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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Whither Cap-and-Trade?

For anyone focused on the climate change challenge, or for that matter, the long-overdue task of transforming America’s energy sector, the last few days have been painful, as signals emerge from Washington that congressional action this year on carbon limits–the hinge on which all other climate change efforts depends–is unlikely.
This bad news first arose from a report by ABC’s George Stephanopolis last week that the Obama administration had decided tentatively to move (or at least threaten to move) health care reform, but not its signature carbon cap-and-trade proposal, via the budget reconciliation route. The decision itself was likely forced when eight Senate Democrats signed onto a Republican letter to the Budget Committee opposing the inclusion of cap-and-trade in any budget reconciliation package.
As the perpetual gridlock over earlier cap-and-trade bills in Congress would indicate, a proposal without the protection of a reconciliation package–which cannot be filibustered–is unlikely to survive the Senate without being fatally watered down.
Moreover, as TDS Co-Editor Bill Galston explains at TNR today, there are other adverse developments that make action on cap-and-trade this year very problematic. For one thing, polls are showing new strength for the old Republican talking point that we can’t afford environmental progress in a bad economy. And for another, regional factionalism on energy policy hasn’t gone away, as evidenced by the above-mentioned senatorial letter to the Budget Committee: of the eight Democrats signing on, seven are from energy-producing states, and the eighth is from auto-producing Michigan.
But as Galston also points out, the consequences of inaction this year are more concrete and immediate than another delay in dealing with the ever-ticking clock of climate change. For one thing, cap-and-trade is a revenue raiser, and if it’s not included in the budget package, the administration will have to find some other way to pay for the president’s politically crucial Make Work Pay tax credit, his major tax cut for middle-class families. And for another, the long-awaited resumption of international climate change negotiations, which the Bush administration worked so hard to torpedo, is due to occur in December in Copenhagen, and it would be very helpful if the United States showed up with a policy accomplishment in hand.
There remains, of course, a sort of “nuclear option” for enacting carbon limits: regulatory action by EPA under the aegis of the Clean Air Act, a path made available by a 2007 Supreme Court decision. As Kate Sheppard of Gristmill reported yesterday, EPA has just taken an important procedural step–a finding that climate change endangers the public welfare–in that direction. It’s more likely, suggests Sheppard, that the administration will use that option as leverage to force Congress to deal with the subject itself. But it may have to wait until next year.

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