Inside the Democrats’ climate deal with the devil
Originally published: openDemocracy on August 2, 2022 by Aaron White (more by openDemocracy) | (Posted Aug 06, 2022)
Last week, Joe Manchin, the West Virginia senator whose decisive vote in the evenly split upper house has led some to brand him ‘President Manchin’, and Senate Majority leader Chuck Schumer surprised even the most clued-in political junkies by announcing support for a climate bill that had been declared dead just several weeks before.
The 725-page legislation seemed a brief respite from a summer of extreme weather–a brutal heatwave and flooding across the U.S.–as well as soaring inflation, a cost of living crisis and radical Supreme Court rulings that overturned abortion rights and limited the regulatory power of the Environmental Protection Agency.
Manchin, the top recipient in the U.S. Congress of fossil fuel cash, had previously killed President Joe Biden’s more ambitious climate package. But there are signs that this time may be different.
For one, this is now Manchin’s package. He even named it the Inflation Reduction Act (extraordinary abbreviated to IRA).
It’s a far cry from Biden’s Build Back Better plan or the 2019 Green New Deal, the congressional resolution proposed by two Democrats, Massachusetts Senator Ed Markey and New York Representative Alexandria Ocasio-Cortez. The IRA includes nearly $370bn in clean (and dirty) energy as well as healthcare and tax provisions that will lower the costs of prescription drugs and implement a 15% corporate tax on large businesses.
But it has already been endorsed by key progressives in Congress, including Markey and Ocasio-Cortez. The IRA followed unprecedented sit-ins by congressional staffers demanding the party leadership reopen climate negotiations before departing Washington DC for the August recess.
Through tax credits and rebates, the IRA bill offers domestic green energy incentives, including the manufacture of electric vehicles, wind turbines, heat pumps and solar panels. It also includes a methane fee and establishes a national green bank, which would leverage private funding for green projects and unleash an estimated $290bn in further investment.
Democrats and climate experts claim the package will cut carbon emissions by 40% by 2030 compared to 2005 levels. Overall, the proposed legislation will make it more affordable for people to access clean technology.
But the full picture isn’t quite so rosy, or, in this case green.
Unlike last year’s Build Back Better package, the IRA actually incentivizes fossil fuel production. The bill that Manchin killed had the clean electricity program, which would penalize utilities that didn’t transition to renewable energy. The IRA bill’s ‘all of the above’ energy strategy invests in developments that will mean further greenhouse gas emissions. New solar and wind projects are contingent on approval for oil and gas leases on millions of acres of public land and waters. And there is a provision that locks in new drilling in the Gulf of Mexico and off the coast of Alaska. (Many climate groups are now mobilizing against these elements.)
Schumer has also agreed to support legislation that will make it easier to approve green energy as well as fossil fuels projects, such as the Mountain Valley Pipeline that Manchin desperately wants.
It’s no surprise then that the package was reportedly pushed and subsequently lauded by a diverse coalition of capital that includes Bill Gates and Exxon Mobil executives.
So, the IRA is a very dirty and risky trade-off, but one that Democrats will probably take.
This ostensibly ‘moderate’ approach of working alongside the fossil industry and even incentivizing production is radically destructive. It is in direct opposition to a recent report by the UN’s Intergovernmental Panel on Climate Change, which states that we need “immediate and deep emissions reductions” to keep global warming to 1.5°C.
‘Merica loves its cars
In typical American fashion, the IRA bill is also into cars. Big ones. It includes billions of dollars worth of rebates for electric vehicles–$7,500 tax credit for a new purchase and $4,000 for used–and incentives for companies to manufacture and source vehicles, batteries and minerals in the U.S. or in a country with a U.S. free-trade agreement.
As Jael Holzman outlines in E&E News, which covers energy and environmental policy, this requirement will probably create major barriers to accessing the credit. “Minerals required to make market-ready EV batteries–lithium, cobalt, graphite and nickel–are primarily mined, refined and processed in China and Russia or in less adversarial nations like the Democratic Republic of Congo and Indonesia that aren’t parties to U.S. free trade agreements,” she points out.
