President Talks Climate Change, ‘Cash for Clunkers,’ with House Democrats

May 5, 2009 1:49pm

ABC News’ Jake Tapper and Sunlen Miller report:

President Obama signaled a willingness to compromise on major environmental legislation, a key House Democrat said today.

The president held a private meeting in the State Dining Room Tuesday morning with Democratic members of the House Energy and Commerce Committee, after which members of the committee spoke to reporters.

The most contentious issue in the Climate Change bill — on track to be voted on in the House this year, House Energy and Commerce Committee, Rep. Henry Waxman, D-Calif., said — is a "Cap and Trade" system.

In "Cap and Trade," the federal government would limit the amount of carbon emissions permitted, and require companies to bid in an auction for permits to emit greenhouse gases.

Eventually the government would lower the amount of credits available. Firms that reduced their emissions below the required level could auction leftover credits to other polluters.

Some power companies have been lobbying for the administration to initially give free allowances to some utility companies, so as not to drive consumers’ utility bills too high.

The president has previously stated that his preferred approach was a "100 percent auction," with some Democrats discussing giving tax rebates to consumers adversely impacted.

Asked how President Obama today received suggestions to allow free allowances, Waxman said that the president "wants us to try to work out our bill. And he’s giving us a lot of latitude to do that. He wants us to move. He wants legislation."

When a reporter suggested that such a move would be contrary to the president’s budget, which counts $645 billion in tax revenue raised from "Cap and Trade" fees, Waxman said, "I wouldn’t say it’s contrary. He wants us to get to a point where we’re going to have an auction and eventually we will look into an auction."

Waxman said that off-shore drilling expansion was also discussed during the meeting, though the president had previously stated his opposition to such drilling.

The group of House Democrats said they made progress on one key provision of the Climate Change bill: so-called "Cash for Clunkers" legislation.

"Once in a while when you’re in Congress, you do something that really matters in people’s lives," the president said in the meeting, participants recounted, referring to the compromise worked out on "Cash for Clunkers."

Amidst some disagreements between more environmentally-conscious members of the committee, and those from Michigan and other Rust Belt states, a collaborative agreement was reached today, Rep. Betty Sutton, D-Ohio, the author of the original bill, told ABC News.

Under the new agreement, consumers will be able to trade in a "clunker" — a car that gets 18 miles per gallon or less — for a voucher for a new fuel-efficient car. The amount of the voucher will range from $3,500 to $4,500, depending upon the fuel efficiency of the new vehicle.

"Cash for Clunkers" legislation will likely be folded into a larger Climate Change bill, which Waxman said is on schedule to pass the House this year.

"We are determined to pass a bill by this year and our committee is on a schedule to complete the markup on the legislation by Memorial Day recess," Waxman said. "The president said that he wants legislation, he wants us to move as quickly as possible. He said this is an opportunity to move and we ought to take this opportunity."

Waxman said that the environmental legislation will not interfere with the health care reform bill, which President Obama has suggested is a higher priority.

Asked how the committee plans on dealing with requiring polluters to reduce carbon emissions, he said, "the proposal for dealing with the carbon emissions is to put a cap on the amount of emissions that will be reduced over the years and within that cap we will have market-based system to promote innovation to reduce our reliance on carbon energy."

Republicans and some Democrats suggest that the costs to corporate America of any fee on pollutants — what’s called "Cap and Trade" — will be passed on to consumers, constituting a hidden tax. (House Republicans are even doing their own count of Democratic Senators and Members of Congress who have expressed concerns about the bill.)

Waxman said the burden on consumers and particular regions would be factored into the legislation.

"It’s going to require during that transition of period of decades for the Congress to deal with the cost to consumer and the cost to different industries and the development costs of the new technologies, and the allocations of the credits under the cap and trade bill."

The California Democrat added that the committee members "are trying to be mindful of the regional concerns and the rate-payers particularly, the consumers, and that’s the purpose of our legislation and we’re going to maintain the integrity of that." He said the committee aims to protect the "rate-payers, the public, and to ameliorate the harm that may come to any region of the country that might be affected by the cap because of their industry."

As for that other legislative body, the Senate, where Cap and Trade would have a more difficult time surviving a vote, Waxman said "the Senate is waiting for us to put together a consensus with the business community and the environmental community. … We think we have the ability to get that kind of consensus."

Consensus among Democrats in the House Energy and Commerce Committee, said Rep. Ed Markey, D-Mass., is no small thing.

"If we can reach agreement with the coal sector, with the steel, with the auto sector, with the refining sector on our committee which is very representative of the Congress on the whole, then we believe that will be a template for passage in the Senate as well."

Take the varied voices on Cash for Clunkers, for instance.

"We had to decide how green these cars need to be to get that credit," environmentally-focused Rep. Jay Inslee, D-Wash., told reporters.

"It’s a good agreement," agreed former committee chairman Rep. John Dingell, D-Mich., a leading protector — some say enabler — of the U.S. auto industry. "It means sales of autos, it means fuel efficiency and it means progress."

– Jake Tapper and Sunlen Miller

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