, we can live with them. But a little volume at the BEGINNING of the process rather than a rush at the end would help, Mr. President. Unless you see these bills at data points on your re-election resume instead of deadly serious legislation that affects all of our lives.

Climate/Energy Bill Deal?

It's a bit odd to have two important bills moving rapidly through the Congress, on parallel tracks, both of which would represent a key pillar of the President's agenda. I've focused a lot of health care, but there's also climate and energy legislation, which may have hit a breakthrough, according to CQ (subs. req.):

House Democrats may be nearing a resolution on energy and climate legislation ... Waxman will meet Tuesday afternoon with committee Democrats to follow up on staff discussions over the weekend. A markup is expected to begin as early as May 14, though a committee spokeswoman said no decision has been made...

...The biggest area of contention is the bill’s cap-and-trade plan to reduce greenhouse gas emissions. President Obama proposed to auction pollution allowances that industry would use in order to meet the cap. Yet to win votes, Waxman’s bill will almost certainly allow businesses to receive some of these allowances for free.

Lawmakers are not divulging any details of a compromise proposal. However, the bill is generally expected to provide about 35 percent of the allowances to local electric distribution companies, which would then be expected to pass the savings on to consumers. Additional allowances, most likely around 15 percent, could go to the manufacturing industry, and coal-fired utilities could receive some allowances to fund research into carbon capture and sequestration. Oil-state lawmakers want 5 percent of the allowances to go to refineries, but Gene Green, D-Texas, said negotiations are continuing. “We’re not there yet,” he said.

Several members also want to auction a substantial portion of the allowances to pay for research into clean-energy technologies and to assist low-income consumers. Some of the allowances would also go to the Treasury so the bill is deficit-neutral.

An even bigger decision for Waxman is whether to change the draft bill’s short-term target to reduce emissions 20 percent from current levels by 2020. Waxman has repeatedly said he does not want to change the target, but to reach a deal, he could move closer to Obama’s proposal to reduce emissions 14 percent by 2020.

I think it's a mistake to allow pollution credits to go to industry for free. But importantly, cap and trade makes up just part of the proposal, and the other elements of the bill would not only clean up some of the shortcomings of cap and trade, but actually strengthen the cap:

...unpriced carbon is not the only market failure. In fact, there are dozens, hundreds of such failures. If you sought to address them all with a carbon price—a fairly blunt tool—you’d need a very, very high price, and that’s not going to happen. A politically realistic price on carbon, likely to be low at least for the first decade or two, will not address or overcome most of those failures. The idea behind “complementary policies,” or policies outside the carbon price, is to address some of those failures and thereby make the road smoother (cheaper, more efficient) for the declining cap.

Roberts uses some examples: utilities, which are regulated monopolies acting outside the free market that may default to the most cost-effective but least climate-friendly options; the need for coal-fired plants to get phased out to meet the cap target despite the fact that they are grandfathered in under the Clean Air Act; and some more. Ultimately, complementary policies like a renewable energy standard drives the cap down to a level where it can actually mitigate the most disastrous effects of climate change. Ultimately, this may not be enough to prevent a rise of, say, three degrees in global temperature, and we need to move to an adaptation strategy as much as a mitigation one. But the fatalist notion of "there's no political will to tke meaningful steps," or "even if we lower carbon emissions, India and China won't" doesn't fly with me. In fact, since China has built power plants far more efficiently than we have, perhaps that phrase should get flipped around.

We don't really know what the changes in the legislation will be - hopefully, Peter Welch fattened up the Blue Dogs with enough lasagna so they didn't muck around with the bill too much. But while I still wonder whether we can get this done in this year, the most hopeful sign, for me, happened outside of Congress:

Bloomberg reports that Duke Energy Corp., which owns utilities in the Southeast and Midwest, announced that it won’t be renewing its membership with NAM, in part because of NAM’s refusal to address global warming:

“We are not renewing our membership in the NAM because in tough times, we want to invest in associations that are pulling in the same direction we are,” Duke Chief Executive Officer Jim Rogers said last month in an interview. The association, the U.S. Chamber of Commerce and Republicans “ought to roll up their sleeves and get to work on a climate bill, but quite frankly, I don’t see them changing.”

Charlotte, North Carolina-based Duke is a founding member of the United States Climate Action Partnership, a coalition of business and environmental groups that seeks to influence legislation on greenhouse gases linked to global warming. The National Association of Manufacturers has opposed mandatory controls, arguing they will harm the economy.

A Duke spokesman also said that the company would like to see cap-and-trade legislation “happen this year if possible.”

If energy companies like this want something done, something can actually get done.

Don't Make Me Save The Planet!

So those centrist House Democrats have bought into the myth that government can do too much, asking Nancy Pelosi to set aside their climate change bill in favor of health care - even though the Senate has managed the health care bill and the House the climate change bill, an appropriate division of labor. Pardon me for suggesting another reason - these centrists want to protect the polluting industries in their districts.

Democratic centrists are pressing House Speaker Nancy Pelosi to set aside a flagging climate change bill to focus on what they think is a more achievable goal: overhauling the nation’s healthcare system.

