Democratic divisions stall U.S. cap-and-trade: John Kemp

Wed Apr 8, 2009 8:25am EDT

-- John Kemp is a Reuters columnist. The views expressed are his own --

By John Kemp

LONDON (Reuters) - Prospects for enacting a cap-and-trade program regulating U.S. greenhouse gas emissions later this year have receded following a vote in the Senate exposing deep divisions within the Democratic Party.

On April 1, 26 Democratic senators broke with the majority of their colleagues and both the party's Senate leaders to join all 41 Republicans voting for an amendment to the annual budget resolution forbidding use of the budget reconciliation process to pass climate change legislation involving a cap-and-trade system.

In effect, the amendment ensures approval of a cap-and-trade system will require a minimum of 60 votes rather than a simple majority of 50 in the 100-member chamber. Since Democratic leaders do not currently have anywhere like that number of votes for the measure, and little time to build popular support, it is going nowhere in the near term.

BUDGET RECONCILIATION

Budget reconciliation is a two-stage process intended to expedite passage of important spending and taxing bills the federal government needs each year to maintain its operations:

* First, reconciliation instructions are included in a budget resolution instructing one or more congressional committees to recommend legislative changes to bring levels of spending, taxation or debt into conformity with overall totals laid out in the budget resolution itself.

* Second, committee recommendations are packaged into one or more "reconciliation bills" considered under special procedures on the floor of the House of Representatives and the Senate.

Reconciliation is especially important in the Senate, where the tradition of unlimited debate allows even one senator to block passage of legislation by threatening to filibuster it.

Proponents of controversial legislation need to muster 60 votes to invoke Senate Rule XXII (cloture, or motion to proceed), in order to cut off debate and move to a vote on the substance of the legislation.

Contentious bills therefore require two majorities: a super-majority of 60 votes to prevail on the motion to proceed, then a simple majority of 50 votes to prevail on the substantive motion. In practice the real battle centers on the motion to proceed because it is harder to win.

The reconciliation process is crucial because it curbs unlimited debate. In the Senate, debate on a reconciliation bill is limited to 20 hours, after which the chamber can continue to consider amendments but without further debate. Because there is no filibuster, the effective majority needed to pass legislation drops from 60 votes to 50.

Reconciliation was originally intended to expedite passage of tax and spending bills. It was never intended for other legislation, and the process contains safeguards to prevent it being misused to pass other bills. But the safeguards are flexible. In the past, reconciliation has been used to force through controversial measures that would not otherwise be able to secure the 60 votes needed to stop a filibuster.

Cap-and-trade could easily have been presented as a budget measure subject to reconciliation because permit sales would raise revenue for the federal government -- and those revenues have already been included in the president's outline budget [ID:nLR468410].

Alive to this risk, opponents have moved to exempt cap-and- trade from the reconciliation process, ensuring it will still need 60 votes to pass.

DEMOCRATIC DIVISIONS ON SHOW

The Democratic Party currently controls the Senate with a majority of 58 (56 Democrats and two independents caucusing with them).

But the party is deeply split on proposals to implement a cap-and-trade program that would raise prices for consumers and penalize states with a heavy industrial base or large fossil-fuel resources.

Party leaders and the Obama administration cannot count on 60 senators to overcome a filibuster -- which is why proponents were hoping to leave open the option of presenting it as a reconciliation bill that would need only 50 votes.

The extent of the Democratic Party's divisions was on display in last week's vote line up:

* Voting for the amendment (and therefore against using reconciliation) were 26 Democrats from Midwestern and industrial states (10) plus Democrats from conservative states and those in the heartland (16).

* Voting against the amendment (in favor of using reconciliation) were 31 Democrats from the west and east coasts (23), plus senators from grain states that would benefit from any move away from fossil fuels (2), the party's floor leaders (2), and only a handful of others representing the interior (4).

The vote illustrates the fault line within the Democratic Party between legislators from coastal and liberal states who favor cap and trade, and those from industrial and conservative areas in the Midwest and rest of the country worried about a popular backlash in response to higher energy prices and the implications for local industry.

The administration will need to buy off many of these Midwestern and conservative senators to have any chance of enacting a program.

President Barack Obama foreshadowed this effort when he told reporters recently the administration would probably have to give permits away free to some industries in the early stages to build support. It will also have to mount a major public relations campaign to build popular support.

But given the crowded congressional agenda and the competing demands on the president's time, it will almost certainly be impossible to mount a major lobbying effort and get cap-and- trade enacted in 2009, which puts the effective date of any scheme back until at least 2012 or 2013.

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