Although overshadowed by the presidential contest, there was much speculation going into last Tuesday's election about whether Democrats could capture a filibuster-proof majority of 60 seats in the US Senate. This would have had profound implications, not only for the ability of an incoming Democratic president to push his agenda through Congress, but for Congress to pass a number of measures that the leadership likely considers unfinished business. That includes major legislation on energy and climate change. Although three contests remain unresolved at this point, leaving this possibility tantalizingly open, a review of the voting on a couple of key bills suggests that even if they all went the Democrats' way, that outcome might be less useful than it appears, because several of the Republicans who retired or have been turfed out were moderates who voted with the majority on the measures in question.
Today's topic might seem overly focused on "inside-the-Beltway" concerns, but I think it could have serious consequences outside Washington, DC. Consider two key pieces of energy-related legislation that came before the Congress this year. The Boxer-Warner-Lieberman Bill, S.3036, would have enacted an increasingly-restrictive cap on greenhouse gas emissions, enforced through a national emissions-trading system ratcheting up energy prices and the prices of energy-intensive goods, in order to reduce US emissions of CO2 and other GHGs. After extensive debate, the bill failed on a "cloture vote", which would have brought it to the floor of the Senate for an up-or-down vote, which it might well have passed. The vote was 48-36, but should probably be counted as 54-36, due to some key absences. That would still have fallen short of the 60 votes required to end debate. Adding the six Senate seats the Democrats have already picked up in this election might lead one to see cap-and-trade as a shoe-in in the next Congress. That math doesn't quite work, however. Of those Senators who voted against cloture, only two lost their seats, while four of the six seats that changed hands were already in the "aye" column. Even if the unresolved races in Alaska, Georgia and Minnesota all send Democrats to Washington, they would still come up one vote short, unless another Senator who voted no or did note vote could be brought around.
The prospect of a windfall profits tax on oil companies looks equally shaky at this point, for similar reasons. Consider the voting on the "Consumer First Energy Bill of 2008", S.3044, which in addition to a 25% tax on "windfall" profits of the major integrated oil companies--over and above the taxes they already pay--would have allowed OPEC to be sued for anti-trust violations in US courts and imposed restrictions on energy commodity speculation. This bill also failed its cloture vote, by 51-43. When we adjust for the seats that have already changed hands, that improves to 55-39. Yet if Senators Stevens (R-AK) and Chambliss (R-GA) fall, it would only extend to 57-36, still short of the magic 60 votes.
So even if the new Senate tallies 58 Democrats and only 40 Republicans, not counting the two Independents who have historically voted with the Democratic caucus, enacting major energy legislation will likely require serious consideration of the views of the minority. While that will disappoint partisans and those desiring the strictest possible climate change legislation, the practical necessity of a bi-partisan approach to energy could pay dividends over the long haul, by preventing the majority from passing measures that could be overturned the next time the balance of power in the Congress shifts. Like the Cold War, solving our energy and climate problems is not the work of one Congress or one Administration, but will require a cumulative effort spanning decades. That should align with the necessity of avoiding further shocks to the economy, as well.
Next Tuesday I will be speaking on the climate change implications of the election at a breakfast panel in Manhattan hosted by my sponsor, IHS Herold. The topic of the session is "Investment Insights in Alternative Energy." If you are interested in attending, please email Bianca Smothers.