But those close to Pelosi (D-Calif.) say she is charging forward on cap-and-trade legislation, despite the potential defections of Democrats who represent states with industries that would be adversely affected by the bill [...]

Democratic aides say the sentiment for putting healthcare first is felt most strongly among New Democrats.

“A lot of our members feel that healthcare has a higher likelihood, so getting that done first and then doing energy makes sense,” said an aide to a New Democratic leader.

“New Dems are in a tough spot,” said one Blue Dog member, explaining that New Democrats are more likely to have an environmental constituency at odds with their business constituency. Blue Dogs, by comparison, have more freedom simply to vote no on climate change legislation.

Whew, I wouldn't want those Blue Dogs to feel conflicted about voting against doing something about a boiling planet! Thank Jeebus they have some "freedom."

We hear plenty about the costs of action. Artur Davis (D-AL) says in this article, "in the throes of a recession, more of a burden on industry is not a good idea.” But inaction has a cost, too. Bills that quantify a certain change in policy must be scored and the costs must be announced. The cost of doing nothing can more easily be ignored. That would be a grave mistake.

The real cost of carbon emissions is far from zero. Each new scientific report brings proof of a changing climate that promises to disrupt agricultural patterns, set off a scramble for dwindling resources, raise sea levels, propel population shifts and require massive emergency spending as we try to react to the growing crises. These are the costs of inaction.

A smart climate policy can create a mechanism to put the right price on carbon, and rapid economic change will follow that firm price signal, along with reduced climate risks. Our work with more than 100 economists nationwide and at RealClimateEconomics.org demonstrates the weight of economic analysis supporting this point.

The whole point of climate legislation is to price externalities that we already spend. When children acquire asthma from pollution, when naval ships ensure safe passage for petroleum from the Middle East, when droughts affect farm crops, when houses flood and rivers pour over their banks, those costs come, at least in part, from burning carbon. We have several options for pricing those carbon emissions, but the most important thing we can do is employ a cap, to bend the curve of the increased costs from climate change in exactly the same way that we must bend the curve of increased health care costs by eliminating the hidden costs of the uninsured. The problems are exactly the same.

If we fail to cap carbon because some coal-state lawmakers refuse to take a tough vote, then in 5 or 10 years, we'll return to Congress, talking about capping carbon after spending hundreds of billions as a result of making parts of the planet uninhabitable. The political system doesn't deal with the future very well, sadly.

Climate And Energy Bill Hanging By A Thread

I think that, at the end of the day, the Obama agenda on education and even on health care will make its way through the Senate. It may not look exactly like what he campaigned on, particularly on health care. But something's going to happen. Obama should be able to mass substantial bipartisan support on education reform, considering that he sides with reformers over teacher's unions, and the previous bipartisan deal on education is showing signs of success. And the budget reconciliation instructions on health care really offer a big stick to force a solution, even to conservative Democrats.

On climate and energy legislation, I'm really not so sure. People have a visceral relationship to health care and education - it's their bodies and their kids. Arguments about the climate and alternative energy, while just as important, exist in the abstract, and are ripe for conservative misinformation, particularly around costs (see the "national energy tax" fearmongering). Progressives can push back on this nonsense, and thanks to Paul Krugman for giving this a shot, particularly using conservative market principles:

To be sure, there are many who insist that the costs would be much higher. Strange to say, however, such assertions nearly always come from people who claim to believe that free-market economies are wonderfully flexible and innovative, that they can easily transcend any constraints imposed by the world’s limited resources of crude oil, arable land or fresh water.

So why don’t they think the economy can cope with limits on greenhouse gas emissions?

However, even though the Republicans are rank hypocrites on this issue, they can make an abstract debate more concrete with the constant efforts to label this a tax. Right now, Americans support regulating greenhouse gas emissions, even if it raises energy prices (and I can give this to you in more than one poll). However, just the mere action of conservative fearmongering is, I suspect, enough to waver those Blue Dog conservative Democrats who don't want to pass this bill anyway, as well as give an excuse for coal-state Democrats who resist change. Therefore, you're seeing this week Reps. Waxman and Markey hunting for votes on Capitol Hill.

House Democratic leaders appeared to still be short of the votes needed to pass climate-change legislation out of a key subcommittee, but a spokeswoman for one of the lawmakers leading the talks said negotiations were continuing.

Several moderate Democrats on the House Subcommittee on Energy and the Environment said Thursday that fundamental issues such as how to soften the impact of the legislation on constituents and industries in their regions are still unresolved and that the panel might not be ready to vote on the measure by next week as Democratic leaders have called for.

The qualms expressed over legislation sponsored by House Energy and Commerce Waxman (D., Calif.), and Edward Markey (D., Mass.) along with possible Republican obstruction, point to the difficulty Democrats are having in finding consensus on climate and energy issues.

“I don’t think the votes are there in the subcommittee,” Rep. G.K. Butterfield (D., N.C.) said in an interview. Mr. Butterfield said he was particularly concerned about the bill’s impact on low-income Americans, adding “What do I tell a single mom making eight dollars an hour?”

