Ryan Lizza has an interesting article coming out in the new New Yorker about the negotiations behind the failed Senate bill to address carbon emissions. The House of course did pass such a bill, but it was one of many things the House passed that went to die in the Senate (which insists on acting as if it takes 60 votes to pass anything).
One thing that becomes clear is the White House really dropped the ball on this issue. For all the douchebaggery of Lieberman and Graham they worked in earnest with Kerry to get something done. You may remember Graham lamely saying that Reid's decision to put immigration reform before the energy bill meant he could no longer support the latter... (and of course neither ended up getting voted on) At the time many, including myself, just concluded he was being what the blogger Atrios would call a WATB. But he actually had a legitimate complaint, which for obvious reasons he couldn't state publicly: in order to sell this to his constituents he needed to plausibly deny that the carbon cap would in effect be a new tax. But rather than work with him on this the White House told Fox News that Graham wanted to raise peoples taxes but that they wouldn't let him. And when Graham asked Harry Reid for his support, he refused. So, if Lizza's account is accurate it would seem Graham had every right to be pissed off that after going out on a limb to get something done Democrats made no effort to be helpful, and in one instance intentionally undermined him.
Furthermore the White House made HUGE strategic errors in increasing off shore drilling and nuclear power without consulting KGL (Kerry/Graham/Lieberman). These were the incentives they had built into the bill in order to garner Republican support. Now that the White House had just given those away Graham had nothing to take to Republicans to say he had "won" for them.
Here's my condensed version of the article:
In Barack Obama’s primary-campaign victory speech, in St. Paul, Minnesota, he said that his election would be a historical turning point on two pressing issues: health care and climate change. “We will be able to look back and tell our children that this was the moment when we began to provide care for the sick,” he said. “When the rise of the oceans began to slow and our planet began to heal.” During the campaign, he often argued that climate change was an essential part of a national energy strategy. “Energy we have to deal with today,” Obama said in a debate with McCain. “Health care is priority No. 2.”
After the election, Obama decided to work on both issues simultaneously. Representative Henry Waxman moved climate change through the House, while Max Baucus, of Montana, moved health care in the Senate. “The plan was to throw two things against the wall, and see which one looks more promising,” a senior Administration official said. Obama, in a February, 2009, address to Congress, said, “To truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution.”
In March of 2009, a senior White House official outlined a strategy for a “grand bargain,” in which Democrats would capitulate to Republicans on some long-cherished environmental beliefs in exchange for a cap on carbon emissions. “You need to have something like T. Boone Pickens and Al Gore holding hands,” the White House official told me. In exchange for setting a cap on emissions, Democrats would agree to an increase in the production of natural gas (the only thing that Pickens, the Texas oil-and-gas billionaire, cared about), nuclear power, and offshore oil. If Republicans didn’t respond to the proposed deals, the White House could push them to the table by making a threat through the Environmental Protection Agency, which had recently been granted power to regulate carbon, just as it regulates many other air pollutants.
Graham warned Lieberman and Kerry that they needed to get as far as they could in negotiating the bill “before Fox News got wind of the fact that this was a serious process,” one of the people involved in the negotiations said. “He would say, ‘The second they focus on us, it’s gonna be all cap-and-tax all the time, and it’s gonna become just a disaster for me on the airwaves. We have to move this along as quickly as possible.’ ”
In early December of 2009, Lieberman’s office approached Jay Heimbach, the White House official in charge of monitoring the Senate climate debate. For Obama, health care had become the legislation that stuck to the wall. As a consequence of the long debate over that issue, climate change became, according to a senior White House official, Obama’s “stepchild.” Carol Browner had just three aides working directly for her. “Hey, change the entire economy, and here are three staffers to do it!” a former Lieberman adviser noted bitterly. “It’s a bit of a joke.” Heimbach attended meetings with the K.G.L. staffers but almost never expressed a policy preference or revealed White House thinking. “It’s a drum circle,” one Senate aide lamented. “They come by, ‘How are you feeling? Where do you think the votes are? What do you think we should do?’ It’s never ‘Here’s the plan, here’s what we’re doing.’”
Lieberman’s office proposed to Heimbach that the first element of the bill to negotiate was the language about oil drilling. Lieberman and Graham believed it would send a clear message to Republicans and moderate Democrats that there were parts of the bill they would support. Heimbach favored doing anything to attract Republicans, and, though he wouldn’t take any specific actions, he generally supported the strategy.
