Health care and climate change are rival siblings battling for attention. ACA overshadows cap and trade

Washington’s political atmospherics couldn’t be much worse for taking on big, complicated things after the bungled Obamacare launch. One unlucky and little noticed casualty: climate change.

A sweeping cap-and-trade bill, like the kind that died in President Barack Obama’s first term, remains the best policy tool for addressing global warming at the federal level.


But the Affordable Care Act’s early implementation problems offer a gut check for anyone considering putting their political muscle behind making another run at either a comprehensive legislative or regulatory fix to the climate issue - a remedy that could easily match, if not exceed, the bureaucratic complexity of Obamacare.

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Obamacare’s stumbles have also fueled a debate in policy circles about alternative history - as in, would Obama’s New Year’s headache be even worse if climate change had also won congressional approval alongside health care?

There’s plenty of irony in all this. Health care and climate change have been rival siblings battling for attention since the start of the Obama administration (Health care, so far, has been the winner).

Like key parts of Obamacare, the cap-and-trade concept originated with Republicans seeking a business-friendly way to control pollution. And EPA regulators have actually used the marked-based system with success for almost two decades to deal with acid rain and smog.

It stings even more for climate advocates that the country’s recent natural gas revolution has led to a sharp drop in greenhouse gas emissions as electric utilities wean off coal. No one predicted this during the 2009-10 climate debate, but the U.S. is already nearly half way to the targets of the cap-and-trade bill that passed in the House but couldn’t get out of the Senate.

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With Obamacare implementation on the ropes, there’s something of a wistful feeling among many of the failed climate bill’s proponents that they wouldn’t be causing the administration anywhere near the same problems. Their legislation had implementation in mind during the drafting phase by leaning on a number of existing programs, including channeling rebates to low income people via the food stamp program to compensate for energy prices that went up because of cap and trade.

But not only did cap-and-trade legislation get left at the altar when the Senate balked, Obamacare’s unsteady debut leaves the future for any big climate proposal even dimmer. Supporters can only think of what might have been - and even some opponents acknowledge global warming might have been an easier governmental lift than health care reform.

“Perfection is an elusive human quality, but the larger picture of economic growth related to the energy sector would have been so profound that I think the benefits would be hard to roll back,” Sen. Ed Markey, the Massachusetts Democrat and former congressman who led the cap-and-trade push in 2009, told POLITICO.

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“It would have been a real boost to our economy,” added Rep. Henry Waxman (D-Calif.), Markey’s partner on the climate campaign. “People would not be looking at the huge number of unemployed in this country. There’d be enormous investments in alternative fuels and fuel efficiency in ways to make the transition to a low carbon economy.”

Republicans banking on Obamacare as their ticket to 2014 mid-term election gains counter that Democrats should be relieved the climate bill isn’t law. The GOP would have spent the last three-plus years trying to repeal it and defund it just like they did with Obamacare. And just imagine how many more punches the administration would be taking if it was juggling implementation of a climate law at the same time it was rolling out health care and the Dodd-Frank Wall Street reforms.

“Beating up on EPA is a lot easier than attacking the creation of a new entitlement,” said Chris Hessler, a former deputy GOP staff director on the Senate Environment and Public Works Committee.

House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) offered this prediction had Obama been successful in getting all three of his top first-term legislative priorities: “Romney might be president. And maybe we’d have the Senate.”

Democrats from states and districts with a heavy reliance on fossil fuel production or consumption resisted the cap-and-trade bill despite pleas from Obama and then-House Speaker Nancy Pelosi and several built-in incentives that could have helped transition their economies. With the bill’s demise, many said they dodged a bullet.

“I’d rather not think about it,” said Rep. Nick Rahall, a West Virginia Democrat and cap-and-trade opponent, when asked how the climate bill would have fit in now alongside Obamacare. “If there was not any more adequate preparation than what the health care act had, it’d have been a disaster.”