You can see the nonsense bubbling to the surface already. With a properly constructed cap and trade system that rebates significant money to lower-income Americans, they would actually be better off than with no system and continued pollution into their communities. But that doesn't matter. Butterfield and his fellow conservaDems are delaying, offering poison pill amendments, and emboldening Republicans to obstruct. These proposed amendments fly in the face of the science, loosening the carbon cap and generally seeking to keep polluters in business.

Some of the areas of the bill where Democrats are engaged in give and take are obvious.

A group led by Rep. Rick Boucher (D-Va.), wants to weaken the 2020 emission limits from the draft's 20 percent cut target, bringing it down to the 6 percent level spelled out last fall in legislation he produced with former Energy and Commerce Chairman John Dingell (D-Mich.) [...]

Rep. Mike Doyle (D-Pa.) said Boucher's group has endorsed the electric utility industry's call to set aside 40 percent of the proposed cap-and-trade program's allowances for free distribution to regulated local distribution companies within the electricity sector. The free credits would be phased out around 2025, which he said roughly lines up with projections of widespread deployment for carbon capture and storage at coal plants.

Doyle said the group also has recommended setting 15 percent of the credits aside for free allocation to U.S. industries considered most vulnerable to international competition, including steel, pulp, paper, cement and glass. Another 5 percent should also be walled off for petroleum refineries, he said.

Turning to the renewable electricity standard, Doyle said the moderate and conservative Democrats want Waxman to trim down his proposal from a 25 percent standard by 2025 to a less aggressive 15 percent requirement. Some states cannot meet the higher limits, he said, and they also want the definition of renewables expanded to include nuclear power.

And then you have refinery-state Dems wanting to protect their jobs. And coal-state Dems wanting to exempt coal. And nuclear-industry flaks wanting money for nuclear. There are just too many competing interests here. Now you know why Obama officials call ConservaDems the bad guys.

Unfortunately, the abstract nature of the debate obscures the urgency of legislation as soon as humanly possible. America cannot really make progress along with the world on mitigating the worst effects of climate change without a major effort like Waxman-Markey. We've already lost too much ground to stop a boiling planet, and if we let this slide, things will only get worse.

Can we really prevent global warming? Or should we be thinking more about adaptation? Building coastal fortifications may be cheaper than halting the release of CO2.

Right now, the climate scientists feel that if all humans shut off carbon emissions today, it will still glide up by about 1 degree centigrade. In the business-as-usual scenarios, Nicholas Stern says there's a 50 percent chance we may go to 5 degrees centigrade. We know what the Earth was like 5 or 6 degrees centigrade colder. That was called the Ice Ages. Imagine a world 5 degrees warmer. The desert lines would be dramatically changed. The West is projected to be in drought conditions. And certain tipping points might be triggered. We can adapt to 1 or 2 degrees. More than that, there is no adaptation strategy.

What do you mean by tipping points?

There's lots of carbon in vegetation that has grown and died in the northern tundras of Russia, Canada. Normally what happens when a tree falls and dies is the microbes come and gobble it up and they recycle in terms of carbon dioxide, methane. But in the frozen tundra, those microbes are asleep. So the big fear is that once the tundra thaws, those microbes wake up, they digest all that carbon. It goes up in the atmosphere. At that point, no matter what humans do, it's out of our control. This is the realization in the last decade that has caused many of us to get very, very concerned. Adaptation at 1 or 2 degrees will be painful, it will cause a lot of hurt and pain, but adaptation at 5 or 6 degrees—I'm terribly frightened that that's catastrophic.

Aren't we in pretty bad trouble no matter what we do? We're not going to be able to stop burning fossil fuels for quite a while.

We're in the great ship Titanic, the Earth is, and it's going to take a half century to really turn the ship. But that doesn't mean we can't start doing it today, and we must. It's possible that the United States can greatly reduce its use of energy in our buildings, which consume 40 percent of our energy, and our personal vehicles.

The scientists are warning that 2/3 of total coal reserves must be left unused if we want to stop the catastrophe that Dr. Chu is talking about here. We cannot afford to give anyone a break or hold off on a cap. This is bigger than any one district.

Two things in the corner of supporters of Waxman-Markey. One, the EPA has the authority to massively regulate emissions, including possibly implementing cap and trade if they so choose. So ConservaDems and coal-state pols can either come up with a solution or have it taken from their hands. The other trick we may have is the return of reconciliation.

This is a little bit deep in the weeds, but you may recall that back in early April when the Senate was debating the budget, Sen. Mike Johanns (R-NE) introduced an amendment meant to prevent the Senate from passing climate change legislation through the reconciliation process, and it passed by a wide margin.

Well, in conference, that amendment was stripped out completely. Mike Johanns is very unhappy. But that doesn't mean that a cap-and-trade program will absolutely be established during the reconciliation process. And it doesn't mean that Democrats will be hanging the threat over Republicans' heads the way they are with health reform. In fact, the conference report basically says this won't happen. But technically there won't be anything (other than Senate politics) stopping Democrats from doing so.