Graham asked Senator Lisa Murkowski, of Alaska, to write the drilling language. Murkowski was up for reëlection and would soon be facing a primary against a Sarah Palin-backed Tea Party candidate. Her price for considering a climate-change bill with John Kerry’s name attached to it was high: she handed over a set of ideas for drastically expanding drilling, which included a provision to open the Arctic National Wildlife Refuge to oil companies. Democrats had spent decades protecting ANWR, and even Graham didn’t support drilling there. But he passed the Murkowski language on to his colleagues to see how they would react.
The K.G.L. coalition had two theories about how to win over Republicans and moderate Democrats. One was to negotiate directly with them and offer them something specific for their support. After a year of that method, the coalition had one Republican, and its next most likely target wanted to drill in ANWR. Other Republicans were slipping away.
The second theory about how to win the Republicans’ support was to go straight to their industry backers. If the oil companies and the nuclear industry and the utilities could be persuaded to support the legislation, then they would lobby Republicans. Rosengarten called the strategy “If you build it, they will come.” This was the strategy Obama used to pass health care. He sent his toughest political operatives—like Rahm Emanuel and Jim Messina—to cut deals with the pharmaceutical industry and hospitals, which at key points refrained from attacking the bill. (The pharmaceutical industry actually ran ads thanking Harry Reid for passing the bill.) In early 2010, K.G.L. shifted its focus from the Senate to industry.
Perhaps ironically it was the oil industry that asked for a more straight forward tax system (known as a 'linked fee') instead of cap and trade. They said it would reduce uncertainty (although I can't help but wonder if their real motivation was the knowledge that such language would be a harder sell politically, making the legislation less likely to pass).
Here's what happened:
The hardest choices involved the oil industry, which, by powering our transportation, is responsible for almost a third of all carbon emissions in the U.S. Under Waxman-Markey, oil companies would have to buy government permission slips, known as allowances, to cover all the greenhouse gases emitted by cars, trucks, and other vehicles. The oil companies argued that having to buy permits on the carbon market, where the price fluctuated daily, would wreck America’s fragile domestic refining industry. Instead, three major oil refiners—Shell, B.P., and ConocoPhillips—proposed that they pay a fee based on the total number of gallons of gasoline they sold linked to the average price of carbon over the previous three months. The oil companies called the idea “a linked fee.”
On March 23rd, the three senators met to discuss the linked fee, which they had been arguing about for weeks. The environmental community and the White House, which rarely weighed in on its policy preferences, thought the linked fee was disastrous because it would inevitably be labelled a “gas tax.” At one meeting, Joe Aldy, a staffer on Obama’s National Economic Council, advised Kerry, Graham, and Lieberman’s staffers to kill it. According to a person involved in the negotiations, Kerry told his colleagues that the Democrats might lose their congressional majority over the issue. But Lieberman, who had first proposed the linked fee, and Graham supported it.
Kerry, despite his hesitations, wanted the oil companies, which had already spent millions attacking Waxman-Markey, to support his bill. So the senators proposed a deal: the oil companies would get the policy they desired if they agreed to a ceasefire. According to someone present, Kerry told his colleagues at the March meeting, “Shell, B.P., and Conoco are going to need to silence the rest of the industry.” The deal was specific. The ceasefire would last from the day of the bill’s introduction until the E.P.A. released its economic analysis of the legislation, approximately six weeks later. Afterward, the industry could say whatever it wanted. “This was the grand bargain that we struck with the refiners,” one of the people involved said. “We would work with them to engineer this separate mechanism in exchange for the American Petroleum Institute being quiet. They would not run ads, they would not lobby members of Congress, and they would not refer to our bill as a carbon tax.” At another meeting, the three senators and the heads of the three oil companies discussed a phrase they could all use to market the policy: a “fee on polluters.”
On March 31st, Obama announced that large portions of U.S. waters in the Gulf of Mexico, the Arctic Ocean, and off the East Coast—from the mid-Atlantic to central Florida—would be newly available for oil and gas drilling. Two days later, he said, “It turns out, by the way, that oil rigs today generally don’t cause spills. They are technologically very advanced. Even during Katrina, the spills didn’t come from the oil rigs, they came from the refineries onshore.” From the outside, it looked as if the Obama Administration were coördinating closely with Democrats in the Senate. Republicans and the oil industry wanted more domestic drilling, and Obama had just given it to them. He seemed to be delivering on the grand bargain that his aides had talked about at the start of the Administration.
