When Senator Joe Manchin and Senate Majority Leader Chuck Schumer reached a climate bill agreement this summer, they managed to win a quick endorsement from Manchin’s left-wing antagonists from the Sunrise Movement. The climate hawks pragmatically tweeted, “If 50 Senators are actually committed to voting for a package that reduces emissions by 40% by 2030, Congress must pass it immediately.” A couple days later, Sunrise took a swipe at oil giant ExxonMobil on Twitter: “While we’ve watched our planet burn, Exxon made $18,000,000,000 this year. Big Oil is literally profiting off our destructions.” 

Sunrise may not have been aware that on the same day, the CEO of ExxonMobil was also praising the Schumer-Manchin deal. “We’re pleased with the broader recognition that a more comprehensive set of solutions are going to be needed to address the challenges of an energy transition,” Darren Woods said on a second-quarter-earnings conference call. 

ExxonMobil wasn’t the only corporation to cheer the accord. Manchin’s office produced a 33-page list of supportive statements from natural gas, nuclear, utility, manufacturing, and retail representatives, as well as from labor and environmental organizations.

Support was hardly universal in the business community. Washington’s main oil and gas lobby, the American Petroleum Institute, organized a letter of opposition, joined by 58 other trade associations. The U.S. Chamber of Commerce produced another opposition letter, backed by 253 allied business groups and primarily focused on the bill’s tax impacts. The pharmaceutical lobby criticized the bill’s empowerment of Medicare to negotiate lower drug prices.

But without a united corporate front, what opposition existed was muted, lacking the firepower of a one-sided multi-million-dollar attack ad campaign. President Joe Biden signed the Inflation Reduction Act on August 16, less than a month after Manchin and Schumer shook hands.

Manchin’s support was mathematically necessary for Schumer to secure the minimum 50 votes to pass a filibuster-proof budget reconciliation bill. But Manchin’s ability to stitch together a corporate-environmental coalition brought political value beyond the head count. He pacified corporate America by dividing it, removing a major obstacle from Democratic efforts to sell the bill to the public. 

Noble defeat: Henry Waxman and Ed Markey’s cap-and-trade bill spurred a unified and implacable opposition from Republican PACs and fossil fuel interests. Credit: ASSOCIATED PRESS

While Democrats are often rhetorically comfortable railing against corporations, they have a long history of smoothing the path for progressive legislation by picking off some corporations and dulling the edge of the opposition. For example, in 1934, as recounted in Arthur Schlesinger’s The Coming of the New Deal, when Franklin D. Roosevelt was battling with the head of the New York Stock Exchange, Richard Whitney, over proposed legislation to regulate securities trading, his aides identified a “moderate Wall Street group.” The traders of Whitney’s exchange were an insular group. Other Wall Street investment bankers, Schlesinger explained, “had long resented the Whitney regime.” They also had more contact with clients, which gave them a better read of public opinion.

The White House and congressional allies drove a wedge between the groups by crafting a bill that created a new Securities and Exchange Commission, but shied away from embedding rigid requirements in the statute. 

More recently, regarding health care reform, Barack Obama accomplished what Bill Clinton could not, in part thanks to the help of the oft-loathed pharmaceutical industry. Sixteen years before, President Clinton and his health care point person, First Lady Hillary Clinton, viewed the insurance industry as an enemy to be defeated. The insurance industry responded—before the Clintons finished drafting any legislation—with a devastating $20 million ad campaign. A fictional married couple in the near future, “Harry and Louise,” slogged through a pile of health care bills, complaining about services no longer covered and a lack of insurance plan choices. The more the Clintons attacked insurance companies, the more money the companies raised to fund the ad campaign. Spooked congressional Democrats didn’t give the Clinton plan a vote.

Obama, in contrast, eagerly collaborated with a partnership between the progressive health advocates at Families USA and the Pharmaceutical Research and Manufacturers of America (PhRMA), the drugmakers lobbying operation. While developing the Affordable Care Act, Obama agreed to shelve proposals that could have allowed cheaper imported medicines, and in turn, the partnership funded a new “Harry and Louise” ad campaign, using the same actors but in support of the bill. The insurance industry donated $86 million to the U.S. Chamber of Commerce’s effort to kill the bill (while still negotiating with the White House in hopes of shaping it), but PhRMA’s pro-reform ad campaign totaled $150 million. In the final weeks of the legislative effort, the U.S. Chamber of Commerce spent $5.5 million in attack ads, then PhRMA countered with $6 million of its own.

Democrats have become increasingly anxious to address the intensifying climate crisis, but their legislative attempts to do so—from Clinton’s ill-fated “BTU tax” to John Kerry’s ultimately futile negotiations with Lindsey Graham—have been a series of belly flops. 

Without the benefit of historical context, you might be inclined to view the Manchin-Schumer final product as an anomaly—the awkward result of an evenly divided Senate. But a look back at the past 30 years of climate bill failures, combined with a clear-eyed understanding of how other progressive breakthroughs came together, shows that what Schumer and Manchin did provides a template that Democrats will need to replicate if they are to build on their recent environmental success. Because whenever Democrats have tried to steamroll fossil fuel interests, they’ve been flattened. When they’ve divided those interests, they’ve won.