So many Democrats voted against reconciliation in the Senate that trying to pull that trigger would probably not work. But at least there's another option. Those of us who want meaningful climate and energy legislation need something to hang on. Because it's real tough out there.

The Battle Begins On Climate Legislation

Today is the 39th anniversary of Earth Day, which drew 20 million people to events in 1970. Without the Internet. Or Fox News promotion. And the House of Representatives used the anniversary to fire the starting gun for major climate change legislation:

Congress is launching the “mother of all climate weeks” on Tuesday, with a monster hearing designed to push forward global warming legislation.

Fifty-four witnesses will testify on climate change legislation in three full days before the House Energy and Commerce Committee, topped off with an appearance from Al Gore on Friday. The committee will also hear from EPA Administrator Lisa Jackson, Energy Secretary Steven Chu, Transportation Secretary Ray LaHood and high-profile representatives from business and the environmental movement.

As I noted last week, Chairman Henry Waxman seeks to get the bill out of committee by Memorial Day. The hearings are taking place right now. The efforts for legislation got a major boost with an EPA report suggesting that the consumer cost would be far less than the claims being made by Republicans.

With Republican critics of the bill zeroing in on the cost to consumers and industry, a pivotal issue will be how to mitigate the bill’s economic impact. Under a cap-and-trade plan, overall emissions would be limited and polluters would be issued emission allowances, which they then could buy and sell.

An EPA analysis released to the committee on Tuesday found that the price of emission allowances would be less than projected for a similar bill the Senate debated but did not pass last summer. Allowance prices would range from $13 to $17 per ton of emissions in 2015, and $74 to $96 per ton in 2050, the EPA reported. Last year, the agency projected that the Senate bill would cost $20 to $50 per ton in 2015 and $160 to $200 per ton in 2050.

The agency said forecasts have changed in part due to lower projected growth in gross domestic product, which means industrial output of greenhouse gases will be lower than expected.

“With lower forecast emissions, the allowance prices necessary to achieve the goals set in the discussion draft are also reduced,” the EPA said.

The EPA also said the bill’s average annual cost per household would be between $98 and $140, leading proponents to say the bill would have a relatively modest impact.

“When you combine this analysis with cost-saving measures from updated energy efficiency measures and weatherization, the savings will pile up for consumers,” Markey said in a statement.

In addition, the benefit to energy companies, having the certainty of a cap and carbon pricing, so they can manage their businesses and support the kind of innovation needed to get under the caps, would actually provide long-run savings as well, apart from mitigating the worst effects of climate change (which would cost lots of money).

Of course, Republicans will continue to smear and fear about consumer costs, even though revenues from cap and trade can roll back to ratepayers. In fact, the Republican opposition to this bill represents throwing a bunch of junk at the wall to see what sticks. They are vacillating between denying the science and focusing on costs, and the result is muddled.

The Senate clearly wants to follow the House's lead, and this will be a long process. But in the meantime, there are steps the Administration can take to improve our energy outlook, like allowing offshore wind turbines; and the looming EPA regulations under the Clean Air Act can work as a vice to force the Republicans to either allow a cap and trade system or get steamrolled by the executive branch.

It's exciting to see a very real transition to a new energy economy, and the hard work of the policymakers committed to moving forward. I urge you to watch these hearings.

...This is awesome from new Obama Administration advisor Van Jones.

Waxman: Focus on the Cap

The EPA today took a major step in declaring greenhouse gas pollution a danger to the public, increasing the urgency to regulate CO2.

Environmental Protection Agency Administrator Lisa Jackson is officially confirming today that greenhouse gas pollution endangers the health and welfare of the American public, finally obeying the mandate set down by the U.S. Supreme Court on April 2, 2007. Following a review from the White House and agencies across the administration, Jackson is announcing this morning that she has signed the Clean Air Act endangerment finding for six greenhouse gases. By the time the decision is finalized after two months of public comment, it will have been nearly two years since the EPA was blocked by the Bush White House from issuing such a finding.

The implications of this ruling loom large over proposed climate and energy legislation under consideration in the Congress. I agree with Barbara Boxer that this finding will provide a serious boost to those efforts, because now the EPA is obligated under the Clean Air Act to regulate carbon emissions.

The EPA's endangerment finding will open the door for the Obama administration to regulate greenhouse-gas emissions under the 1970 Clean Air Act.

Although the president would prefer not to tackle this issue through his administration's regulatory power, the threat of EPA regulation could be used as a hammer to persuade moderate senators of both parties to get behind cap-and-trade legislation.

"What it says to the senators on the fence is that it's not really a question of whether regulation is happening. It's a question of how it will happen," a senior aide to Boxer told ABC News.

Call it "blackmail," as the corporate lobbyists do in this piece, or call it what it is, a requirement under the law mandated by the Supreme Court. So the obstructionists can block legislation in Congress and watch the EPA enact strict mandates, or they can have a say in the regulation. Their choice.