But there had been no communication with the senators actually writing the bill, and they felt betrayed. When Graham’s energy staffer learned of the announcement, the night before, he was “apoplectic,” according to a colleague. The group had dispensed with the idea of drilling in ANWR, but it was prepared to open up vast portions of the Gulf and the East Coast. Obama had now given away what the senators were planning to trade.
This was the third time that the White House had blundered. In February, the President’s budget proposal included $54.5 billion in new nuclear loan guarantees. Graham was also trying to use the promise of more loan guarantees to lure Republicans to the bill, but now the White House had simply handed the money over. Later that month, a group of eight moderate Democrats sent the E.P.A. a letter asking the agency to slow down its plans to regulate carbon, and the agency promised to delay any implementation until 2011. Again, that was a promise Kerry, Graham, and Lieberman wanted to negotiate with their colleagues. Obama had served the dessert before the children even promised to eat their spinach. Graham was the only Republican negotiating on the climate bill, and now he had virtually nothing left to take to his Republican colleagues.
But the Administration had grown wary of cutting the kind of deals that the senators needed to pass cap-and-trade. The long and brutal health-care fight had caused a rift in the White House over legislative strategy. One camp, led by Phil Schiliro, Obama’s top congressional liaison, was composed of former congressional aides who argued that Obama needed to insert himself in the legislative process if he was going to pass the ambitious agenda that he had campaigned on. The other group, led by David Axelrod, believed that being closely associated with the messiness of congressional horse-trading was destroying Obama’s reputation.
“We ran as an outsider and then decided to be an insider to get things done,” a senior White House official said. According to the official, Schiliro and the insiders argued, “You’ve got to own Congress,” while Axelrod and the outsiders argued, “Fuck whatever Congress wants, we’re not for them.” The official added, “We probably did lose part of our brand. Obama turned into exactly what we promised ourselves he wasn’t going to be, which is the leader of parliament. We became the majority leader of both houses, and we ceded the Presidency.” Schiliro’s side won the debate over how the White House should approach health care, but in 2010, when the Senate took up cap-and-trade, Axelrod’s side was ascendant. Emanuel, for example, called Reid’s office in March and suggested that the Senate abandon cap-and-trade in favor of a modest bill that would simply require utilities to generate more electricity from clean sources.
In early April, according to two K.G.L. aides, someone at the Congressional Budget Office told Kerry that its economists, when analyzing the bill, would describe the linked fee as a tax. After learning that, the three senators met with lobbyists for the big oil firms, and Kerry offered a new proposal: the refiners would have to buy permits, but the government would sell them at a stable price outside the regular trading system. This arrangement would make no economic difference to consumers: the oil companies would pass the costs on to drivers whether they paid a linked fee or bought special permits. But Kerry thought that the phraseology could determine whether the bill survived or died. The refiners surprised everyone by readily agreeing to the new terms. The linked fee was dead, and so, it seemed, was the threat of Kerry, Graham, and Lieberman’s bill being brought down by opponents attacking it as a gas tax.
Two days later, on April 15th, Emanuel and Browner hosted a group of prominent environmentalists at the White House for an 11 A.M. meeting. For weeks, the linked fee had been a hot topic among Washington climate-change geeks. Now the two groups that hated the policy the most were in the same room. According to people at the meeting, the White House aides and some of the environmentalists, including Carl Pope, the chairman of the Sierra Club, expressed their contempt for the linked fee: even if it was a fine idea on the merits, it was political poison. The White House aides and the environmentalists either didn’t know that the fee had been dropped from the bill or didn’t think the change was significant. The meeting lasted about thirty minutes.
Just after noon, Rimkunas, Graham’s climate-policy adviser, sent Rosengarten an e-mail. The subject was “Go to Fox website and look at gas tax article asap.” She clicked on Foxnews.com: “WH Opposes Higher Gas Taxes Floated by S.C. GOP Sen. Graham in Emerging Senate Energy Bill.” The White House double-crossed us, she thought. The report, by Major Garrett, then the Fox News White House correspondent, cited “senior administration sources” and said that the “Obama White House opposes a move in the Senate, led by South Carolina Republican Lindsey Graham, to raise federal gasoline taxes within still-developing legislation to reduce green house gas emissions.” Including two updates to his original story, Garrett used the word “tax” thirty-four times.
