Lieberman-Warner Postmortem

Last week, I summarized what happened to the Lieberman-Warner-Boxer (hereafter L-W-B) energy-rationing bill on the Senate floor.  This week I want to begin discussing what can be learned from it that might be useful as we prepare to fight cap-and-trade in the next Congress.  What strikes me most strongly is that while the push for reducing emissions is coming from environmental pressure groups, the push for cap-and-trade as the means to do so is coming from big businesses that hope to make a lot of money in the short term.  The battle is therefore really between special interests and consumers (that is, the public).  Special interests are organized to exert considerable pressure on Congress, while consumers are not.  That is usually bad news for consumers.  The 2005 and 2007 ethanol mandates and the new farm bill are good examples of how things usually turn out in Washington.

However, L-W-B crashed in less than a week.  Why?  First, the environmental pressure groups were divided.  Friends of the Earth led a “Fix It or Ditch It” grassroots campaign, while the big Wall Street establishment groups, Natural Resources Defense Council and Environmental Defense Fund, supported the bill.  Second, there was no way to pay off all the special interests.  Some big companies didn’t do so well.  Thus James Rogers, Chairman, President, and CEO of Duke Energy, has been the biggest promoter of cap-and-trade in the business community, but he lobbied actively against it because he felt that Duke wasn’t getting its fair cut (that is, more than its share of the loot).  Now, Rogers has come out in favor of a carbon tax, which may or may not be a strategic ploy. 

The fact that big business was divided meant that there was room for the public to make their views heard in Washington.  Since Kyoto hasn’t been a live issue since it was negotiated in 1997, most conservative groups haven’t paid much attention to it—and understandably so: there are many other important issues and resources are limited.  But in the weeks leading up to the debate, many conservative grassroots groups got active.  Talk radio paid a lot of attention to L-W-B, and listeners started to light up the phone lines.  I don’t know how many people called or wrote their Senators, but I did notice in the debate that quite a few Senators who support cap-and-trade suddenly felt obliged to express concern about the costs to consumers.

My preliminary conclusion is that the public can be heard when cap-and-trade comes up again in 2009 or 2010 and therefore it can be defeated in Congress, but only if we can keep the special interests divided and pushing and shoving each other to get to the trough.  If the proponents figure out a way to pay everybody off, then it will become very difficult to save ourselves from energy rationing.