The bill even incentivizes the purchasing of larger electric vehicles such as trucks and SUVs, which are, as Aaron Gordon notes in Vice, “incredibly energy intensive”.
Notably, there is no mention or support for other modes of transport such as trains, electric bikes or even walking. So much for investing in the transition of urban and public spaces to be more green and enjoyable. The IRA bill is classic Americanah, but with a touch of green.
The proposed package has a paltry $1bn for energy and water efficiency in affordable housing. The communities most impacted by the climate crisis, the housing crisis and the cost of living crisis are abandoned once more at a time when Democrats are hemorrhaging working class support.
How about the rest of the world?
It’s striking but not surprising that the U.S. can annually approve, with bipartisan support, nearly $800bn in military spending, but not a climate finance plan for the most climate-vulnerable countries.
The U.S. is responsible for the largest share of historical greenhouse gas emissions but Congress only approved $1bn in climate finance in this year’s spending bill. (Biden pledged to increase this to an annual $11.4bn by 2024 but this requires congressional approval.) The IRA is silent on global climate finance.
But it’s not just absence. The U.S. Federal Reserve’s recent interest rate hike to combat inflation at home is exacerbating the global debt crisis in developing countries. This is making it even more difficult for those least responsible for and most directly impacted by the climate crisis to adapt to our rapidly warming planet.
But given the current composition and corruption of the U.S. political system, the dire state of the planet, and the many many defeats of climate and social legislation, many progressives would have taken any serious climate investment. It is certainly true that this is the largest investment in renewable energy in U.S. history, but that’s really not saying much.
Next time let’s hope it’s far bolder, just, global–and finally pisses off the fossil fuel industry.
https://mronline.org/2022/08/06/inside- ... the-devil/
Schumer lets Aide kill key drug price reforms
Originally published: The Lever on August 6, 2022 by David Sirota (more by The Lever) | (Posted Aug 08, 2022)
Senate Majority Leader Chuck Schumer (D-N.Y.) let a U.S. Senate adviser kill key parts of Democrats’ promised drug pricing legislation, as Schumer has become the Senate’s second largest recipient of pharmaceutical industry cash.
On Saturday, the Senate’s parliamentary adviser Elizabeth MacDonough — who Schumer can remove — issued a non-binding advisory opinion saying Democrats should remove provisions in their spending bill that would punish drugmakers for inflating their prices for patients in private health insurance plans. The provision could have saved $40 billion, according to one estimate.
“The exclusion of the private insurance price limits means there is little left that will reduce costs for the vast majority of Americans who receive health insurance through their private sector employer,” reported Politico.
MacDonough also advised Democrats against including a provision in their legislation to cap out-of-pocket insulin costs at $35 a month for people on private insurance plans. Democrats ultimately held a failed vote to overrule her on the insulin cap.
Democrats’ legislation does still allow Medicare to negotiate drug prices for the first time — but only on 10 drugs by 2026, and eventually 20 drugs per year. Removing the inflation cap will substantially limit protections for patients on private health insurance plans. Medicare patients will benefit from the $35 cap on out-of-pocket insulin costs, but patients on private insurance plans will not.
Taken together, Democrats’ signature drug pricing measure is now a shell of the proposal that lawmakers debated for much of last year, and far weaker than the compromise deal negotiated by the party’s drug industry allies.
“Unfortunate Ruling”
Like Republicans have done in the past, Schumer could simply fire MacDonough or the Democrats’ presiding officer of the Senate could ignore her opinions. Instead, though, Schumer has issued public statements lamenting the advisories, but refusing to do anything to change, stop, or ignore them.
Before this, he allowed the parliamentarian to initially kill Democrats’ promised $15-minimum wage legislation, and then eight Senate Democrats voted with Republicans to prevent it from being revived. The parliamentarian also killed Democrats’ immigration reform plan.
In this new case, pharmaceutical lobbyists have been working with Republican lawmakers to help them influence MacDonough’s advisories.
