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RECONCILIATION GUIDE: Democrats’ victory in the Georgia runoffs unlocks a powerful procedural tool called budget reconciliation, which enables the passage of fiscal legislation with a simple majority instead of 60 votes, meaning Republican votes aren’t necessary.
Republicans with full control of Washington used it in 2017 to pass tax cuts, and liberal activists are eying it as a mechanism in 2021 to pass tax and spending climate policies.
Josh spoke with experts on congressional procedure to understand how Democrats could use reconciliation, whether its power weakens at all in a 50-50 Senate, and some of its limitations and challenges.
We answer the most burning questions below.
Was reconciliation allowed in 2001, the last time there was a 50-50 Senate? Yes. Some have speculated that Republicans could restrict the ability of Democrats to use reconciliation since committees, where most legislation originates, could have an equal number of members from each party, meaning they could deadlock on a vote.
At the start of the 107th Congress in 2001, Republicans had full control of Washington by similar margins as Democrats will have. George W. Bush was president, and Vice President Dick Cheney was the tie-breaking vote, as Kamala Harris will be in the 117th Congress.
In 2001, Senate Majority Leader Trent Lott, a Republican, and Minority Leader Tom Daschle, a Democrat, worked out a power sharing agreement. It did not mention reconciliation. But it adopted rules that allowed Lott or Daschle to move bills directly to the floor if they get stuck in committee because there is a tie vote.
Why does that matter for reconciliation? This matters for reconciliation because to use it, the Budget Committee typically has to approve a budget resolution that contains reconciliation “instructions” essentially unlocking the ability to use the tool.
Senate Democratic Leader Chuck Schumer and Republican Leader Mitch McConnell are expected to work out a similar agreement like the 2001 version allowing legislation to be brought to the floor in the event of a split committee like the Budget panel.
“Procedurally there is nothing that would prevent the process of reconciliation from proceeding,” Bill Hoagland, who was staff director of the Senate Budget Committee in 2001, told Josh. Hoagland is now senior vice president at the Bipartisan Policy Center.
Is there a limited number of opportunities for Democrats to use reconciliation? Yes. Congress must pair reconciliation with passing a budget resolution, which is normally not an easy task. Democrats are expected to have as many as three chances to use reconciliation during the 117th Congress since Republicans never adopted a fiscal 2021 budget resolution. So Democrats can still pass a budget resolution for this fiscal year before it ends in September, and also have later opportunities for fiscal 2022 and 2023.
How could Democrats use those opportunities? Experts expect Democrats to quickly pass a very short budget resolution for fiscal 2021 that makes reconciliation available for approving $2,000 stimulus checks, an immediate priority.
Democrats then would look to pass a different set of reconciliation instructions for other priorities to tag with the 2022 and 2023 budget resolutions. While Republicans prioritized tax cuts in 2017, Democrats are expected to pursue tax increases to pay for an infrastructure plan, which could have green provisions such as construction of EV charging stations and energy-efficient homes and buildings.
A carbon tax could theoretically be a good fit here as a way to generate revenue for spending, but Biden and Democrats have not been emphasizing that policy as of late. Biden is unlikely to seek tax increases during his first months given the struggling economy.
Democrats could also use reconciliation to pass climate measures connected to the tax code, such as subsidies for clean energy technologies.
What are the odds Democrats succeed using reconciliation? If recent history is a guide, it’s not a gimme for passing legislation. Republicans failed to pass repeal of Obamacare through reconciliation, after the late Sen. John McCain memorably delivered thumbs down, denying the GOP 50 votes. Democrats, assuming no Republican votes, will have to get conservative Joe Manchin, set to chair the Energy Committee, and liberal Bernie Sanders, who will chair the Budget Committee, on the same page.
“Reconciliation is really hard,” said James Wallner, a former executive director of the conservative Senate Steering Committee who is now a senior fellow at the R Street Institute. “You need a policy that divides Republicans and Democrats evenly and cleanly and all the Democrats agree on it.”
Do Democrats have to go at it alone? No. Democrats, of course, could pick off a few Republican votes among an emerging centrist power center of swing votes that’s expected to include Mitt Romney, Susan Collins, and Lisa Murkowski. Reconciliation bills have been bipartisan in the past, including in 2001 during the last 50-50 Congress, when 12 Democrats crossed over to pass Bush’s tax cuts.
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OIL EXECUTIVE AND DONOR TURNS ON TRUMP OVER RIOT: “No tax cut is worth being branded a domestic terrorist,” Dan Eberhart, who is the CEO of an oil services company, Canary, told Josh. President Trump has “made himself toxic by turning his rhetoric into violence, which is a line no politician should ever cross. Words matter.”
“He’s f—— crazy,” Eberhart added. “You put up with crazy because you want conservative policies that are pro-growth and pro-business, but he has taken this three steps too far. Look, dude, you lost.”
Eberhart, who has donated heavily to Republican lawmakers in addition to Trump in recent years, said the president’s actions “delegitimized his administration’s achievements” and made it “impossible to support him.”
