How the Green New Deal became the Inflation Reduction Act

The rise and fall of a meme

David Wallace-Wells sees vindication for the climate left in Democrats’ apparent success cobbling together an Inflation Reduction Act that centers on historic increases in zero-carbon energy production.

I disagree with that and stand by most of my criticisms of the climate left from a year ago, but I also think that the IRA is a good bill, and to the extent that the left wants to embrace it and claim credit, I don’t want to discourage them. It’s certainly true that Bernie Sanders and other left-wing members of Congress are proving to be pretty pragmatic about voting for bills that can pass — I’ve always thought it’s striking how much more sensible Bernie-the-legislator is than Bernie-the-Twitter-personality.

But I think it’s instructive to consider the success of the IRA negotiations through the lens of the Green New Deal construct.

"Green New Deal" was a strikingly successful slogan, a phrase that implied little in terms of concrete policy but was ubiquitous in the climate policy debate. Indeed, the idea was so powerful that it leaped across the Atlantic into a European context where the reference didn’t make sense. I remember chatting with some European political observers who kept talking about a “New Green Deal,” following the normal English-language adjective order convention rather than the meaningless-to-them reference to 1930s American liberalism. Ultimately, the EU settled on a European Green Deal — a sort of amusing game of telephone that underscored just how much cultural power this slogan had.

On policy content, though, I think the IRA owes this idea relatively little. The Green New Deal drew heavily on lessons learned from the failure of the Obama-era Waxman-Markey bill, but this led to an over-indexing on the specific circumstances of 2009. Instead of a Green New Deal to lift us out of a depression, we got a slightly awkward Green Austerity bill that promises to curb inflation.

The big misconception of the climate left

As I’ve written previously, the erroneous conceit of the climate left is a kind of political romanticism about the climate issue. They not only want the government to take major action on climate change, but they also want it to be the case that the mass public is crying out for the government to do this with special interests standing in their way.

The progressive narrative looks something like this:

• There is a latent desire among the mass public for sweeping change in general and for sweeping climate-related change in particular.

• The main impediment to change is an elite cabal of special interests, most of all the fossil fuel companies, who wield power through making campaign contributions and buying ads to distort the media agenda.

• Due to the corrupting influence of fossil fuel money, not only do Republicans take bad stances on climate-related issues but so do Democrats, which means highlighting Joe Manchin’s personal financial relationship to the coal industry is crucial to communicating the legislative dynamics at work.

But in the most recent Gallup poll asking people about the most important problem facing the country, about 2 percent of voters named climate or environmental concerns. That’s tied with health care, school shootings, and the courts, but behind race relations, poverty, family values, crime, gun control, immigration, oil prices, “economy in general,” and inflation.

And this is pretty consistent. In a pre-election Pew poll, voters ranked climate as their 11th priority out of 12. In a pre-election Gallup poll, 55 percent of voters said climate was either very important or extremely important, which sounds good but puts it behind healthcare, terrorism, gun policy, education, the economy, immigration, abortion, inequality, the budget deficit, taxes, race relations, and foreign affairs.

This is one reason why I think the political impact of passing the IRA is hard to gauge. Given the public’s lack of interest in climate, I think it’s very unlikely that voters will reward Democrats for taking action. But partisans’ hopes that the public will reward them for passing bills is almost invariably frustrated. In this case, I think Democrats may actually benefit politically from passing the bill because it would give the party license to stop talking about climate change for a year or three. Appearing to be a political party led by people who are really fired-up about the climate is, I think, pretty bad for Democrats electorally. It’s a much better brand for them to be the party of people who are fired-up about health care.

But this brings us to the most interesting aspect of the Green New Deal.

Did the climate-welfare linkage succeed or fail?

The most distinctive idea associated with the Green New Deal was the notion that an ambitious push on climate change should be intimately linked to a large expansion of the welfare state.

In its canonical maximalist form, this meant yoking the transformation of the energy sector to a total transformation of the American economy. In Kate Aronoff’s look ahead to 2043 written in 2018, she describes the life of a young woman named Gina in the world the Green New Deal built:

• Gina attended free preschool and free college in addition to her free K-12 education and indeed was able to graduate entirely debt-free.

• She received Medicare benefits as a recent college graduate.

