A months-long standoff between Senate Majority Leader Chuck Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.Va.) ended Wednesday when they reached a historic deal on deficit reduction, an Affordable Care Act extension, drug price reductions, climate and clean-energy investments to provide energy security, and expedited full-spectrum energy-permitting reform.
Washington, the Democratic Party, and perhaps the world can breathe more easily again because — by some miracle of twisted turns and backflips — Schumer, Manchin, President Biden and House Speaker Nancy Pelosi (D-Calif.) are on the same page and seem committed to a new equilibrium on climate and energy security that has been elusive and inflaming the anxieties of those watching a disappearing Lake Mead, record-breaking heat in London, wildfires, landslides, hurricanes and out-of-whack weather just about everywhere. They also are aligned on taking real steps towards deficit reduction. And, as part of the deal, they accepted energy-permitting reform that not only pushes forward oil- and gas-lease development but also renewable energy investments.
How did we get here?
Media headlines referred to a “major reversal” by Manchin. But that’s not true. This legislation has had many lives, and a couple of near-deaths. It once had been the $3.5 trillion Build Back Better spending conglomerate — or $6 trillion, if you count what Sen. Bernie Sanders (I-Vt.) wanted — but then that came “un-conglomerated.”
But progressives like Rep. Ro Khanna (D-Calif.), understanding that something is better than nothing and new climate-directed investments are as fundamental to national security today as oil and gas in an energy-squeezed world, reached out to Manchin to consider a smaller bill that would spur national investments in climate-positive energy options. Talks started two months ago and then went cold; some folks thought those were dead and blamed Manchin. Then Sen. Mark Warner (D-Va.) pushed Manchin and Schumer to re-engage; Manchin’s priorities were inflation and the energy crisis, and Schumer was pushing for a political deadline.
The details and scaffolding of all this matter, however. The nuances are where political opportunity and deal-making lie. The headlines that Manchin reversed himself or folded are flat-out wrong.
On June 13, Americans learned they were becoming poorer at a fast clip. The cost of basic daily staples, gas at the pump, a coffee and muffin at Starbucks, baby formula — everything up, and up more. Over a year, inflation surged from about 6 percent to 8 percent, then jumped to 9.1. None of the strategic oil reserve releases, or Biden’s jawboning of the shipping and transport industries, or the blame-Russia pivot, or the many read-outs of the administration saying “We are working on it” made a visible dent in inflation.
Inflation is at the core of America’s national anxiety. Americans get their tough economic lessons at the cash register. To the Biden administration’s credit, national economic adviser Brian Deese did tell reporters that the administration hoped rapidly falling energy prices might have a positive impact on the “next inflation figure” in August. But hope is not a strategy.
The evening that 9.1 percent inflation was announced, Manchin told Schumer — with whom he had been negotiating for two months on a reconciliation bill — that fellow Democrats who wanted a trillion-dollar package of climate, energy and other potential social infrastructure would just pour fuel on a raging inflationary fire. Manchin told reporters that he said to the Senate leader, “Chuck, don’t you think we ought to wait for a month, see where these inflation numbers are going? So we don’t make inflation worse?” He worried that tax hikes which were part of the negotiations, coming at the exact time interest rates were being set higher by the Federal Reserve, could have a huge impact on working families who already were gut-punched by higher supermarket prices.
Schumer erupted — and here is where things got really interesting.
Schumer and Sen. Debbie Stabenow (D-Mich.), in exasperated language, told leading environmental advocacy and corporate stakeholders that Manchin betrayed them, had moved the goal post once again, and was completely undependable. Sen. Martin Heinrich (D-N.M.) said Manchin should be removed as Senate Energy Committee chairman; President Biden told a reporter he had no idea what Manchin was thinking, because he hadn’t negotiated with him.
Manchin became toxic, and Schumer helped make him Public Enemy No. 1 to Democratic progressives who believed Manchin was beholden to a coal/fossil fuel industry that helped make his family wealthy. At the same time, Manchin’s popularity in West Virginia (and with Republicans and some independents) soared; many who thought he purposely derailed the reconciliation bill and tax hikes within it applauded him.
But it was untrue that Manchin gave up on climate and energy as part of a reconciliation bill. The stressed-out, high-angst stories about Manchin yet again blowing up things were wrong.
Manchin never left the negotiating table, never quit trying to do a deal with Schumer. On July 15, in an interview with West Virginia MetroNews host Hoppy Kercheval, Manchin said he “hadn’t walked away from anything.” He said inflation was really hot and that “everything” in the reconciliation package under discussion had to be scrubbed to see if it would contribute to inflation; he said people were hurting, prices were surging, and the Senate shouldn’t make matters worse.
