COVERAGE AREA and macrothesis
As President Donald Trump begins his third year as President – and, not to be overlooked, his 2020 re-election campaign – incoming House Democratic Party leaders have telegraphed their plans for vigorous “oversight” activities that could circumscribe the pace and scope of his deregulatory agenda. We expect the Administration to focus on finalizing and defending marquee rollback initiatives, especially greenhouse gas (GHG) standards for the power sector and light-duty vehicles and meta-regulatory matters such as the social cost of carbon and infrastructure permitting under the National Environmental Policy Act.
To “pendulum-proof” the President’s efforts against a differently minded, future White House, we also expect the White House to prioritize the seating of simpatico federal jurists disposed to uphold those rules. Senate Republicans’ ongoing cohesion with the White House may prove critical for the President’s realization of his deregulatory and judicial goals. An adverse report by Special Counsel Robert Mueller – even one that falls short of directly impugning the President – could spur some of the 22 Senate Republicans facing their own re-elections in 2020 to break with the President.
Legislatively, we anticipate heightened pugilism, rather than policy cooperation, after a mid-term election where both parties gained ground by going on the attack. House Democrats’ embrace of a “Green New Deal” – a government-directed, low-carbon transition –and the reinstatement of a Select Committee to pursue this goal augurs weak legislative prospects, in our view. It also suggests that both sides could address climate policy symbolically, rather than substantively, as a wedge issue. We continue to give low odds for a federal carbon tax, and not just because fossil-levered Senate Republican gatekeepers seem likely to block it.
In addition, progressives and climate activists appear to looking beyond market-based measures in favor of stricter regulatory modalities that could deliver more certain, more immediate impacts. Even if no federal law passes, the Select Committee could reactivate state-level climate debate (and fracking and flaring debate, too) by spotlighting mid-continent producing states led by incoming Democrat Governors with new statehouse majorities. Meanwhile, in green-leaning, Democrat-led coastal states, we see a second wave of carbon pricing programs under consideration, particularly in the transportation sector.
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Updated: December 24, 2018.