• Gina “isn’t extraordinarily wealthy, so she can live in public, rent-controlled housing — not in the underfunded, neglected units we’re accustomed to seeing in the United States, but in one of any number of buildings that the country’s top architects have competed for the privilege to design, featuring lush green spaces, child care centers, and even bars and restaurants.”

• Broadband, water, and electricity are all provided for free by publicly owned utilities.

• There is also a national employment guarantee where “at any number of American Job Centers around the country, she can walk in and work with a counselor to find a well-paid position on projects that help make her city better able to deal with rising tides and more severe storms, or oral history projects, or switch careers altogether and receive training toward a union job in the booming clean energy sector.”

Now obviously this all goes quite a bit further than anything Joe Biden ever proposed.

But the Biden administration’s original $3.4 trillion Build Back Better proposal is clearly a copy of a copy of a copy of Aronoff’s story. I spent a lot of time during the first 18 months of Biden’s term in office complaining about Democrats’ failure to set priorities. And the core idea of the Green New Deal really was on some level that prioritization isn’t necessary — this sweeping vision of eco-socialism would save the planet.

This idea always struck me as borderline insane (for a more polite criticism, read Jerry Taylor writing back in 2019 for the Niskanen Center) because it takes reducing greenhouse gas emissions, something the public supports but doesn’t think is very important, and pairs it with multiple unrelated and highly controversial social changes as if deliberately trying to maximize political backlash. Why?

I have never heard a convincing defense of this concept on the merits. But a Democratic Party graybeard who encouraged major funders to support the Sunrise Movement did once tell me that he thought I was missing the big picture.

In his view, the Sanders 2016 campaign and the massive backlash to ACA repeal in 2017 created a huge danger for the climate movement — namely that Democrats would win in 2020 and then spend 2021 prioritizing another round of health care reform. According to this graybeard, telling young leftists that it was all one big struggle would make it possible to knock health care out of pole position in the prioritization game and get climate to the front of the line.

This struck me as such an unbelievably weird bank-shot theory of change that I mostly believed the guy was just BSing to get me to stop complaining. But the fact is, that’s almost exactly what happened, so it’s possible this guy is the Kwisatz Haderach and everything went according to plan.

After carbon pricing

The most straightforward success of the Green New Deal was to get people to stop talking about carbon pricing.

Back in the Waxman-Markey days, people thought carbon pricing was the only way to take climate change seriously. When the convoluted Waxman-Markey pricing mechanism failed to capture the public’s imagination, Theda Skocpol proposed a big mass push for a cap-and-dividend system that would give the public a direct financial stake in its passage. An incredibly broad range of distinguished economists, including leaders from both parties, signed onto the Climate Leadership Council’s cap-and-dividend proposal.

The Green New Deal did not oppose carbon pricing, but it absolutely de-centered it in favor of an approach focused on standards, investment, and justice.

That said, the standards and justice parts of the three-legged stool basically died on the vine. What we ended up with in the IRA is closer to a pure investment-driven approach where the hope is that driving down the cost of green energy is enough to push decarbonization while assuring voters that energy will only ever become more plentiful.

And this pure investment strategy predates the Green New Deal and is associated with the right flank of the climate movement and the Breakthrough Institute.

So while I think the left absolutely deserves credit for coming around to a politically viable strategy — he didn’t talk about it a lot on the campaign trail, but Sanders ran on a carbon tax in 2016, and if he’d been the nominee, he’d have been hit hard over it — this is primarily a triumph of pragmatism, not of organizing or big ideological vision. I don’t want to quibble too much, though; there was essentially a left-right pincer movement against economists’ wise-but-doomed desire to price the externalities and it worked. But the ultimate legislation looks a lot more like ecomodernism than like a Green New Deal.

The unbeloved technologies that saved the day

I first wrote about Joe Biden’s climate policies back in June 2019 when everyone on the internet hated him, when the conventional wisdom was that his campaign was dead in the water, and when haters were trying to gin up hits on him for his campaign plan allegedly copying too much from the Blue-Green Alliance.

My take was that the plagiarism charge was nonsense, and the real substance of the controversy was that Biden agreed with the Blue-Green Alliance on issues that are controversial with the big environmental groups. The BGA exists to provide a labor perspective on decarbonization, and as such, they are much more enthusiastic than mainstream environmentalists about nuclear and carbon capture and much more skeptical of ideas like pipeline blocking.

