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ARTICLE Federal Legislation with Local Relevance–the Inflation Reduction Act passes the US Senate
By Katya Gordon Lake County Press 8/19/2022
After months of negotiations that has been anything but smooth, Congress is poised to pass the most significant climate legislation ever. The Inflation Reduction Act, which has passed the Senate and will soon pass the House, will have a major effect on our economy, our health, and our planet. It also exerts both a short-term and long-term lessening of inflationary pressure.
Tax credits mark a substantial element of the bill. Businesses, industry, utilities, manufacturing, households–everyone will pay lower taxes for doing things that clean up the air pollution created by fossil fuels. For instance, electric vehicle tax credits will allow middle income families to buy electric vehicles which are much cheaper to use and maintain, which will then lower their household expenses. Electricity is far more predictable as an expense than gas or oil, and stability is a key factor in investment and growth. 1.5 million jobs created directly from all this growth in clean energy, like construction and manufacturing jobs, will boost our GDP. Batteries are the new engine; what percentage of the minerals in these batteries needs to come from the US or one of its trading partners? Today we import many of these critical minerals from China and Russia; the details remain unclear on this point today.
Other winners, via tax credits or grants, will be people, communities, businesses, and government entities that improve their conservation practices, forestry growth, agricultural methods, and wildfire prevention. Business loans from the Department of Energy, like the one that jump-started Tesla, will encourage domestic manufacturing.
In a last-minute negotiated item, oil and gas leases will be issued in the same proportion as on- and off-shore leases for renewable energies. Could new oil and gas leases cancel the clean energy benefits of this bill? Number-crunching from three sources, The National Resources Defense Council, Energy Innovation, and Princeton REPEAT determined that the benefits of the bill outweigh the added air pollution for these leases by a ratio somewhere between 10:1 and 24:1. And, there are many unused oil and gas leases today. There is no guarantee that oil and gas leases that are available will be bought or used. Our market-based economy will find the winners and losers, and buy up the leases that stand to be profitable.
A methane fee is another element of this bill. If it has the intended effects, this will establish greenhouse gas pricing as a legitimate and effective means of reducing air pollution. This will raise eight billion dollars ($8 billion) by incentivizing companies to fix all their methane leaks. EPA regulations on methane do not change and companies that are already compliant do not have to pay anything, so really it’s just putting “teeth” into the rules that already exist.
How efficiently will this bill reduce emissions? There are some areas with wide variability and unknowns, and others that are more predictable. But this bill should bring the United States somewhere into the ballpark of a 40% drop in emissions by 2030, which is still 10% short of the 50% commitment that was made in Paris. This is far better than the 17% drop which is approximately where the United States would sit in 2030 without the bill. Republicans, in the next few years, will have the opportunity to complement the IRA with a carbon border adjustment, based on a US carbon price, to take full advantage of relatively clean energy production from the US. This could bring the Paris goals into the realm of reality.
It will take time to understand all the implications of this bill as it is rolling, but early polling shows that 91% of Democrats, 61% of Independents, and 39% of Republicans want to support candidates who are supporting the Inflation Reduction Act. Thorough details and analysis are available at yaleclimateconnections.org.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Budget:
“The Inflation Reduction Act will be the largest deficit reduction law in over a decade, assuming it is ultimately signed into law. This legislation represents an important first step toward fixing our debt and helping the Federal Reserve fight inflation.
The Inflation Reduction Act will reduce near and long-term deficits while still enacting a number of policies related to energy, climate, health care, and the tax code. To those concerned with the nation’s fiscal situation, it is a major victory. It is a model for how we can get multiple things done responsibly without punting on the payfors.
It has been so long since we had a significant deficit reduction package that 60 percent of our federal lawmakers have never experienced one. This package is important not only for the savings it generates, but for the example it sets that when something is worth doing, it is worth paying for, and that deficit reduction should not just be an empty talking point but an actual commitment.
Senator Manchin especially deserves credit and praise for steering this legislation from a budget-busting monstrosity to this fiscally responsible and economically important package. I cannot think of the last time a bill started as a reckless and unpaid-for blueprint and through the negotiating process did a 180 to become something that would actually strengthen our balance sheet.
With $24 trillion in debt and a dangerous dependency on borrowing, there is more work to be done, but this bill is an important step in the right direction – the first in a very long time. America cannot be a strong nation when our fiscal foundation is weak. Going forward, policymakers should make a commitment to pay for their policies and make sure deficit reduction becomes a priority rather than a punt. They most certainly should not undo this good work by returning to the norm of borrowing for their priorities and asking our kids and grandkids to foot the bill.”
