By Mark Young,
President, Rational Games, Inc.
Not only Washington D.C. was shocked and buzzing on August 2 when Chuck Schumer and Joe Manchin announced they had clinched a deal on the Biden Administration’s climate change bill – just two weeks after Manchin’s categorical public statement that he could never support it. How did this historic negotiation come about?
The answer is the Back Channel. First in a windowless basement, then remotely as each of the two consecutively acquired COVID (!), with plenty of emotion and in complete secrecy. Not even the President was kept apprised of the progress of the talks.
What has been agreed now is less than half the size of the original bill, but is still, at $369 billion, three times the size of any previous climate change bill in US history. If fully implemented, it could reduce emissions to 40% (the US promise was 50 % by 2030). As such, it represents a heroic political achievement of astonishing magnitude.
What enabled this breakthrough? I think three things:
- The externalities were favorable. The cost of renewable energy is down significantly, and public support for doing something substantive on this issue has risen as well, even in West Virginia. So the political costs of the agreement were manageable.
- Successful appeal to interests. Manchin voiced a strong concern about inflation and said he was unable to sign anything until the latest numbers are published in late August. Larry Summers, as a helpful third party, managed to provide some within 48 hours. With this objection out of the way, Schumer managed to appeal to Manchin’s pride and desire for a “place in history”.
- The power of reframing. The simple act of renaming this bill as the “Inflation Reduction Act” (although it is only indirectly concerned with inflation) made it much easier for Manchin to pirouette to support, knowing his supporters were unlikely to dig further into the content. And President Biden was careful to stick to the positive narrative of “green growth” rather than repeating the doomsday warnings of the Democratic Left.
- A host of concessions. Predictably, Manchin cashed in his veto power handsomely. While we will probably never know what was in the gift bag, certainly it included a cancellation of tax increases on the wealthy, a new shale gas pipeline in WV, new drilling off the Gulf of Mexico and generous benefits for miners’ black lung disease and lower prescription drug prices. Quite a haul.
The Republicans furious and the White House jubilant. Talk about a place in history!