The Limited Bipartisan Infrastructure Bill Must Be Followed By A Climate Change Bill

Thursday, a group of ten Democratic and Republican Senators announced a bipartisan infrastructure bill. This is a start, but it must be followed by a major climate change bill, to be passed by reconciliation.

The bipartisan bill would cost $974 billion across five years and $1.2 across eight years and includes $579 billion in new spending. The caution about “new spending” signifies that some of what pays for the bill (i.e., the “pay-fors”) will be “repurposing” money already appropriated to states and localities, that desperately need the money but have not yet jumped through all the hoops to use it. So, the scale of actual spending is much less than President Biden’s $1.7 trillion package.

Another “pay-for” is increasing the tax on gasoline and indexing it to inflation. This will rankle President Biden. It is a regressive tax that hits hardest at the poor and middle class, in contrast to what Biden asked for, corporate taxes and capital gains taxes, which he promised would never hit anyone earning less than $400,000 a year. Another pay-for consists of a provision that might raise revenue by having the IRS go after tax cheats.

The bipartisan bill apparently does contain energy-related spending. The details have not been disclosed, but presumably this means a modest amount of solar and wind power and/or facilitating natural gas use, while leaving coal and oil as profitable as ever, despite global warming.

The leaders of the bipartisan negotiations were Senators Sinema and Portman. The other eight includes Democrats Joe Manchin, Jeanne Shaheen, Jon Tester and Mark Warner, with Republicans Bill Cassidy, Susan Collins, Lisa Murkowski and Mitt Romney.

Of course, this is not the end of legislative consideration, it is the jumping-off point for the next phase. It will get intense opposition from progressive Democrats, outraged by the small scale, the gas tax, the repurposing of already-appropriated funds, and limiting what is included to physical infrastructure. 

It will also get some opposition from ultra-conservative wing of the Senate Republican party, like Senator Josh Hawley, who may complain that the bill spends money without cutting taxes, as they always desire, and not so subtly, they will complain that it gives Biden and Democrats something that looks like a victory going into the 2022 election.

One track for Biden and the Senate Democrats to pursue is to make the best of this current bill, trying to improve it without losing its support from the five Republicans. As the saying goes, if you are given a lemon, make lemonade. This will warrant further discussion as the details get discussed.

But the other track will follow Majority Leader Schumer’s line, take this bipartisan bill, and then follow it up with a budget reconciliation bill that includes some of what was left out.

Schumer only needs 50 voted to do that, but he may lose his 50^th Senator, namely, Manchin, who has said he will not support a bill only supported by Democrats.

There are three good reasons a follow-up bill on climate change might pass by reconciliation.

First, there is an existential climate crisis. We will see calamities this summer, as in past summers. It cannot wait. If the Republicans take the House in the 2022 election, there will not be a climate change bill, maybe for many years to come.

Second, climate change involves some way to get the utilities and other fossil fuel users to cut back. One way is a carbon tax (coupled with cap-and-trade). A carbon tax is a natural for a reconciliation bill.

Third, a carbon tax will pass muster with the Supreme Court, even with the Court’s three Trump justices. When the Roberts Court considered Obamacare, they threw out the argument based on interstate commerce, but accepted the argument based on its having some tax provisions.

All this will change in times to come.