Katya Gordon is a Two Harbors resident and reporter for the Lake County Press. She can be reached at kgordon@cherryroad.com.
LTE The Inflation Reduction Act: What’s in it for you?
by Lucy Grina Grand Rapids Herald Review 8/20/2022
On New Year’s Eve of 2020, my husband and I sat down with a builder and an architect to discuss the fate of our old house. Should we invest in trying to save our dark and drafty 1960s vintage home or should we tear it down and start over? We had lived in this old house for 30 years and while it had its charms (a double sided fireplace hand built by the original owner and wood paneling from trees logged on the property), the house had serious flaws. In the winter at subzero temperatures, the drafty windows and archaic heating system left us shivering in the living room unless we were outfitted in long underwear and parkas.
In the end, we made a decision to invest in saving the house. It required insulating our entire home well, new siding and windows and rewiring. Our house needed a new heating system and we chose air source heat pumps to keep it warm in the winter and cool in the summer. Air source heat pumps are the most energy efficient way to heat and cool homes as they transfer energy directly from the outside air to an indoor space. Thankfully our last 2 winters in our energy efficient house have been comfortably warm, no parka necessary!
How can a family possibly afford to upgrade their home and make their home energy efficient as we were able to? Fortunately Congress has just passed the Inflation Reduction Act. Within this bill, there is incredible financial support for low and middle income households to do just what we were able to do for our home. For instance, a low income household will receive a rebate covering the full cost of heat pump installation, up to a cap of $8,000. For moderate income households, the same rebates are available to cover 50% of the costs. Also within the bill are tax credits that allow households to deduct from their taxes up to 30% of the cost of efficiency upgrades to their homes.
For more specific information regarding what’s inside the inflation reduction act for you, please use this link. https://www.rewiringamerica.org/policy/inflation-reduction-act
It’s too late for us to take advantage of the savings, but not for you!
Lucy Grina
OP ED Celebrate that federal act is finally offering climate hope
by Michael Overend Duluth News Tribune 8/18/2022
Up to $1,800 in annual energy savings for the average American homeowner are in the new Inflation Reduction Act, according to Rewiring America .
The act is an enormous accomplishment with many important long-term benefits for all Americans, including lowered health care costs, requiring corporations and the rich to pay a fairer share of taxes, and lowering our national debt.
Most importantly, it is a watershed moment where one party in Congress chose to address the climate crisis by reducing U.S. greenhouse-gas emissions 40% by 2030. This will be accomplished by incentivizing the innovations and investments necessary for our 21st-century, renewable-energy economy and by enabling net-zero carbon emissions by 2050. These goals are critical to the future of humanity and all living things sharing our planet.
The act’s important climate features, according to Senate Democrats , include major clean-energy investments; major tax credits and rebates for purchasing new and used electric vehicles, solar panels, and efficient heating and cooling systems and home appliances; major help for communities suffering the most from pollution; and the creation of millions of green-economy jobs
Please remember the notable events and people in the decades-long struggle against fossil fuel’s devastating, global warming-causing greenhouse-gas emissions. Human misery has been detailed in countless news stories about droughts, fires, destroyed crops, dead livestock, barren farmlands, and starving families. There have been images of heat waves, hurricanes, tornadoes, flooding, and devastated communities.
We’ve heard of people who have lost their livelihoods, homes, possessions, and loved ones; of refugees on miserable marches or clinging to boats, making desperate journeys to support their families after their lands have gone barren from drought they did not cause; and of endangered animals of all species threatened by environmental damage and forest fires, resulting in their displacement, starvation, and threat of extinction.
Recall our 65-year environmental history and the people dedicated to addressing climate change.
In 1958, Charles David Keeling developed a means of measuring accumulating atmospheric carbon dioxide.
In 1962, Rachel Carson ’s landmark book, “Silent Spring,” raised the alarm that our fragile environment, critical to human existence, is vulnerable to our actions.
In 1968, the first photos from space showed the isolated, small, blue-and-white marble, Earth, home to all life we know and to the realization that there is no “Planet B” to rescue us.
In 1969, oil spills off the coast of Santa Barbara, California, foreshadowed 1989’s Exxon Valdez environmental disaster and the massive tragedy that affected New York’s Love Canal from unregulated industrial pollution that damaged many lives.
The first Earth Day was celebrated in 1970, with Americans nationwide protesting the threat to our air and waters. Republican President Richard Nixon signed the landmark Clean Air Act of 1970 and Clean Water Act of 1972.