“This is horrific,” Rosengarten e-mailed Rimkunas.
“It needs to be fixed,” he responded. “Never seen lg this pissed.”
“We’re calling Schiliro and getting the WH to publicly correct.”
Graham was “screaming profanities,” one of the K.G.L. staffers said. In addition to climate change, he was working with Democrats on immigration and on resolving the status of the prison at Guantánamo Bay. He was one of only nine Republicans to vote for Obama’s first Supreme Court nominee, Sonia Sotomayor. Now Obama aides were accusing him of backing a gas tax, which wasn’t his idea and wasn’t even in the draft bill. Worst of all, the leakers went to Fox News, a move which they knew would cause Graham the most damage. He called one of his policy advisers that day and asked, “Did you see what they just did to me?” The adviser said, “It made him question, ‘Do they really want to get this done or are they just posturing here? Because why would they do something like this if they wanted to get it done?’ It was more than an attempt to kill the idea. It was also an attempt to tag him with the idea, and, if you want him to be an ally on the issue, why would you do that?” Graham’s legislative director, Jennifer Olson, argued that he should withdraw from K.G.L. that day.
Kerry called Browner and yelled, “It wasn’t his idea!” He added, “It’s not a gas tax. You’ve got to defend our guy. We’ve been negotiating in good faith, and how can you go and turn on him like this?” After talking to Graham, Lieberman walked into the office of his legislative director, Todd Stein. “If we don’t fix this,” the Senator said, “this could be the death of the bill.”
On April 17th, two days after the Fox story, an activist named William Gheen, speaking at a Tea Party event in Greenville, South Carolina, told the crowd, “I’m a tolerant person. I don’t care about your private life, Lindsey, but as our U.S. senator I need to figure out why you’re trying to sell out your own countrymen, and I need to make sure you being gay isn’t it.” The question, with its false assertion that Graham is gay, turned into a viral video on the Web. Then Newt Gingrich’s group, American Solutions, whose largest donors include coal and electric-utility interests, began targeting Graham with a flurry of online articles about the “Kerry-Graham-Lieberman gas tax bill.” That week, the group launched a campaign in South Carolina urging conservatives to call Graham’s office “and ask him not to introduce new gas taxes.”
Kerry and Lieberman spent hours alone with Graham, trying to placate him. They forced the White House to issue a statement, which said that “the Senators don’t support a gas tax.” Graham had talked to Emanuel and was satisfied that the chief of staff wasn’t the source of the leak. Eventually, the people involved believed that they had mollified him. By the time Graham showed up at the conference table in Emanuel’s White House office on April 20th, he had calmed down. But, if he was going to suffer a ferocious backlash back home, he needed the White House to be as committed as he was. He was not encouraged when Axelrod, speaking about Democrats in Congress, noted, “The horse has been ridden hard this year and just wants to go back to the barn.”
That evening, hours after the meeting ended, a bubble of methane gas blasted out of a well of the Deepwater Horizon oil rig, in the Gulf of Mexico, setting the rig on fire and killing eleven men. At the time, it seemed like a tragic accident, far away and of little consequence.
Kerry and Lieberman were desperate to accommodate Graham’s every request. The dynamics within the group changed. Aides marvelled at how Kerry and Lieberman would walk down the hallway with their arms around each other, while Lieberman and Graham’s relationship was tested by Graham’s escalating demands.
the Deepwater Horizon drilling rig had sunk to the bottom of the Gulf. The spill began to spread; soon it would show signs of becoming one of the worst environmental disasters in history. Then, suddenly, there was a new problem: Harry Reid, the Senate Majority Leader, said that he wanted to pass immigration reform before the climate-change bill. It was a cynical ploy. Everyone in the Senate knew that there was no immigration bill. Reid was in a tough reëlection, and immigration activists, influential in his home state of Nevada, were pressuring him.
