Great "New Yorker" story on the failed energy bill

In the October 11, 2010 The New Yorker, Ryan Lizza, reports: “As the World Burns: How the Senate and the White House missed their best chance to deal with climate change.” I’ll quote from it extensively, but if you don’t subscribe, you should definitely go to the library and read this story.

On April 20, 2010, Kerry, Graham and Lieberman met with Rahm Emanuel in the White House. Several democrats were going to oppose the legislation. Emanuel asked: “How many Republicans did you bring on?” Kerry answered five, including Graham. More than the 60 required.

Now going back in time. In January 2009, Lieberman-McCain were working one bill, and Boxer another. McCain would back out in the face of a conservative talk-radio opponent running in the Arizona primary.

March 2009: a senior white house official told the reporter:

“You need to have something like T. Boone Pickens and All Gore holding hands.” In exchange for setting a cap on emissions, Democrats would agree to increase in the production of natural gas … the only thing Pickens … cared about.

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 the power to regulated carbon, just as it regulates many other pollutants.

Part of the carrot was expanded drilling offshore, said the White House source.

“Carol Browner [head of EPA] says the fact of the matter is that the technology [for offshore drilling] is so good that after Katrina there was less spillage from those platforms than the amount you spill in a year filling up your car with gasoline.”

Coal producing states were most affected by the carbon cap: Pennsylvania, West Virginia, Ohio, Kentucky, Indiana, Illinois. This issue is one that has more geographical boundaries than partisan boundaries.

George Voinovich, of Ohio, told both Harry Reid, the Senate Majority Leader, and Lieberman that the right nuclear language could win his vote.

Meanwhile, the House bill, know as Waxman-Markey (for Edward J. Markey of Massachusetts), passed on June 26, 2009, by a vote of 219-212. Eight republicans supported it.

Several members who had committed their vote in support to Pelosi reneged. “One of them, Ciro Rodriguez, of Texas, ducked into the chamber, quickly cast a no vote, and then sprinted out.”

During the presidential primaries, Kerry was due to endorse Obama after the New Hampshire primary.

But Obama lost, and that night he nervously called Kerry and asked, “Are you still on board?” Kerry said he was. “Ninety-nine per cent of the politicians would have walked away at that moment, because the odds of winning the primaries were quite low,” Dan Pfeiffer, now Obama’s communications director, told me in a 2008 interview. “It was a huge moment.” Kerry and his aids believed that, if Obama was the President, Kerry’s endorsement would give him the inside track in the competition for the job as Secretary of State. But Obama passed him over.

Massachusetts senior senator, Ted Kennedy had been “the legislator;” Kerry was the “investigator.”

“This was Kerry’s opportunity to prove that he could be in a major, really historic piece of legislation,” Lieberman said.

Graham and Kerry agreed:

that their eventual bill would have to help the nuclear industry and expand oil drilling. As they wrote the article [a Times Op-Ed announcing their partnership], Graham introduced a third issue: revoking the EPA’s authority to regulate greenhouse gases. Kerry was furious, but eventually relented.

October 2009.

Graham came to the issue strictly as a dealmaker. He saw the Democrats interest in capping carbon emissions as an opportunity to boost the nuclear industry and to expand oil drilling.

He warmed up to the idea of the carbon cap.

Every lobbyist working on the issue wanted time with [Graham], because suddenly it became clear that he could be the central person in the process,” Krupp [Environmental Defense Fund] recalled. All sectors of the economy would be affected by putting a price on carbon, and Graham’s campaign account started to grow. In 2009, he raised nothing from the electric-utility PACSs and just fourteen thousand four hundred and fifty dollars from all PACs. In the first quarter of 2010 alone, the utilities sent him fourty-nine thousand dollars. Krupp introduced Graham to donors in New York connected to the EDF. On December 7th, Julian Robertson, and EDF board member, hosted Graham at a small gathering in his Manhattan apartment. Some New York guests gave money directly to Graham’s campaign account. Others, at Krupp’s suggestion, donated to a new group called South Carolina Conservatives for Energy Independence, which ran ads praising Graham in his home state.

Graham warned Kerry and Lieberman, the second Fox News gets wind of this, “it’s gonna be all cap-and-tax all the time, and it’s gonna become just a disaster for me on the airwaves.” Graham needed the legislation to move quickly.

December 2009. Obama puts health care first. Climate change becomes Obama’s “stepchild.”

After a year of negotiation, the KGL (Kerry, Graham, Lieberman) coalition had only one Republican, and the second most likely one, wanted to open up the Artic National Wildlife Refuge (Lisa Murkowski).

Olympia Snowe, the moderate Republican from Maine, was known “for stringing Democrats along.” She had “a new demand” every time she met KGL. “She used similar tactics to win concessions in Obama’s health-care bill, which she eventually voted against.”

Susan Collins, the other Republican from Maine, was sponsoring the “cap-and-dividend” bill with Washington’s Maria Cantwell.

In January 2010, Kerry meets with the Chamber of Commerce and offers them “preemption from carbon being regulated by the EPA under the Clean Air Act, with few strings attached.” The chamber said that they’d start working with KGL. “It was a promising beginning.”

In exchange for Pickens publicly endorsing the bill, he won “a series of tax-incentives to encourage the use of natural-gas vehicles and the installation of natural-gas fueling stations.”

Shell, BP, and Conoco Phillips 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 White House thought such a “linked-fee” was disastrous because it would inevitably be labeled a “gas tax.”

On March 31, 2010 Obama announced that large portions of the US water 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.

“There had been no communication with the senators actually writing the bill, and they felt betrayed.” Had the White House talked to other senators? Like Reid? “Obama had now given away what the senators were planning to trade.” This was the third blunder from the White House, to the KGL point of view. The first two:

In February, the President’s budget included $54.5B 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, eight moderate Democrats sent the EPS 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 that KGL wanted to negotiate with their colleagues.

Axelrod “believed that being closely associated with the messiness of congressional horse-trading was destroying Obama’s reputation.”

A White House official said “Fuck whatever Congress wants, we’re not for them.”

And then comes the crisis that cut Graham away from the bill. It was on April 15th. It was about the “linked fee.” It is worth reading the New Yorker article particularly at this point, because the sequence of mistakes and miscommunications are complex. Eventually on April 17th, the White House issued a statement “which said that the Senators don’t support a gas tax.” “That evening 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.”

Now the horse-trading, absent a coordinated strategy, got desperate. More money to specific people. Delayed implementation until 2015, and eventually reducing the cap below the House Bill’s 17%. On April 22, Earth Day, the Deepwater Horizon drilling rig sank to the bottom of the Gulf and the spill began. And finally Harry Reid under pressure in Nevada to win his race, put Immigration before Energy–an Immigration bill that at that time didn’t even exist. KGL urged Reid to support the “linked-fee.” Reid was only willing to say he’d “review the bill.” Graham walked away.

Bill Kimzey,  December 5, 2010