In 1987, the U.S. joined the international Montreal treaty that banned global ozone-depleting substances. It resolved the ozone-layer crisis but inadvertently worsened global warming by substituting refrigerant chemicals with severe greenhouse-gas effects.
James Hansen delivered his watershed congressional testimony, in which he stated, "The greenhouse effect has been detected, and it is changing our climate now,” in 1988.
In 2006, Vice President Al Gore’s work advancing climate awareness from his initial congressional global warming hearings led to his film, “An Inconvenient Truth,” and subsequent climate action.
Countless inspiring climate leaders from diverse backgrounds, countries, and experiences — well represented by courageous15-year-old Greta Thunberg — organized the school climate-strike movement in 2018.
Americans should celebrate and thank those concerned people, friends, and colleagues who spent untold hours and energy focusing attention on climate solutions. We can also express gratitude to Sens. Tina Smith and Amy Klobuchar of Minnesota and their staffers for the extraordinary contributions and tireless work that helped to create and pass the Inflation Reduction Act.
The bill is not perfect, but it offers hope for eventual victory over the climate crisis and for a livable world for our children.
Mike Overend of Two Harbors is a volunteer for the Minnesota Northland Chapter of the Citizens’ Climate Lobby.
ARTICLE Katya's Corner
By Katya Gordon Lake County Press 8/19/2022
My request for the week is to ask you to read the article in this paper about the Inflation Reduction Act, a historic piece of legislation that will be edging us towards deficit reduction and climate mitigation for decades to come. This bill’s creation has been anything but smooth and has probably caused both our Senators, Klobuchar and Smith, to lose hair and sleep. Just weeks ago it appeared quite likely that the whole thing could go up in smoke and many of us were wondering if anything could possibly be messier than the Democratic process.
This bill is part of the budget reconciliation process, which means it must only concern itself with budgetary issues. It is easier to pass than regular legislation because debate is limited. In practice, this means it cannot be stopped by a filibuster, which in turn means that it requires only 51% of Senators to pass it. And only 50 Senators, all Democrats, have indeed signed it, requiring a tie-breaking vote by Vice President Kamala Harris. The end result: It is not a bi- partisan bill. I am sad about that–those of you who have read my column know how deeply I believe in bi-partisan action. And Republicans are beginning to share substantive ideas for transitioning to clean energy as I mentioned a few weeks ago, led by the GOP Climate Task Force. Had the parties been able to work together, I think the bill would have been better.
It also does not contain a price on carbon, the single most critical backbone, the piece that could strengthen and accelerate every other piece. It does include a price on methane, which is a gigantic step in the right direction that will, if predictive analyses prove correct, demonstrate the efficacy of pricing greenhouse gases both to reduce them and to spark innovation and jobs. Pricing carbon will be essential to our global leadership and without it we will soon be at a severe (and unnecessary) disadvantage when we trade with Europe. Pricing carbon takes the most advantage of our relatively clean industries relative to, say, China or Russia. Since successfully competing with China and Russia is one of the “pillars” of the GOP’s Climate task Force, I believe that this will become a focal point in the next few years. A carbon border adjustment, based on our own carbon price, would neatly fill the current gap.
Does this bill take into account climate justice? No one wants to solve climate change on the backs of the poor. While this bill does not specifically do enough to address this issue for some groups, it does allot $60 billion specifically as clean energy investments into disadvantaged communities, and every general benefit it will bring by cleaning up air pollution, will disproportionately improve lives for communities that live with the worst air quality, which are–you guessed it–underserved communities, often communities of color. Finally, it extends a trust fund for victims of Black Lung, a disease created by coal mining, to be paid for by the coal companies.
Read about this bill, learn about it, and take advantage of its tax breaks when they come. The bill itself is much more important to understand than the rhetoric you will certainly be hearing as the election season advances.
Katya Gordon is a Two Harbors resident and reporter for the Lake County Press. She can be reached at kgordon@cherryroad.com.
LTE Act is a huge step
By Patricia Fettes Chisago County Press 9/1/2022
Thanks to the Chisago County Press and John Eret for his August 18 letter about the Inflation Reduction Act (IRA). Mr. Eret outlined some of the benefits of this act including limits on prescription drug costs and assistance for people on Affordable Health Care plans. I wanted to expand on the monumental climate change provisions in the IRA which will reduce carbon emissions by an estimated 40% by 2030. While falling short of the 50% reduction by 2030 pledged by the US, it’s a HUGE step forward and critical amid increasing climate emergencies like the historic flooding that ravaged Minnesota this spring/summer.
