U.S. President Joe Biden came into office with an ambitious climate change agenda. He also had a long wish list of social programs, all part of what he called “Build Back Better,” including making prescription drugs cheaper, health insurance less costly, lowering student-loan debt and funding child care.
With a majority in the House and half the seats in the Senate, the Democratic Party had the votes, just barely, to get Mr. Biden’s transformative legislation across the line. Or so it seemed in 2021.
And then Senator Joe Manchin started playing Lucy with the football – turning Mr. Biden into Charlie Brown. Every time the Democrats tried to kick Build Back Better through the uprights, the Democrat from conservative West Virginia would yank away the pigskin. With each miss, the ball moved a little farther back.
The latest whiff came last week, after the administration had yet again whittled away at its ambitions to appease Mr. Manchin, only to have him announce at the 11th hour that he would not be supporting what little was left, namely a plan to cut greenhouse gas emissions.
And that was, apparently, the end of that. With Congress about to rise – and Democrats poised to lose control of one or both chambers in mid-term elections this fall – it was game over. Surveying the wreckage, we wrote an editorial on why this spelled long-term trouble for the fight against climate change, and immediate trouble for Ottawa’s plans to tackle industrial emissions.
That editorial was going to run today. And then the Peanuts script got flipped.
On Wednesday night, Mr. Manchin came out of nowhere to announce that he’d be supporting Mr. Biden’s climate-change package – the one he’d sunk the week before. Not only that, the bill he suddenly now backed included many social programs he’d previously rejected, and new taxes to pay for it all.
Given the challenge of getting anything through the U.S. Senate, nothing is over until it’s over. But as of Thursday evening, it looked like this bill, including spending of more than US$700-billion, will be passed next week.
The old movie cliché of reporters racing to the bank of payphones and shouting “Get me rewrite!” into the receiver? That just happened, from coast to coast, and across the political spectrum.
What Congress is on the verge of approving looks to be good for America, good for the planet and, in a number of ways, good for Canada.
The Democrats long ago decided that carbon pricing, though economically efficient, isn’t politically saleable in the United States. So instead of making carbon more expensive, the legislation includes US$369-billion to subsidize consumers and businesses into cleaner technologies. Most important are tax credits for electric utilities to invest in low- or zero-carbon energy.
Some of the subsidies involve high costs for low (environmental) returns, such as payments to buyers of electric vehicles. But though it doesn’t always use the most economically efficient means, this climate package is ambitious, and it should get the Biden administration close to meeting its goal of cutting emissions in half by 2030, compared to 2005.
That will make the U.S. a climate leader, rather than the world’s leading climate laggard. The subsidies, and their spur to innovation and economies of scale, are likely to steadily lower production costs of everything from solar cells to electric cars. That’s good for the world, and Canada, too. Also helpful for Canada are U.S. plans to sharply lower industrial emissions; absent such plans, Ottawa would have had to consider watering down its own policies.
It will all be paid for – in fact, it will be more than paid for, thereby lowering both the deficit and inflation pressures – through higher taxes on top earners, and a 15-per-cent minimum corporate tax. That last item is also good for Canada, and is part of a global agreement on fighting tax avoidance that Mr. Manchin was thought to have scuppered last week.
The price of Mr. Manchin’s conversion? Renaming this the “Inflation Reduction Act.” Plus a promise of future legislation for quicker permitting of new infrastructure, including pipelines. Environmentalists don’t like that, but speeding up the approvals process is not a bad idea – and something Canada could use, too.
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