Respective of Congressional legislation, I recently had a great opportunity to sit down as part of a lobbying delegation with Henry Waxman, my Congressman and the chair of the House Energy and Commerce Committee, to discuss the Waxman-Markey clean energy legislation introduced on March 31. There are actually two bills, one in Energy & Commerce and one in the tax-writing Ways and Means Committee, both following similar tracks and expected to be out of committee by Memorial Day. And it can be argued that this provides a wealth of options for Congress to consider in pricing carbon, and thus the multiplicity of bills makes sense. But clearly, by virtue of its expansiveness and impact on a host of energy/climate issues, not just carbon pricing and hard caps but energy efficiency and renewable energy standards, the Waxman-Markey bill will be the template for energy legislation in this Congress.

Waxman brings an interesting perspective to the debate. He believes that the best way to get energy legislation through the Congress is to just start moving it, with tight deadlines, and dare the Republicans to stop it. He frames the issue as one of national security, to reduce our dependence on foreign sources of energy; of environmental imperative, to mitigate the catastrophic impacts of climate change; and of economic necessity, to move the country into a renovated, clean energy economy.

There's a lot of talk about how the cap and trade portion of the bill will be handled. The bill is somewhat murky on these points. The potential exists in the bill for offsets that would give a substantial portion of the carbon permits away for free. And the bill has no mention of how the revenues gained from what permits are auctioned off would be used (Waxman said that he would like to see some money directed to ratepayers, and some money directed to R&D for innovation in the energy space, and he would like to see the money targeted rather than applied as a broad tax cut). But Waxman de-emphasizes these concerns in favor of looking at the cap part of cap and trade. If the cap is firm and based on what the scientists have set as a goal to mitigate the effects of climate change, he reasons, the rest will fall into place. He used the example of acid rain, which used a similar cap and trade system in the 1980s. Industry feared that they'd have to spend billions for compliance, but lawmakers focused on the cap, and the problem was resolved for 1/10th of the expected cost. The goal, then, must be the cap. Waxman believed that offsets would have to be verifiable, and in exchange for the offsets there would have to be more reductions (a 1-to-1 1/2 ratio rather than 1-to-1). But if that's the cost to make the bill more politically attractive, Waxman is content to focus on the cap. Waxman also responded to a question I had about Europe's cap and trade system, which was marred by offsets and giveaways, by saying that the committee worked with Europe's regulators in drawing up the legislation, and that they will not fall into the same traps.

Waxman also played up the economic possibilities of the legislation, that only the innovation unleashed by having to get under the cap will be sufficient to actually create valuable goods for America and "get us out of the recession." Dozens of new industries can be developed and tremendous potential realized through innovation and technological advancements.

The other problematic element of the bill, for the progressive citizen lobbyists in the room with me, was the inclusion of clean coal technology in the bill, something that has been accepted by the White House and the Department of Energy as part of the solution. The typical response to this is that India and China will keep using coal even if the Western world stops, and we'd better come up with a way to capture and store the carbon produced or else our efforts will come up lacking. Waxman said that "we have to figure out if we can keep coal in our future." Obviously, the cap will eventually be too stringent for coal to remain a going concern in the United States without capture and storage technology advancing. And hopefully, the cap can force that, and develop new industries and new exports in the process. I don't know that I totally agree with that, but it's the party line on this, anyway. And besides, renewable energy has its own trade-offs.

Overall, I am far more optimistic about the prospects of climate and energy legislation coming through the Congress than I was before walking into that meeting. We still need to work hard to make the bill stronger, but the combination of the EPA ruling and the deliberate pace of the legislation moving through the House could provide the necessary momentum. We have to get this done, and hopefully we can create that sense of urgency. Also, we need to use the leverage of the EPA ruling to ensure this bill doesn't get weakened as it goes through the legislative sausage-making.

Ignoring The Obvious

Over the weekend, the New York Times had an article with the thesis statement that the legislative machinery is rusty and unused to the kind of ambitious policy agenda that Barack Obama has proposed.

Lawmakers, senior staff members and other experts agree that a combination of divided government, thin majorities, the running battle for Congressional control and an emphasis on national security caused a decline in the old-school legislative give-and-take that will be required to deliver major health, energy and education measures to President Obama.

“We have been miniaturized,” said Senator Olympia J. Snowe, a moderate Republican from Maine and a veteran of health care negotiations. “You have three talking points on a card. We are going to have to be taught and relearn the process, crack the notebooks.”

Congress has not even managed to produce its basic spending bills on time in recent years and has exhausted considerable energy dealing with recurring tax and Medicare snags. Big bills have been few and far between — the 2003 Medicare drug plan and a 2007 energy law are examples — as lawmakers nibbled around the edges of problems [...]

As members of Congress and analysts look at the daunting demands for legislation emanating from the White House, some wonder if Congress is up to the task.

“Do we have a Lyndon Johnson in the Senate at the moment, someone who can push through legislation?” asked Stanley E. Collender, a former top aide on Capitol Hill and a longtime observer of Congressional budget fights. “We haven’t seen it in a while.”