Eberhart, however, stopped short of calling for Trump’s removal before the inauguration on Jan. 20, which he considers pointless given the short duration until Biden takes office.
But Eberhart is the latest of many energy and business leaders who have abandoned Trump for the president’s role in the riots after four years of supporting his administration’s weakening of environmental regulations and pro-fossil fuel agenda.
WHEELER STOPS SHORT OF FAULTING TRUMP: EPA Administrator Andrew Wheeler said yesterday in a note to EPA staff he was “completely disgusted” by the riots at the Capitol, but he didn’t mention Trump and vowed to stay on and continue the transition.
“There is no place for violence in settling political disputes,” Wheeler said in the note to staff. He said the agency has been cooperating with the transition, providing the Biden team with hundreds of documents and more than 50 briefings.
Worth noting: Wheeler is traveling the latter half of this week in Costa Rica, for a visit focused on marine litter, recycling, and joint agriculture initiatives, according to the agency. All events the administrator is attending there are closed to press.
BROUILLETTE STAYING THROUGH THE END TOO: Energy Secretary Dan Brouillette will be staying around and seems unlikely to support removing Trump from office before Inauguration.
Brouillette tweeted yesterday that he’s “pleased” Trump finally committed to a “peaceful transition of power to President-elect Biden.”
He said he remains “fully focused” on his duties and is “committed to providing the support and resources needed to ensure a smooth transition within the Department.”
BUT HIS PRESS TEAM IS MOVING ON: The Energy Department’s press secretary, Jess Szymanski, announced she is leaving today, notifying reporters that she’ll start a new role next week as a media spokesperson for the American Petroleum Institute.
Szymanski, who’s been at DOE since 2017, is departing on the same day as Shaylyn Hynes, the director of media affairs for the agency, who is finishing up today before joining Venture Global LNG as vice president of strategic communications.
2020 TIED FOR THE HOTTEST YEAR ON RECORD: Last year tied with 2016 as the world’s warmest year on record, capping off the hottest decade ever recorded, Europe’s Copernicus Climate Change Service said in new data this morning.
While 2016 included a strong warming El Niño event that contributed to driving temperatures up, though, 2020 experienced a cooling La Niña, the researchers noted. That means warming caused by rising greenhouse gas concentrations in the atmosphere is increasingly overtaking any slight cooling effect a La Niña event would have.
2020 also saw massive monetary losses from natural disasters, totaling $210 billion globally, according to data released yesterday by insurer Munich Re. The U.S. accounted for a significant share of $95 billion, due to an unprecedented Atlantic hurricane season, hard-hitting thunderstorms in the Midwest, and devastating wildfires in the West.
LATEST BIDEN CABINET PICKS: Biden announced new Cabinet picks yesterday that could play an important role in implementing his climate change agenda.
In announcing Rhode Island Gov. Gina Raimondo as his nominee to lead the Commerce Department, Biden’s team said she would be “a key player in helping position the United States as an exporter of 21st century products and leader in the clean energy economy.” The announcement touted Raimondo’s work expanding clean energy jobs in her state.
Biden also tapped Boston Mayor Marty Walsh as his nominee for secretary of Labor. In that role, Walsh would likely be tasked with helping deliver on Biden’s promises to expand, diversify, and unionize clean energy employment.
Biden is also staffing up his National Security Council: The president-elect announced a number of new appointments to the security council this morning, including Melanie Nakagawa as senior director for climate and energy. Nakagawa worked in the Obama administration State Department, as deputy assistant secretary for energy transformation and as a strategic advisor to former Secretary of State John Kerry.
Kerry, picked as Biden’s special climate envoy, could oversee an office of 30 to 50 people, largely State Department employees, according to Politico reporter Natasha Bertrand. Sue Biniaz, the State Department’s top climate lawyer for more than two decades who helped negotiate the Paris Agreement, is expected to have a senior role, Bertrand reported.
EX-IM BANK FINANCES US LNG PROJECT FOR FIRST TIME: The Export-Import Bank finalized its first ever U.S. LNG export project authorization, the agency announced today.
The bank is providing $50 million to Freeport LNG, a Houston-based exporter of liquified natural gas.
Ex-Im says the action will support 200 American jobs, mainly in Texas, as well as through supplier networks in Arkansas, Louisiana, Mississippi, and Oklahoma.
The first and last? It will be interesting to see whether Biden moves to restrict Ex-Im and the International Development Finance Corporation, another export finance agency, from supporting fossil fuel projects. Former President Barack Obama ended overseas coal finance, but Biden has been murky about his approach to natural gas exports.
The Rundown
Wall Street Journal South Korea pushes Iran to release seized oil tanker
Bloomberg The CEOs of U.S. shale are pledging restraint amid oil rally
Reuters Trump moves to loosen mining regulations, approve projects as he exits
Calendar
WEDNESDAY | JAN. 13
11 a.m. The American Petroleum Institute hosts its virtual 2021 State of American Energy event.