“While there was one unfortunate ruling in that the inflation rebate is more limited in scope, the overall program remains intact,” Schumer said of his aide’s latest non-binding opinions.
MacDonough, the parliamentarian, also helped kill the $35 cap on out-of-pocket costs for insulin. Democrats could have ignored her advice but didn’t, before trying to keep the measure in the bill anyway.
Sen. Lindsey Graham (R-S.C.) raised a point of order, which led to a vote to keep the measure in the bill that would have required 60 votes to succeed. Handled differently, Democrats could have set up a scenario in which it may have required 60 votes to exclude the provision from the bill.
In the end, all 50 Democrats voted to keep the insulin cap in the bill, along with seven Republicans, and it failed.
Pharma Cash Floods Into Democratic Coffers
Schumer’s refusal to do anything about the parliamentary adviser’s edict on the drug inflation cap comes as he has raked in more than $289,000 from donors in the pharmaceutical and health products industry during his 2022 election campaign. Eight of the Senate’s top 10 recipients of donations from that industry are Democrats.
That includes Arizona Sen. Kyrsten Sinema, who has raked in more than $556,000 from the industry since 2017. She has also benefited from a flood of supportive TV ads from a Big Pharma front group.
Sinema recently said her support of the bill would be subject to the parliamentarian’s review. She previously said:
There is no instance in which I would overrule a parliamentarian’s decision.
Yet, Sinema actually voted on Sunday to overrule the parliamentarian and keep the $35 insulin cap in the bill. Perhaps she would have voted differently if the measure had a genuine shot at passage.
In all, the pharmaceutical and health products industry has funneled more than $61 million to Democratic candidates in the last two election cycles, far more than it gave to GOP lawmakers in the same time period.
https://mronline.org/2022/08/08/schumer ... e-reforms/
Dems’ gift to their Wall Street donors
Originally published: The Lever on August 4, 2022 by Matthew Cunningham-Cook & Andrew Perez (more by The Lever) | (Posted Aug 07, 2022)
Democrats and the Washington press corps spent the last week insisting that the party was about to close a notorious tax loophole that allows many Wall Street billionaires to pay a lower tax rate than most Americans.
In truth, the proposal would have left most of the loophole open, fulfilling Senate Majority Leader Chuck Schumer’s (D-N.Y.) longstanding pledge to protect the private equity industry that bankrolls his campaigns. Now, the plan is gone.
On Thursday night, Sen. Kyrsten Sinema (D-Ariz.), a favorite of private equity donors, announced that Democrats “have agreed to remove the carried interest tax provision.” Meanwhile, President Joe Biden–who pledged to close the loophole–continues to decline to try to use his executive tax enforcement authority to shut the tax break.
Taken together, Democrats’ bait and switch allowed party lawmakers to pretend they were finally cracking down on private equity moguls, while actually protecting them.
That political gift to Wall Street comes after the private equity industry has delivered $83 million to Democratic politicians and $62 million to Republicans at the federal level over the last two election cycles. That includes $1.2 million to Schumer in just the last cycle, and $283,000 to Sinema.
Despite the fact the provision was always set to mostly preserve the loophole, corporate media outlets echoed Democratic leaders’ insistence that they were closing it–even as a major corporate law firm and other experts acknowledged that was not actually happening.
“Contrary To Discussions In The Media”
At issue is the so-called “carried interest” tax loophole, which permits private equity managers to classify their earnings as capital gains rather than regular income. That allows them to have portions of their income taxed at the lower capital gains rate of 20 percent, as opposed to the top income rate of 37 percent.
Democratic politicians have long pledged to close the loophole, and they have previously introduced legislation to reap $63 billion by completely eliminating it. They spent the last week insisting their new Inflation Reduction Act (IRA) would do that.
“I think the people that have benefited from carried interest for years and years and years knew that they had a good run, it was long overdue to get rid of it and you can’t justify it anymore,” Senator Joe Manchin (D-W.Va.) told The Hill last week.
However, the proposal negotiated by Manchin and Schumer rejected the party’s previous legislation and would have only slightly limited the tax break.
