The 3 Interesting Climate Parts of Biden’s Budget Proposal
The plan tells us a lot about where the White House thinks it can make a deal with Republicans.
Let’s start here: The Biden administration’s federal budget proposal for fiscal-year 2024 has zero chance of becoming law. The PDFs and press releases published by the White House today — and met with acclaim from Democratic-aligned nonprofits — are basically fiscal fan fiction; to first approximation, they more closely resemble pregame trash talk than solemn policymaking.
To be clear, this is not only because the Republican Party controls the House of Representatives and wants far deeper cuts than Biden has ventured. It’s because no president’s budget proposal ever becomes law. Even during the early years of the Trump administration — when the GOP held the White House and both houses of Congress —Republican lawmakers looked at the president’s proposed 31% cuts to the Environmental Protection Agency, laughed a bit, then went back to their appropriating.
So why pay attention at all? There are two reasons. First, the proposal is the White House’s opening move in one of the year’s biggest political stories: whether Democrats and Republicans can agree on a new federal budget without shattering the debt ceiling and triggering a financial crisis. The budget, in that sense, is an argument that the government can reduce the federal deficit — and slow inflation — without the kind of drastic spending cuts that Republicans have mused about so far. Biden’s proposal contends that revenue can fill the gap, calling for about $5 trillion in new taxes on companies and the wealthy over the next decade.
The budget also shows that climate change remains a central concern for Biden’s team. Although the bipartisan infrastructure law and Inflation Reduction Act released a flood of climate-related funding, Biden officials are now asking for even more to pursue their decarbonization-related goals. And this hints at the second reason to heed today’s proposal: that if nothing else, it reveals the White House’s aspirational priorities.
Will any of the proposals outlined below make it into the final budget? It’s hard to say; a few climate-adjacent topics — especially energy security and permitting — now have such bipartisan support that Republicans may eventually opt for them in the final deal. But regardless, these climate policies are the ones you’re likely to keep hearing about from Democrats — especially as they look toward the 2024 election.
Here are some of the most interesting ideas in the proposal:
1. A new tax on the electricity used for crypto.
The cryptocurrency industry’s voracious use of energy has long concerned Democrats; at peak, crypto miners consumed more energy than Finland. Now the industry has sagged— and the party smells blood. Last month, Senator Elizabeth Warren of Massachusetts promised that a crackdown on crypto’s energy use is coming, and the Department of Energy and EPA have said that they have the legal authority to compel crypto miners to disclose their energy use.
Biden’s budget goes further, proposing a new and gradually rising 30% tax on crypto’s electricity use. The White House estimates it will bring in $3.5 billion over the next decade.
2. An end to fossil-fuel subsidies.
Biden campaigned on ending fossil-fuel subsidies and tax breaks; in his first year as president, American diplomats endorsed a United Nations pledge to end such subsidies globally.
Yet so far he’s struggled to actually make it happen. He couldn’t get Congress — and especially Senator Joe Manchin of West Virginia — to swallow the reform in the Inflation Reduction Act last year. (In fact, Biden has sometimes boosted de facto fossil-fuel subsidies: After gasoline prices spiked last year, he invoked the Defense Production Act to make sure fracking firms had the resources they needed to drill.)
Now he’s trying again, proposing reforms to fossil-fuel subsidies that the White House estimates could bring in more than $90 billion over the next decade. That said, it’s unlikely to go anywhere this time.
3. More money for permitting renewable energy.
One of the White House’s biggest worries is that the Inflation Reduction Act’s hundreds of billions of climate funding is going to wither on the vine. If developers and energy companies can’t get new clean-energy projects sited and approved, then many tax credits might expire before firms can take advantage of them, officials fear. After Democrats rejected a Manchin-led effort to reform environmental-permitting laws last year, those concerns intensified.
Now, Biden has requested another $60 million in funding to help the National Oceanic and Atmospheric Administration build the internal capacity it needs to approve offshore wind farms. It has asked for millions more to build rural electricity infrastructure and overcome other procedural holdups. And unlike other aspects of the budget, this could actually go somewhere: House Republicans have identified permitting as one of their own priorities and approved a bill in committee on Thursday. If there’s a climate-related deal this year, it’s likely to happen on permitting.