Manchin’s climate concern is a solvable problem
Strike a deal on climate now — but hold on to the money until inflation cools.
Last night, Senator Joe Manchin lobbed yet another grenade into President Biden’s legislative agenda. With delicate negotiations over the last shreds of Biden’s Build Back Better agenda underway, Manchin abruptly declared that he wanted the bill’s critical climate spending and tax revenue out, and would only support a bill focused on prescription drug prices and short-term healthcare subsidies.
Manchin disputes this somewhat, saying that he wanted to wait to see another Consumer Price Index report this month to gauge the current inflation situation. “I said, ‘Chuck until we see the July inflation figures…then let’s wait until that comes out so we know we’re going down a path that won’t be inflationary,’” Manchin said in a radio interview today. Because of inflation, he added, “It’s not prudent to do the other right now” — referring to climate spending.
Either way, if we take Manchin at face value (and there’s plenty of evidence by now that we should not), his main hold-up around climate spending seems to be inflation. As his spokesman said on Thursday: “Senator Manchin believes it’s time for leaders to put political agendas aside, reevaluate and adjust to the economic realities the country faces to avoid taking steps that add fuel to the inflation fire.”
There’s a way to thread this needle — one that allows Democrats to strike a deal on crucial climate spending now, while allowing Manchin to ensure it doesn’t “fuel the inflation fire.” And it can probably be done with a simple search-and-replace in the legislative text.
Democrats are up against something of a timing trilemma:
1. Affordable Care Act subsidies need to be renewed ASAP in order to avoid premium hikes this fall.
2. Manchin wants to continue monitoring inflation — the next CPI release date is August 10.
3. They are expecting to lose their lawmaking power in November.
So they need to agree on a legislative package now — because of (1) and (3) — but Manchin isn’t ready because of his inflation concerns in (2).
There may be a work-around here. All statutes contain effective dates indicating when the statutory provision takes effect. For instance, the Build Back Better bill passed by the House last year includes an important investment tax credit for electric transmission lines — which are essential for deploying renewable energy. That tax credit (section 136105) has the following effective date: “The amendments made by this section shall apply to property placed in service after December 31, 2021.” (Of course, the bill currently under negotiation would swap in “December 31, 2022.”)
In theory, the sections of mini-BBB related to climate spending could all be given conditional effective dates that hinge on lower inflation. For instance:
“The amendments made by this section shall apply to property placed in service after the later of (a) December 31, 2022, or (b) thirty days following the first year-over-year Consumer Price Index report under 8.5 percent issued after enactment of this Act.”
This would embargo the new spending on climate subsidies until we get a CPI report showing signs of inflation cooling — which seems to be what Manchin is ostensibly looking for. (Note that the contingent clause here could be whatever metric Manchin requires to feel sufficient comfort on inflation. The broader point is that the spending can be made conditional on some measure of disinflation.)
This structure would meet the Democrats’ other timing constraints — both striking a deal before ACA subsidies run out, and before the November midterm elections. And it would provide Manchin an insurance policy that the new spending won’t go into effect until inflation slows. (In fact, given the recent drop in energy prices, it’s possible last month’s inflation reading was the peak.)
Can Congress do this? I’m not sure that other federal legislation has employed this kind of contingent effective date. But it’s not unheard of at the state level. One striking example are the states that had abortion trigger bans on the books in the event that Roe was overturned. These laws banned abortion in the state, and were effective upon the day that the Supreme Court overturned Roe. For instance, Louisiana’s law outlawing abortion had the following effective date: “The provisions of this Act shall become effective immediately upon, and to the extent permitted, by the occurrence of any of the following circumstances:
(1) Any decision of the United States Supreme Court which reverses, in whole or in part, Roe v. Wade, [. . .]
(2) Adoption of an amendment to the United States Constitution which, in whole or in part, restores to the state of Louisiana the authority to prohibit abortion.”
Similarly, fifteen states have joined the National Popular Vote Interstate Compact, which would have each state award its electoral votes in presential elections to the winner of the national popular vote. But the Compact only goes into effect once states representing a majority of the electoral college have joined. That means that each current member state has enacted a law pledging its electoral college votes to the popular vote winner, but that only takes effect when other states comprising an electoral college majority have also joined the compact.
So if Manchin’s concern here is genuinely about inflation (a big if), slapping contingent effective dates on the energy subsidies should put his mind at ease. Maybe it’s too late for this — by all appearances, the train is leaving the station and President Biden and Senate Democrats have had enough with Manchin. The Manchin exhaustion is completely understandable. But we stand on the brink of a second Democratic consecutive administration failing to enact climate change legislation. It could be a decade or more before we get another chance. The consequences of failure here are cataclysmic. So why not try?