Instead of generating $63 billion in savings, as a 2021 proposal to fully close the loophole would, the new version would have only recouped $14 billion–effectively preserving most of the controversial tax break.
The measure would have only increased the time that firms must hold assets in order for their income to qualify as carried interest, changing it from three years to five years.
This reform would have increased the amount of private equity income subject to taxes at the ordinary rates, but only modestly, because many private equity investments last far longer than five years.
For instance: The Carlyle Group’s investment in Manorcare, a nursing home company, lasted 11 years. Petsmart has been in BC Partners’ portfolio for more than seven years. The Blackstone Group held Hilton Hotels for 11 years.
Tax law professor Victor Fleischer, a former top Democratic tax policy aide on Capitol Hill who initiated the effort to end the carried interest loophole in 2007, said on Twitter,
The Schumer-Manchin deal on carried interest isn’t great. All it does is extend the holding period from 3 to 5 years… Most private equity deals are 5-7 years, so most carried interest will continue to be taxed as long term capital gain.
DLA Piper, a law firm with a large private equity practice, noted in a client alert last week, the IRA “would not, contrary to discussions in the media, close the carried interest loophole.”
One way to know for sure: As corporate lobbyist Liam Donovan tweeted, existing Democratic legislation to fully close the loophole would have raised more than four times as much revenue as the provision originally included in the Manchin-Schumer deal.
Big Donors To Democrats
It should not come as a shock that Democrats weren’t pushing to outright close the carried interest loophole.
Schumer, for example, has long been an ally of the private equity industry. In 2009 and 2010, he tried adding a poison pill to a legislative effort to kill the loophole.
His recent carried interest proposal arrived just days before a private equity giant hired his son-in-law.
The industry has also showered President Joe Biden with cash. Private equity manager Marc Lasry raised more than $3 million for Biden’s 2020 campaign, while Blackstone Group executives donated $350,000 to a pro-Biden super PAC.
While the IRA would not have closed the carried interest loophole, and would not have affected the majority of private equity income, the industry went through the motions of pressing allied lawmakers to strip the carried interest changes out of the bill.
After many news stories indicated Sinema was pushing to remove the measure, she issued a statement saying that Democrats are nixing the carried interest proposal. She added that she’s planning to work with Sen. Mark Warner (D-Va.), to “enact carried interest tax reforms, protecting investments in America’s economy and encouraging continued growth while closing the most egregious loopholes that some abuse to avoid paying taxes.”
Corporate Media Gets The Story Wrong
As the private equity industry and Sinema worked to kill Democrats’ carried interest proposal, corporate media outlets repeatedly oversold the measure, saying it would end the loophole entirely. These mistakes had the effect of making Schumer and Manchin look like populist heroes while also providing cover to those who wanted the measure gone.
On Wednesday, NPR compared the current carried interest language to a 2019 proposal that would have also raised $14 billion over a decade, rather than the gold standard 2021 proposal from Senate Finance Committee Chairman Ron Wyden (D-Ore.) and Sen. Sheldon Whitehouse (D-R.I.), which would have raised $63 billion over a decade.
In their August 2021 press release, Wyden and Whitehouse said, “Unlike other bills, the senators’ bill would close the entire carried interest loophole.” Similarly, Punchbowl News, one of the Beltway’s most reliable purveyors of corporate spin, oversold the carried interest changes several times.
Last week, Punchbowl asserted that the Manchin-Schumer “plan eliminates the carried-interest loophole.” Punchbowl similarly wrote on Wednesday,
Perhaps the biggest question in the reconciliation process is whether the elimination of the carried-interest loophole makes it through Congress.
https://mronline.org/2022/08/07/dems-gi ... et-donors/
And there ya go....It isn't what you'd thought it would be and was never intended to be such. It's worse than nothing, as now the Dems will parade that they've finally done something and are absolved, in the media's eyes anyway, from doing something
effective.
The only promise Joe Biden has kept is the one to his real constituency, the rich, that "nothing would change", at a time when change is screamingly required. People will suffer, wars instigated, life on this planet will die back, because the rich like it that way and they own two political parties to keep it that way.