There's no doubt that some of this is true. The "Masters of the Senate" have come and gone, and the reasons cited do tell part of the story. Furthermore, the internal dynamics of the Republican opposition tend them in the direction of unthinking opposition, behaving like perpetual candidates in a contested primary (Similarly, the glory-seeking Evan Bayhs of the world see value in obstructionism and shining attention on themselves). But this article never gets around to mentioning the special interests who frustrate progress on a daily basis. And we see them lining up, one by one, particularly with respect to the domestic agenda, to throw sand in the gears of the legislative machinery. As campaigns grow more expensive, and as inequality increases with the biggest firms getting bigger, these impediments have simply metastasized.

For example, lobbyists for practically every corporation want to halt the move to tax overseas profits from offshore tax havens, something the entire world came to an agreement on at the G-20. Corporate farming interests succeeded in removing cuts to farm subsidies from the budget resolution. And despite the rhetoric that action on the climate and on the economy are inextricably linked, oil companies have flat out given up on renewable sources of energy, and appear to have convinced the Administration to cave on the 100% auction element of their cap and trade proposal.

The Obama administration might agree to postpone auctioning off 100 percent of emissions allowances under a cap-and-trade system to limit greenhouse gas pollution, White House science adviser John P. Holdren said today, a move that would please electricity providers and manufacturers but could anger environmentalists [...]

During the presidential campaign, Obama called for auctioning off all greenhouse gas emissions permits at the outset, rather than just a portion of them. Many industry leaders say a phase-in will be essential to easing the transition to a low-carbon economy.

"The idea, obviously, is to end up with a bill that reflects both the thinking of Congress and the administration, a bill that the president can sign," Holdren said, adding that when it comes to a 100 percent auction, "Whether you get to start with that or get there over a period of time is something that's being discussed."

We have a model for "getting there over a period of time," in Europe, where they wasted a decade making almost no progress on reducing carbon until they just went ahead and moved to a full auction. The whole point of cap and trade is to price carbon, not give it away for free, because the pricing element encourages the innovation needed to make the needed reductions.

Some, like Chris Bowers, are optimistic that public investment will continue to grow. The question remains whether that will manifest in government spending that improves lives, or the kind of corporate welfare and Treasury raids we have seen over the last decade. Call me skeptical. And I think the reason is simple - a political class too intertwined with a corporate elite, too attentive to their concerns over the concerns of their constituents. Perhaps full public financing of all campaigns is the answer, and what we should be fighting for. Or maybe we just need A New Way Forward to sever that symbiotic relationship and restructure the economy.

Lost in the talk of tea parties by anti-tax zealots are the A New Way Forward demonstrations this weekend. It is crucial that we send a message that real structural change is not optional but necessary. I urge you to find the demonstration in your area and attend.

Going Big, Not Going Home

Yesterday the Senate passed a resolution preventing climate change legislation from going through the budget reconciliation process, on an overwhelming vote of 67-31. The vote suggests that climate change alone can't get 50 votes in the House, anyway, so this doesn't seem to me like a major loss. In fact, this resolution only applies to this particular budget, and if a new budget resolution is written, the ban on reconciliation for cap and trade becomes moot.

However, I think the Administration has already foreclosed on that option, because the Markey-Waxman climate bill is more of an omnibus, which could actually make it easier to pass.

One of the striking features -- and perhaps the most consequential legislative decision Dems will make this year on energy/climate -- is that it lumps everything together in a single bill. I know some folks aren't big on this strategy, and I've been on the fence myself, but I've pretty much come to see it as both smart and inevitable.

Consider the context. There are several important steps that need to be taken on climate and energy, and the Dems have promised to get them done this year. If nothing else, the U.S. needs something to take to the Copenhagen climate talks, coming up in December. That puts serious time pressure on the whole undertaking [...]

It's important to note that the cap-and-trade part of the package is by far the least popular and easiest to demagogue. So conventional wisdom has been that Dems should lead with the more popular energy and grid stuff. But those aren't a cakewalk either -- there's plenty of regional opposition to renewable energy standards and a whole set of jurisdictional and local battles around the grid.

The fact is, doing these pieces separately would mean three, four, possibly five bruising legislative battles, culminating in a battle over cap-and-trade that, in my estimation, simply can't be won on its own in this Senate. No one in D.C. has the appetite for that, not this year.

So they've decided, uncharacteristically for Democrats, to double down. They are piling all this stuff into one big-ticket, high-profile, must-pass bill. Just as there will be "a healthcare bill" -- and not four disparate, complicated healthcare bills only wonks can understand -- there will now be a green economy bill. For it or against it.

I definitely agree that a single green economy bill is harder to demagogue, though Republicans will certainly give it a college try. And if everything is included, then legislators can pick and choose bits they don't like as a means to vote against the bill. But it is unusual to see Democrats go so big on such a big priority. While I think that the Waxman-Markey bill has room for improvement, unquestionably the bill would represent a major step forward.

I like it.

Waxman-Markey: Could Be Better

Some big news today on the climate change front, as Henry Waxman introduced a bill that would cut greenhouse gas emissions dramatically by 2050.

