Three Reasons Why Manchin Did A U-Turn On Climate Policy

Sustainability Three Reasons Why Manchin Did A U-Turn On Climate Policy Nives Dolsak and Aseem Prakash Contributor Opinions expressed by Forbes Contributors are their own. We write on environmental issues, climate politics and NGOs. New! Follow this author to improve your content experience.

Got it! Aug 3, 2022, 02:54am EDT | New! Click on the conversation bubble to join the conversation Got it! Share to Facebook Share to Twitter Share to Linkedin WASHINGTON, DC – Senator Joe Manchin (D-WV) heads to a vote in the Senate at the U. S. Capitol.

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[+] (Photo by Samuel Corum/Getty Images) Getty Images Last week on July 27, Senator Manchin (D-WV) and Senator Schumer (D-NY) announced the Inflation Reduction Act (IRA) which provides $369 billion for climate and energy projects, including a tax credit up to $7,500 for electric vehicles (EVs). The IRA was a surprise to many. After all, on December 19 , 2021, Manchin had withdrawn support for IRA’s previous incarnation, Build Back Better (BBB) Act, citing concerns about inflation.

On July 14, 2022, he went further, announcing an end to negotiations on even a slimmed-down BBB. Manchin has been critical of EV subsidies, an important climate priority in both the BBB and the IRA. On April 27 , 2022 he said: “There’s a waiting list for E.

V. s right now with a fuel price at $4, but they still want us to throw $5,000 or $7,000 or a $12,000 credit to buy an electric vehicle…It makes no sense to me whatsoever…. .

It’s absolutely ludicrous. ” On July 27, 2022, the day IRA was announced, inflation stood at 9. 1%, higher than 6.

4% in December 2021, when announced his opposition to BBB. Over the last six months, the wait time for EVs has not shortened either. So, why did Manchin agree to the IRA? And why now? Below we explore three explanations for Manchin’s policy reversal.

While these factors probably worked together, we examine them separately to highlight lessons for climate policymaking. West Virginia Politics MORE FOR YOU Is Carbon Capture Another Fossil Fuel Industry Con? Sustainable Fashion Wants Brands To Redefine Business Growth Trouble With Predicting Future Of Transportation Is That Today Gets In The Way Manchin represents one of the reddest states. In the 2020 Presidential elections, Trump’s vote share was 68.

6%, just behind Wyoming (69. 9%). For reference, Trump’s national vote share was 46.

8%. Manchin’s hold on the state’s electorate is declining. In the 2012 Senate elections, his vote share was 60.

6% . In 2018, it declined to 49. 6% .

His diminished political fortunes were further revealed last month in the Republican House primaries. Given his bipartisan appeal, he endorsed Representative David McKinley for the Republican ticket. But McKinley lost to Trump-endorsed Alexander Mooney by a sizeable margin, 35.

6% – 54. 2%. Trump, not Manchin, shapes West Virginia’s electoral politics.

If Manchin switches parties, he will probably face a tough primary challenge from a Trump-backed candidate—after all, Manchin supported Trump’s impeachment in February 2020 and again in 2021. Should Manchin decide to seek re-election in 2024 (which is likely given that he is hosting fundraisers ), he will need to do so as a Democrat. But he faces problems here as well.

If climate people are angry, he will surely get primaried; Bernie Sanders has already indicated that he will back a primary challenger. Even if Manchin survives the primaries, given his role in killing BBB, climate-leaning Democrats might not turn out to vote for him (or may even support a third-party candidate), which could cost him the election, given his small victory margin in 2018. For his 2024 reelection, Manchin has to mend fences with climate voters.

The IRA probably provided him with the golden opportunity to do so. Of course, this does not mean that climate voters will flock to him, but at least, he now has something important to say to them. The Window to Shape Policy is Closing While Manchin may want to mend fences with climate voters, why sign the IRA now? He could have waited until 2024 before agreeing to this deal.

We suggest that Manchin recognizes that his window of opportunity to shape climate policy may be closing because Republicans are likely going to take over the House in November elections. For now, the Senate (basically Manchin) decides the fate of climate legislation. But after November, the House may not pass such legislation.

This means that Manchin may not have climate legislations to work with. There is one more twist to the timing issue. Senate Minority leader Mitch McConnell (R-KY) had threatened to hold up another Democrats’ legislative priority, the CHIPS bill, which provides $280 billion to the semi-conductor sector, if the Senate passed the BBB.

But within 24 hours of the Senate passing the CHIPS bill, Manchin and Schumer announced the IRA. Did McConnell get played by Manchin? We need to wait for Manchin’s biography to learn more about this. The Larry Summers Factor The U.

S. is facing unprecedented inflation, the highest in 40 years . Three factors seem to be at work: government spending, Ukraine war, leading to increases in energy prices, and supply chain bottlenecks that began during the COVID-19 pandemic.

Manchin professes to be an inflation hawk and is worried about budgetary spending. After all, he opposed BBB for this reason. Why did his view on the inflationary impact of additional climate spending (IRA) change? Enter Larry Summers.

In February 2021, Summers had raised concerns about the inflationary impact of the American Rescue Plan. Prominent economists such as Janet Yellen and Paul Krugman discounted Summers’ inflation worries. In his February 11, 2021 Op-Ed, entitled, “Joe Biden is the big spender America wants,” Krugman wrote : “the only coherent objections to the Biden plan seem to be coming from some center-left economists who worry that it will lead to economic overheating.

Many, perhaps most other economists, myself included, disagree. . .

” But Summers has been proven correct and both Yellen and Krugman have acknowledged their error in judgment. If Larry Summers says that the IRA will not cause inflation, perhaps Manchin’s inflation worries are assuaged. Apparently, this is what happened .

Of course, we do not know about causality: if Summers convinced Manchin, or Manchin wanted to sign the IRA and Summers provided the cover fire. Again, we eagerly await Manchin’s biography (perhaps Summers’ as well). Implications for Climate Policy The American policy system has several veto points, which makes it frustratingly slow at times.

The IRA still faces several obstacles . Consider these two. The Senate Parliamentarian might deem some IRA provisions to be outside reconciliation’s scope (failing the Byrd Bath ).

Or, Senator Kyrsten Sinema (D-AZ), the other BBB holdout, may press for removing IRA provisions such as the tax on private-equity managers’ carried interest income. It will be interesting to see what sort of bargain Senator Schumer is able to strike with her. With the momentum behind the IRA, there is a decent likelihood that its modified version will get enacted.

The IRA’s climate and energy funding is about 4 times that of the 2009 American Recovery and Reinvestment Act. But beyond its substantive implications for renewable energy and automobile industries, the IRA strengthens the case for making climate policy through the legislature, instead of executive action. This procedural issue is crucial because the legislature is the popularly elected body.

Shortchanging it through executive action does not bode well for the long-term health of American democracy. Moreover, in the wake of the West Virginia vs. EPA ruling, the Supreme Court has limited the EPA’s ability to make regulations based on ambiguous Congressional mandates.

This means that for climate policy to survive in the long run, it should probably get enacted by Congress. While legislations are difficult to enact, they are also difficult to overturn. Thus, the IRA supports the long-term viability of climate policy and maintains the institutional integrity of the U.

S. policymaking system – and one might want to thank West Virginia politics, Larry Summers, and ironically, even the possibility of Republican House victory for it! Nives Dolsak and Aseem Prakash Editorial Standards Print Reprints & Permissions.