When I first started out in political journalism, the labor-aligned faction of the Democratic Party was the left wing of the party. These days, as part of overall realigning shifts, it’s closer to the right flank of the party precisely because of these disagreements. I thought Biden was correct to insist on taking the labor perspective seriously, and that’s ultimately what got a deal done with Manchin.

But let me share a story I heard that illustrates how contentious this is inside the Democratic Party. Someone in the Biden White House had the idea that the president should visit a steel factory in the Midwest that was using union labor to manufacture steel with hydrogen rather than coal. The hydrogen itself was made by burning natural gas, which of course is a source of pollution, but gas is much cleaner than coal.

And more to the point, the steel mill could use any kind of hydrogen. At the moment, gas is the only cost-effective way to make hydrogen. But as a matter of chemistry, you can absolutely manufacture hydrogen using renewable energy. So the steel factory in question was (a) much lower-carbon than existing steel factories, and (b) potentially a future source of zero-carbon steel if renewable energy ever gets cheap enough. The punchline is that that presidential visit got vetoed because other factions in the White House warned that environmental groups wouldn’t like the president touting a facility that used natural gas as green.

To be clear, the Biden administration’s actual policies on industrial decarbonization have adhered to what he wisely campaigned on. But behind the scenes, these ideas are contentious.

But I think that if you look at what ultimately brought Manchin around to the energy title of IRA, it’s that Biden and Ron Wyden and Chuck Schumer embraced a technology-agnostic view of decarbonization that envisions roles for hydrogen, nuclear, and point-of-source carbon capture. Manchin is aware that the coal industry is dying no matter what America does on climate (it kept dying during Trump’s four years in office) and wisely sees an opportunity to capture upside for his state if America can go beyond oil into a future of nuclear, clean gas, and hydrogen.

Back in July 2020, David Roberts wrote a great piece on the emerging climate policy consensus among Democrats that ends with a section on the points of non-consensus. What happened here is that on all the non-consensus points — restricting fossil fuel production, nuclear, carbon capture, etc. — the left viewpoint lost out. We’re making progress because Biden embraced moderate solutions and because Manchin believed in them.

The road ahead

I really don’t want to be too churlish here.

At the end of the day, the climate left wanted to put their issue on the agenda, and they succeeded. To get something done they had to compromise, and they did. If they and their allies see it as a success story, that’s genuinely good.

But I do think it is fundamentally dangerous to ignore the extent to which this was an elite-driven policy consensus that flew in the face of the public’s views about priorities.

You see this now in messaging tensions. Do Democrats want to emphasize the (true) idea that the IRA should moderately reduce inflationary pressures in the economy, or do they want to emphasize the (also true) idea that it’s the most important climate legislation in history? I think if you’re a mainstream Democrat looking to psych yourself up in the morning, “most important climate legislation ever” sounds a lot more exciting than “modest reduction in inflationary pressure” or “small but helpful reform to prescription drug pricing.” But among persuadable voters, a lot more people want to hear that Democrats are addressing inflation and health care costs than that Democrats are addressing climate change.

Indeed, I think it’s going to be important for Democrats to go out of their way to note that this bill steps away from the idea that climate progress requires impeding the short-term exploitation of America’s fossil fuel resources. It contains provisions that will make it easier to build pipelines and easier to secure new oil and gas leases. And that’s good.

Politically, now that they’ve done a Big Important Substantive Thing on climate, Democrats need to pivot away from talking about climate.

Still, I can’t help but think that someday poor, unloved carbon pricing will have its day in the sun. The Green New Deal came to us in 2019 but it was designed for the problems of 2009, conceived with the presumption that the economy would be in a perpetual quasi-depression and in need of stimulus. But we’re potentially heading into the opposite, an era of struggle to restore low and stable inflation. In that kind of environment, we might eventually see the appeal of green austerity, taxing emissions not just as climate policy but as fiscal policy in a world that needs revenue. I am not — I repeat, not — advising Democrats to run on this in 2022 or 2024. But it is something to keep in mind. You can’t get too locked into preconceived notions of what is going to be macroeconomically appropriate in the future.