Representative Henry Waxman, chairman of the House energy panel, will unveil draft legislation to reduce U.S. greenhouse-gas emissions by 20 percent, according to two people familiar with the measure.

The California Democrat, who heads the Energy and Commerce Committee, will release the proposal today, according to the people, who declined to be identified before the plan is made public. Utilities will be forced to rely on renewable energy for some of the power they sell, the people said.

“The Waxman bill is the opening shot in the battle about what we do about global warming,” said Daniel Becker, director of the Washington-based Safe Climate Campaign. “So it’s pretty important.”

President Barack Obama has called for the U.S. to reduce emissions 80 percent by 2050, and get a quarter of its electricity from renewable sources by 2025. Waxman’s proposal would follow those goals.

These goals are actually somewhat in line with the targets of the group Business for Innovative Climate and Energy Policy (BICEP), which includes Nike, Starbucks, eBay and a bunch of other corporate partners. Those businesses are worried about the direct results of climate change to their materials and suppliers. In fact, the BICEP plan is BETTER than Waxman's, because they are calling for a 100% auction, while Waxman's bill would give some carbon credits away to polluters:

The Waxman plan doesn’t specify whether any allowances will be given for free, as some companies have requested. The committee staff favors auctioning a majority of them, according to the energy lobbyist.

The proposal will allow industrial emitters such as cement makers and utilities to buy and hold emissions permits, then use them to meet their targets any time in the future. Polluters may also use permits from “offsets,” projects that absorb carbon dioxide from the air or produce energy with fewer emissions, to meet part of their obligation.

The Waxman plan will allow offset credits covering 2 billion tons of emissions annually, or about 27 percent of total U.S. greenhouse gases in 2007. The government will hold some permits in reserve to help industry keep transition costs down, under the draft plan.

Waxman's plan hews much closer to the U.S. Climate Action Partnership plan, which includes in the coalition ConocoPhillips and General Motors along with mainstream enviro groups. Ed Markey, the go-to on climate change in the House and a co-sponsor of the bill, admitted that some credits would be given away on a conference call today.

Good for Greenpeace for speaking out that this bill doesn't go far enough.

After more than a decade of denial and delay by U.S. leaders, Chairmen Waxman and Markey have placed clean energy and global warming at the very top of Congress's agenda as the world looks to the United States for leadership in the run-up to Copenhagen. The draft bill is a good first step in the right direction, but the bill must be strengthened to ensure that it will achieve the goals of transitioning to a clean energy economy and solving global warming.

Key short-comings that must be addressed include:

• Two billion tons of pollution offsets, a virtually unlimited amount equal to a quarter of all U.S. emissions. If all the offsets in the bill were used, the bill's emissions reductions could be met without any reduction in fossil fuel emissions for more than 20 years. We cannot solve global warming by simply planting trees and continuing to pollute forever.

• The coal industry receives untold billions dollar in handouts for the false promise of carbon capture and sequestration, with American ratepayers and taxpayers footing the bill.

Finally, the discussion draft is largely silent on how auction revenue will be used. We urge the committee to dedicate this revenue to the short-term up-front investments needed to transition to a clean energy economy, including investments in clean energy development domestically and in the developing world as well as adaptation efforts for countries and communities most directly affected by climate change.

Giving away credits makes absolutely no sense and will delay perhaps forever the transition to a clean energy economy. It should be a bright line for progressives. And obviously, the so-called "clean coal" industry shouldn't be getting a bailout in this bill.

What's problematic is that Waxman-Markey is likely to be the best climate bill coming out of Congress this year. The Senate version will be even more compromised. So improving on this one before it goes to a vote is crucial.

A Short Lesson

The original headline for this story was "Congress to cut $400 tax credit".

Senate Budget Committee Chairman Kent Conrad, D-N.D., announced a budget blueprint Tuesday that would scrap Obama's signature tax cut after 2010 while employing some sleight of hand to cut the annual budget deficit to a sustainable level.

Conrad promises to reduce the deficit from a projected $1.7 trillion this year to a still-high $508 billion in 2014. Along the way, the Senate plan would have Obama's "Making Work Pay" tax credit, delivering $400 tax cuts to most workers and $800 to couples, expire at the end of next year. Those tax cuts were included in Obama's stimulus package.

But Obama paid for that tax cut in his budget. It was tied to revenue from the cap and trade plan. The reason the tax cut is out has nothing to do with expense, but because cap and trade has been excised. Kent Conrad and the Axis of Centrism just don't want to deal with climate change in a meaningful and substantive way, which will lead to more extreme weather patterns and more disaster needs.

This is how the government spends money in the name of saving it. And this is how "fiscal responsibility" is used as a cover to block progress.

Budgeting Bytes

I suspect the President tonight will want to put the focus on the budget, which is this gigantic piece of legislation that expresses national priorities on a host of topics, but which has gotten scant attention in the age of bonuses and banks and bailouts. I must admit to a certain discordance with the Organizing for America effort to sign up pledges for the budget in the midst of the Geithner plan's release and the fury at Wall Street.