But from a practical standpoint, Democrats and even some Republicans acknowledge that Obama probably would be having an easier time implementing the cap-and-trade bill compared with health care. After all, the administration had many of the biggest industries on board, including electric utilities, automakers and chemical companies.

Even some industry groups that were fighting cap-and-trade legislation at the time — such as the American Petroleum Institute — are now openly embracing the environmental and economic gains that have come as the country rose to a natural gas producing powerhouse. The trade group said in a statement that the natural gas finds have led to millions of new jobs, tax revenues for the government and greenhouse gas emissions that are down “to nearly 20-year lows.”

A cap-and-trade law also may not have been such an implementation problem for Obama because it doesn’t require the same degree of public engagement as health care — certainly not at the level of millions of Americans having to buy insurance through the federal or state-based exchanges. The whole goal was to put distance between the general public and the climate policy by making regulated industries pay higher prices when they use dirtier fuels. That in turn would drive the development of more environmentally-friendly modes of transportation and new ways to generate clean electricity.

“It doesn’t need a giant web site. It’s not something where individual Americans go to get information or to sign up for stuff,” said Sen. Sheldon Whitehouse (D-R.I.).

Rep. John Shimkus (R-Ill.), a leading critic of the cap-and-trade bill during the 2009 debate, said in an interview that he’d still be worried about the costs of the climate bill had it become law, especially for companies who have continued doing business in his state because of lower natural gas prices. But he also said climate change may not have led to the same size mess as Obamacare.

“I think it’s definitely a lot easier to implement,” he said. “Health care is one sixth of the economy. That’s a major thing and all its intricacies versus actually charging for carbon use. Policywise, it’s a much simpler proposal.”

Authors of the 2009-10 cap-and-trade plans said their bills were far from perfect. Several sources conceded that one potential trouble spot centered around the environmentally-friendly “offsets” designed to limit compliance costs on industry. Former staffers recalled waves of lobbyists who were seeking to get their client’s best green ideas included in the criteria for projects that a regulated company could fund instead of making their own direct emission reductions. While there were safeguards to protect the integrity of the program, it was also ripe for negative stories and bad headlines upon implementation.

“There’s going to be fraud no matter what people do,” said Chelsea Henderson, a former GOP Senate aide who helped write then-Sen. John Warner’s 2008 cap-and-trade bill.

“Would it have been complicated and had hiccups? Probably. But I’d not want to look back and say ‘Thank god we didn’t have cap-and-trade because look at what we have with Obamacare,’” she added.

Obamacare’s dominance on the Washington political stage comes at the same time much of the focus for climate has shifted beyond the Beltway.

In California, a major climate change law has survived an industry-led ballot initiative and lawsuits. The state’s cap-and-trade program has been live for almost two years and will link up in January with Quebec’s similar system. Nine Northeastern states with their own regional cap-and-trade program — initiated when George Pataki and Mitt Romney were still governors — have so far lowered power plant emissions 40 percent, while generating $1.6 billion in economic growth and 16,000 new jobs. More than 30 states also have renewable energy standards like the one that was included in the House-passed climate bill.

“It shows that this could be done, and it really is being done already by states,” said Vicki Arroyo, executive director of the Georgetown Climate Center.

Obama has his own designs on creating a climate legacy that looks beyond the health care law’s problems. “If we remember what’s at stake, the world we leave to our children, I’m convinced that this is a challenge that we will meet,” the president said in June.

While GOP opposition has killed his chances of trying again on cap-and-trade legislation, Obama is still gearing up for a heavy regulatory push during his final three years in office. Recent additions to the White House staff include two Democratic veterans of past climate debates: John Podesta and Phil Schiliro.

Still, an electric utility industry source warned that Obama’s credibility has taken a big hit with the health care fumbles and could come back to bite climate change again — just as the Environmental Protection Agency is crafting a high-profile rule to curb carbon emissions from the nation’s fleet of existing power plants.

“It’s ironic,” the industry source said, “that the two very issues once again collide and may very well effect the outcome of the other.”