Climate components of the IRA include rebates covering 50-100% of the cost of new electric appliances, making these energy-efficient options more affordable for millions of Minnesotans. Hundreds of thousands of small business owners in Minnesota can benefit from a tax credit up to $5 per square foot for energy efficiency improvements that deliver lower utility bills. And millions of Minnesotans will be eligible for new discounts on electric vehicles and will benefit from Minnesota’s plan to use IRA funds to build EV charging stations along highways.
Climate change has been named an “existential threat”—that means it threatens our very survival. We have taken a huge step forward with the IRA, but we must elect state and national candidates that support significant climate measures, rather than those who issue criticism and “no” votes without a plan to move us toward zero carbon emissions by the middle of this century. That means we in MN Congressional District 8 may have to make some changes come November. Everything may depend on it.
ARTICLE COMMENTARY: An economic milestone and a better future
Opinion by Patrick Welle, Bemidji
The Bemidji Pioneer, September 14, 2022
The U.S. economy reached an important milestone recently. This summer’s job reports show that the private sector has regained the jobs lost during the pandemic.
It is a good time to take stock of our economy and the short and long-term challenges the pandemic has exposed.
As hard as we might wish, the recovery of these jobs does not mean we’re done with the pandemic or the economic dislocations that are ongoing.
But at this time, we should recognize the success of relief efforts implemented at federal, state and local levels in 2020 and subsequent policies as we moved into the recovery phase.
Much work remains, especially by the Federal Reserve Board, in balancing inflationary and recessionary pressures. But we’ve progressed enough to breathe a sigh of relief in noting that things could have been much worse.
The depth of business closures and job loss combined with current rates of inflation are causing even more pain in many other countries.
Many economists have been arguing, at least since the Great Recession of 2008, that we need to practice capitalism better.
This goal takes on new meaning as the pandemic has revealed the severity of multiple weaknesses: vulnerabilities in the supply chains for key inputs, goods and services; too much concentration of power among large corporations in many industries; obstacles faced by many middle and working-class families to participate in the labor force and prosper; mismatches between the jobs employers have to offer and the education and training of workers who might fill them, to name a few.
In the near term, the pandemic severely tests our tools of countercyclical policy — measures designed to even out the ups and downs of the business cycle.
It is far too complicated to trust a simple Keynesian (demand-side) solution as if suppressing demand will successfully address these historic challenges.
The Federal Reserve’s increase in interest rates is intended to accomplish this, but the bluntness of this policy and the slowness of response in the macroeconomy raises concerns. The disruptions in global energy and food supplies due to Putin’s war in Ukraine are causing supply shocks of historic proportions.
Some forecasters are betting against the Federal Reserve to set interest rates properly and doubt that the forces of supply and demand can be balanced effectively in the face of huge supply shocks. They are predicting a recession next year or the year after.
However, the strong job creation in recent months is one reason for optimism.
Regardless of near-term swings, we need to support policies that put our economy on a stronger long-term footing.
The infrastructure bill pushed by President Biden and Democrats in Congress was enacted with some Republican support. It is a long-term investment in resources our economy critically needs. It is not a source of too much spending today, instead, it will kick in when other forces in our economy are slowing down.
Other promising policies enacted recently are the expansion of domestic computer chip manufacturing and the long-term cost savings contained in the Inflation Reduction Act.
A key provision is a historic investment in combatting the climate crisis. The economic evidence is overwhelming that the emerging social and economic damages of climate change will be far more severe than the costs of addressing this challenge.
The burdens it will relieve are not so much about current inflationary pain but rather to avoid climate catastrophes for future generations.
Other action is needed now to create a more solid foundation for a sound, sustainable economic future. Interested readers might learn from the discussion of ideas contained in the section on “Jobs and the Economy” on the website of Minnesota’s own Senator Amy Klobuchar.
She has been a leader in forward-looking solutions through her membership on the Senate Commerce and Joint Economic committees.
In addition to investing in infrastructure and combatting climate change, other major solutions to long-term challenges worsened by the pandemic include:
Reverse trends toward growing concentration of power among corporations by stopping tax breaks that tilt in favor of corporations against small businesses and workers in addition to enforcing and strengthening antitrust laws.
Promote forces for innovation so the U.S. economy (and Minnesota) can again lead the world in key industries such as mining, manufacturing, agriculture, tourism and clean energy.
Improve economic opportunity for middle and working-class families through policies that a. reward and dignify meaningful work and b. boost the supply side of our economy by investing in education and training and stimulating greater participation in the workforce.
A crucial lesson from the pandemic is that we need more sustainable development of the supply side of the economy, especially through investments in people.
Patrick Welle is an emeritus professor of economics and environmental studies at Bemidji State University.
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