Senior aides at the White House were shocked by Reid’s statement. “We were doing well until Reid gave a speech and said it was immigration first. News to us!” a senior Administration official said. “It was kind of like, ‘Whoa, what do we do now? Where did that come from?’ ” Reid’s office seemed to be embarking on a rogue operation. In a three-day period, Reid’s office and unnamed Senate Democrats leaked to Roll Call, The Hill, the Associated Press, Politico, and the Wall Street Journal that the phantom immigration bill would be considered before the climate bill. Graham once again said that he felt betrayed. “This comes out of left field,” he told reporters. “I’m working as earnestly as I can to craft climate and energy independence, clean air and jobs, and now we’re being told that we’re going to immigration. This destroys the ability to do something on energy and climate.”
Graham didn’t tell the press that immigration was mostly just an excuse for his anger. That day, he had urged Reid to release a statement supporting the modified linked fee that Kerry, Graham, and Lieberman had used in negotiating with the refiners. Reid’s office greeted the request with suspicion. Reid and Graham didn’t trust each other. Reid’s aides thought the Republican leadership was trying to trick Reid into supporting something that sounded like a gas tax. The fact that Kerry and Lieberman were also supporters of the proposal did little to allay Reid’s fears. His aides drafted a pro-forma statement for Graham that promised simply that Reid would review the legislation. Graham dismissed the statement as meaningless. During one phone call, Graham shouted some vulgarities at Reid and the line went dead. The Majority Leader had hung up the phone.
At 10 P.M. the next day, Rimkunas sent Rosengarten an e-mail. They had worked together for seven months on the bill. Rosengarten had postponed her honeymoon—twice—to finish the project. They had travelled to Copenhagen together for the international climate conference and often teamed up to oppose Kerry’s office during internal debates. “Sorry buddy” is all the e-mail said. It was devastating. “Matt’s e-mail was a life low point,” she said. “It was actually soul-crushing.”
The next morning, a Saturday, Graham abandoned the talks. Lieberman was observing Shabbat and thus couldn’t work, use electrical devices, or talk on the phone. When his aides explained what was happening, he invoked a Talmudic exception allowing an Orthodox Jew to violate the Shabbat commandments “for the good of the community.” Kerry was in Massachusetts and immediately flew to Washington. The two men spent the morning trying to persuade Graham to stay. At about noon, Graham had a final conversation with Reid, who had nothing more to offer. Graham was out. He wrote a statement, and Olson, his legislative director, e-mailed a copy to Lieberman’s office. The public statement cited immigration as the issue, but attached was a note from Olson explaining that Graham was never going to receive the cover he needed from Reid on how they dealt with the oil refiners.
Rosengarten got the message on her BlackBerry while she was on the phone with Pickens’s policy people, who had no idea about the unfolding drama and wanted to make sure that their natural-gas goodies had survived the final draft of the bill. K.G.L., perhaps the last best chance to deal with global warming in the Obama era, was officially dead. As she read Graham’s definitive goodbye letter, tears streamed down her face.
By the end of April, about sixty thousand barrels of oil a day were flowing into the Gulf of Mexico. To many environmentalists, the Deepwater Horizon catastrophe was a potential turning point, a disaster that might resurrect the climate legislation. But in Washington the oil spill had the opposite effect. Kerry and Lieberman were left sponsoring a bill with a sweeping expansion of offshore drilling at a moment when the newspapers were filled with photographs of birds soaking in oil. Even worse, the lone Republican, who had written the oil-drilling section to appeal to his Republican colleagues, was gone. The White House’s “grand bargain” of oil drilling in exchange for a cap on carbon had backfired spectacularly.
As the Senate debate expired this summer, a longtime environmental lobbyist told me that he believed the “real tragedy” surrounding the issue was that Obama understood it profoundly. “I believe Barack Obama understands that fifty years from now no one’s going to know about health care,” the lobbyist said. “Economic historians will know that we had a recession at this time. Everybody is going to be thinking about whether Barack Obama was the James Buchanan of climate change.”
The environment is my top issue, but I supported Obama's decision to pursue Health Care first because I thought that once the public saw how well that worked out Obama would have that much more momentum to tackle other issues. As it turns out some of the benefits just kicked in last week, and others won't be felt for years. It will be another four or five years before the public can really assess HCR. Meanwhile the poor economy seems to be sapping the White House's ability to address big problems. Hindsight 20/20, but in retrospect I think Energy should have come first.