Cap and Trade, Part 3:
Waxman-Markey moves to the Senate
7 Jul 2009 in Regulatory Policy, Legislation
The Obama Administration's "cap and trade" bill to regulate greenhouse gas emissions (HR 2454, Waxman-Markey) has moved to the Senate, where the leadership hopes to have a bill ready to bring to the floor by September. The Washington Post reports that the bill is 15 to 20 votes short.
Staff Writer Paul Kane writes that many more deals will have to be struck to gain these votes, and at the same time, every deal risks alienating supporters, who comprise a minority of 40 to 45 Senators.
For the bill to reduce greenhouse gas emissions, it must radically reduce the consumption of carbon-based fuels. That can be accomplished by raising the price of carbon-based fuels or rationing access to them some other means besides price. Neither approach is likely to be well received by most consumers.
Many Senators (perhaps 40 to 45) are opposed to the bill in principle, and garnering their votes is highly unlikely. In the middle are Senators whose primary objection is the bill's costs to their constituents. So the task facing supporters is simple, if not easy: Figure out a way to reduce the cost of the bill to the 15 to 25 Senators who neither support nor oppose it on principle.
There are three main ways to accomplish this utilitarian calculation:
- Delay the effective date even more than Waxman-Markey.
HR 2454 delays virtually all of the costs for 10 to 20 years. Like regular people, Senators and Congressmen have positive discount rates. They worry more about costs that have to be borne now than costs that have to be borne later. The time horizon for discounting depends on how long the Senator or Congressman expects to be in public office. If costs are postponed until after retirement, then the risk of being involuntarily retired by one's constituents is significantly diminished. There is a distribution of expected retirement dates, so supporters can attract fewer or greater fence-sitters by strategically choosing the effective date.
- Obtain countervailing benefits.
The leadership can secure fence-sitter support by providing indirect compensation. In the House, leadership promises of future action should be severely discounted because rank-and-file Members cannot compel the leadership to honor them. For this reason, deals have to be explicitly included in the text of the bill or they are not real. Many provisions in HR 2454 seem extraneous to the legislation, but it makes sense to see them there as a way to ensure that deals struck to get votes are honored.
The Senate operates much differently, however, as each Senator has significant practical power to penalize the leadership if implicit deals are not honored. For this reason, deals can be struck that are explicitly contained in the bill, memorialized in a floor colloquy, or kept entirely off the record. A Senator may be persuaded to support the bill if the leadership promises favorable action on something of greater interest to the fence-sitting Member.
- Redistribute the costs.
Many compromises that were needed to pass HR 2454 appear to have been intended to shift cost-bearing. From the fence-sitting Member's perspective, it may not matter much where costs are shifted so long as it is clear that the shift is legally enforceable. From the leadership's perspective, it matters a lot where costs are shifted. It is perilous to shift them onto other supporters. But it makes practical political sense to shift them onto opponents. For this reason, the place to look for disproportionate cost-bearing is in Red States that the Democratic Party does not expect to win any time soon.