To those who believe Manchin doesn’t support clean-energy options, listen to him: In that interview, he said he was “pro-climate” but that America could not eliminate its fossil-fuel resources — particularly during a global energy nightmare caused by Russia’s energy brinkmanship and invasion of Ukraine. Manchin said unambiguously that he supported carbon capture, carbon sequestration, hydrogen, renewables, nuclear and more on the clean-energy front; he said oil and gas need to stay in the picture, that U.S.-developed fossil-fuel sources are far cleaner than most other international sources, and he emphasized an all-of-the-above approach.
From Manchin’s perspective, many on the progressive left define decarbonization as eliminating all fossil fuels. He believes a transition to a cleaner energy future means not buying dirty fuels from Russia, Iran or Venezuela, but bringing on-line “cleaner fossil fuel development” in the U.S. and among our closest partners, along with renewables and other climate-neutral options.
The administration finally realized Russia’s strength is cheap energy which it has weaponized; China’s strength is locking up critical mineral supplies and assuring a supply chain for everything it produces, then potentially weaponizing that. The Biden team saw that China’s Xi Jinping had a rope around America’s neck on so many critical mineral fronts and that Europe doesn’t have enough supply to get through the winter, even as they flirted with potentially lifting limits on far dirtier oil from Iran and Venezuela. And so the White House and Schumer came to Manchin’s view that we need to work with our most-favored partners, like Canada and Australia, to reform energy-permitting across the board to develop cleaner fossil-fuel sources and critical mineral mining and production. It takes two years in a developing country to create an energy platform, but more than ten years in the U.S.
Manchin believes it makes zero sense to commit to massive leaps in electric vehicle deployment when the U.S. doesn’t have the key materials — computer chips, battery components, extraction and processing of critical minerals, a supply chain — to do it. American economic and national security both need to secure these pathways and do so in a way that transitions to a lower-carbon economy. The alliance between Manchin, Schumer, Pelosi and Biden on this legislation may change that.
Manchin never left the negotiating table; Schumer did. Schumer then persuaded other senators to believe Manchin wasn’t worth the time, and never would come around. Schumer believed a climate/energy package was not possible and was going to settle for a “skinny bill” that mainly achieved drug-pricing reform. Manchin had always said that bill could pass that night, or six months ago, and it was worth the effort to try and get more than a skinny bill done — but they had to avoid pouring an accelerant on inflation and had to assure America’s energy security in the process.
Manchin’s package always included provisions to lower drug prices and adjust some taxes. He wanted Affordable Care Act subsidies extended; he was pushing for expedited permitting reforms for all energy tracks. He wanted full-spectrum energy investments — renewables and opened, expedited leases for oil, gas and critical minerals development. He wanted firms to pay their fair share through a minimum tax, since many firms with book values of more than $1 billion had figured out how to pay little if any taxes. And he wanted a solid commitment to deficit reduction, which should be part of the White House’s inflation-fighting strategy.
The truth is this: Manchin did not wait for the August inflation numbers because he secured $300 billion of deficit reduction in a $739 billion bill. That’s why this legislation which has climate, energy and drug provisions is called the Inflation Reduction Act of 2022. On top of that, he worked the administration down from a $3.5 trillion spending bill to a $439 billion investment in climate and energy investments, drug-price negotiations and more. He fought for a 15 percent minimum corporate tax on billion-dollar-plus companies, and agreed to robust climate-friendly energy options while not taking current energy sources off the table.
One of Manchin’s critics, Sen. Tina Smith (D-Minn.) tweeted: “Holy shit. Stunned, but in a good way. $370B for climate and energy and 40% emissions reduction by 2030. BFD.”
This is the package Manchin wanted pretty much from Day One.
The altered environment that made it possible was the 9.1 percent inflation figure, which many Democrats seemed to pretend didn’t matter. The fact is that, just like a warming planet and proliferating violent weather matter, so too does runaway inflation. Not taming inflation undermines the political foundation to solve America’s and the world’s climate crisis and other needs.
What is real and what many continue to miss is that Manchin remained consistent with what he wanted throughout, including a climate/energy deal he has talked about for months. He kept telling Schumer that the end of the fiscal year is Sept. 30 and there was potentially a good deal to be had that would reduce debt, make key investments in energy security and climate, and help families with rising costs of food, fuel and health.
Schumer, to his credit, got over his frustrations. Connecting with some senators in Aspen, Colo., this past week, I was told they believed there was zero chance that Schumer would tack back to dealing with Manchin even though there was still time on the clock. Schumer apparently surprised them, did the right thing and reversed, then got Pelosi and Biden on board — without anyone knowing.
It took a lot to get this done. Most senators did not know a deal was in the works. There was no final deal on Monday or Tuesday this week. It happened Wednesday, when Schumer, Pelosi and the White House came around to where Manchin basically always had been.
This package still will face resistance from some quarters, as this is a realist reconciliation bill, not a utopian one. But all this shows that even when things look their bleakest in politics, miracles can happen.
Steve Clemons is founding editor at large of Semafor, a digital global media startup, and a contributing editor at The Hill.
Source: Thehill.com