However, I do agree that we can't wait another second to move forward on these priorities. The situation with the banks will play itself out, but failing to invest in health care and energy and education for the future would be downright criminal and would actually deeply harm efforts at overall economic growth. We know the Republicans will oppose such a plan to help people who work for a living - it's their nature - but the bigger fear is that so-called "centrist" Democrats will do the same. Kent Conrad today already sounded like he's hacking away at the budget.

Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, has been among those complaining about elevated levels of spending in the president's request. Yesterday, after meeting at the White House with Biden, Conrad said he has made "hundreds of billions of dollars of adjustments" to Obama's request in the budget proposal he plans to unveil today.

"When you lose $2.3 trillion on a revenue forecast, then you have to change and budget. And we have changed the budget," Conrad said.

Conrad said his proposal would trim Obama's spending request across the board to dramatically reduce future deficits. In 2014, for example, when the CBO predicts that Obama's request would produce a $750 billion deficit, or 4.3 percent of the nation's overall economy, Conrad said his proposal would generate a deficit of less than $600 billion, or just under 3 percent of the economy. Many economists consider a deficit equal to 3 percent of the economy to be sustainable, because at that level the nation's borrowing would not grow faster than the economy as a whole.

Administration officials signaled that the White House may be willing to accept significant spending cuts so long as the president's signature initiatives on health care, education and clean energy are preserved.

Congress writes the laws, so this isn't all that outrageous. And I agree with taking out the $250 billion dollar placeholder for future bailouts of the financial sector - if the Administration finds that necessary, they can make their case and earn it. But quite a bit of the Congressional Dems' reworking troubles me. First, they are reserving the right to lie:

On the alternative minimum tax, Spratt said the budget will not in later years incorporate Obama's assumption that the $30 billion-plus cost of fixing the AMT and instead assumes other revenues are raised to limit its reach.

"Other revenues" is Washington-speak for "we want to pretend that this will still bring in the same amount of money every year even though we'll get rid of it and not replace the revenue." I assumed that honesty would be the first thing to go in Obama's budget - it's too expensive.

Next, there's the big question mark of what items will fall under budget reconciliation. Already, cap and trade has been written out of that scenario, which is crucial because that was the mechanism for paying for Obama's "Making Work Pay" tax cuts for the middle class:

House Democrats won't advance President Obama's controversial global warming initiative under fast-track rules that could effectively cut Senate Republicans out of the debate, a top Democratic lawmaker said Tuesday.

The House will try to use special budget procedures to remake the health care system, Budget Committee Chairman John Spratt Jr., D-S.C., said Tuesday [...]

At issue is whether to advance controversial Obama initiatives under filibuster-proof rules in the Senate. Republicans say the maneuver would freeze them out of deliberations on such important topics, and Democrats like Conrad say it shouldn't be used for such complicated legislation. But the Democratic-dominated House wants to make sure Republicans don't hijack the legislation.

"Reconciliation is pretty well settled," Spratt said. "I think we'll have reconciliation (for) health care."

The terms of the deal have already been written on health care - Republicans can come to the table between now and September or they will be shut out of the deal. But cap and trade won't work the same way. The whole reconciliation process itself is byzantine and based almost entirely on the whims of Robert Byrd back in the 1980s. Really the Senate parliamentarian ultimately decides what becomes a subject for reconciliation, which is bizarre and no way to run a railroad.

Taken as a whole, the uncertainty of the reconciliation process transforms it into a game of chicken: If Republicans refuse to cooperate with health reform and force Democrats to resort to reconciliation, no one knows what will emerge out of the other end. Republicans might have no input, but Democrats will be at the mercy of an obscure bureaucrat's interpretation of an undefined Senate rule. It's the legislative equivalent of deciding a bill on penalty kicks.

What should not be missed in all this is the absurdity that is the contemporary Senate. You need 50 votes to pass a bill. You need 60 votes to overcome a parliamentary trick that allows 40 senators to talk about cheese whiz until everyone else heads home for the night. But some priorities -- deficit reduction and the budget among them -- were judged too important to face the filibuster. There was no particular rationale given for that shortcut, but the relevant senators have clung tightly to its terms. Last week, Sen. Robert Byrd, now in his late 80s, reiterated that reconciliation was "a process intended for deficit reduction," and using it for health reform and cap and trade "is an outrage that must be resisted."

But the reconciliation process has been used for plenty that did not reduce deficits. Both of President Bush's tax-cut plans traveled through the process. And the very senators who speak reverentially of the filibuster now, voted for reconciliation then. Judd Gregg, in fact, voted for reconciliation every time it was used in the Bush era.

The actual answer is to do away with the filibuster. The Senate GOP today threatened to tear down the chamber if health care or cap and trade are folded into the reconciliation process, so it's not like the minority has no recourse - they can use all the parliamentary maneuvers they want. But if we want to meet the tremendous challenges we face when an irrational minority abuses the lawmaking process, at some point we will need to allow the majority to rule.

Anyway, the President's presser starts shortly.