In mid-February 1993, Bill Clinton had not yet been in office for a month. The new president’s job approval was above 50 percent, and Democrats held 57 Senate seats and a 42-seat House majority. Seeking to leverage his brief honeymoon, he used his first address to a joint session of Congress to propose an economic growth and deficit reduction package that included an energy tax. His sales pitch to Congress and the nation was almost comically nerdy, as he compared his preferred BTU tax (referring to a British thermal unit, the amount of energy needed to increase the temperature of a pound of water by 1 degree) to competing ideas considered in internal White House deliberations:

Our plan does include a broad-based tax on energy, and I want to tell you why I selected this and why I think it’s a good idea. I recommend that we adopt a BTU tax on the heat content of energy as the best way to provide us with revenue to lower the deficit because it also combats pollution, promotes energy efficiency, promotes the independence, economically, of this country as well as helping to reduce the debt, and because it does not discriminate against any area. Unlike a carbon tax, that’s not too hard on the coal states; unlike a gas tax, that’s not too tough on people who drive a long way to work; unlike an ad valorem tax, it doesn’t increase just when the price of an energy source goes up. And it is environmentally responsible. It will help us in the future as well as in the present with the deficit.

Clinton may have believed that he had cleverly threaded a political needle and crafted the most palatable policy solution. But most voters did not feverishly applaud the compelling case that a BTU tax beats an ad valorem tax. Corporations seized the weak target with a one-two punch. First, various industries—ethanol, diesel fuel, aluminum smelters, heating oil, utilities—successfully pressured the White House for tailored exemptions. The BTU tax compromise passed the House in May 1993, but environmentalists were deflated.

Meanwhile, a broader corporate coalition had formed to kill the weakened BTU tax outright. The National Association of Manufacturers, the U.S. Chamber of Commerce, and the American Petroleum Institute formed the American Energy Alliance, with 1,400 business and trade associations as members. They spent heavily on a marketing campaign in 20 states, focusing on two oil state Democrats on the Senate Finance Committee, Oklahoma’s David Boren and Louisiana’s John Breaux. Since the committee had 12 Democrats and 10 Republicans, losing one committee Democrat was enough to deny the president’s plan a majority.

Clinton lost Boren, while Breaux pushed a gas tax increase as a revenue-raising alternative. The corporate lobbying also made several other Democrats skittish, prompting the White House to conclude that going around the Finance Committee straight to the Senate floor wasn’t an option. By June, with no path to passage, Clinton abandoned the BTU tax and eventually settled for a modest gas tax increase that had a negligible impact on greenhouse gas pollution.

Four years later, when Clinton signed the Kyoto Protocol, the first international climate treaty with legally binding targets for reduced greenhouse gas emissions, the business opposition was even more galvanized. In the years preceding the Kyoto accord, the Global Climate Coalition—a lobby composed of many members of the American Energy Alliance—had been stoking concerns that global warming wasn’t settled science. In 1997, the GCC spent $13 million on an ad campaign attacking the emerging Kyoto agreement as a scheme by “China, India, Mexico, and Brazil” to “force American families to restrict our use of … oil, gasoline, and electricity.”

In short order, the Senate bought the GCC’s propaganda. Unanimously, the upper chamber passed a resolution expressing opposition to any climate agreement in which the United States would be legally required to cut greenhouse gas emissions but developing nations would not. The resolution put Clinton in an impossible position, as any requirement on developing nations was a nonstarter among most participants in the international negotiations. Seeing that it was doomed to fail, Clinton signed the treaty but never sent it to the Senate for ratification.

By 2009, after more than a decade of inaction in Washington and rising temperatures globally, the pressure to tackle climate change had intensified. On the campaign trail the prior year, Barack Obama spoke more urgently about the crisis than Clinton ever had. He became the first president to mention climate change in his inaugural address. Yet the Democratic Party still was not united around the issue. The Senate Democratic Caucus totaled 58 members at the beginning of Obama’s presidency but also had a much larger moderate faction than it does today. In particular, 18 Senate Democrats represented the top coal-producing states.

Joe Manchin’s ability to stitch together a corporate-environmental coalition brought political value beyond the head count.

He pacified corporate America by dividing it, removing a major obstacle from Democratic efforts to sell the bill to the public.

In April 2009, the Senate voted on amendments for its annual budget resolution. Under Senate rules, the amendment process was an opportunity for Democrats to designate issues as eligible for the filibuster-proof budget reconciliation process. If climate change made the cut, Senate Democrats could pass a comprehensive policy without worrying about finagling Republican votes. But when Republicans introduced an amendment barring climate policy from reconciliation, it passed overwhelmingly, with 26 Democrats—nearly half the caucus—crossing the aisle. Democrats who voted to keep climate out of reconciliation and are still in the Senate include Colorado’s Michael Bennet, Pennsylvania’s Bob Casey, Illinois’s Dick Durbin, Minnesota’s Amy Klobuchar, Michigan’s Debbie Stabenow, Montana’s Jon Tester, and Virginia’s Mark Warner.

Undeterred, Democrats sought to craft a bipartisan climate policy. Such a process was already under way in the House. Energy and Commerce Committee Chair Henry Waxman was a California liberal who in November 2008 bumped Michigan’s auto industry–boosting Representative John Dingell from the committee’s top spot in a contentious caucus vote, with Speaker Nancy Pelosi’s tacit backing.

Waxman won because everyone knew that Dingell would not pursue a climate bill. But, as detailed in The Climate War by Eric Pooley, an expert on climate politics, Waxman understood that he would need Dingell supporters to pass such a bill. With the help of fellow committee member Ed Markey of Massachusetts, Waxman reached out to the vanquished. He kept some of Dingell’s committee staff and told Rick Boucher, a Virginia coal country House Democrat, “I’d like you to write the bill with me.” Boucher was eager to craft a climate bill that helped develop technology to capture and sequester carbon emissions so coal could remain a viable industry.

Soon a golden opportunity walked through Waxman’s door. Fred Krupp of the Environmental Defense Fund shared with Waxman a forthcoming proposal from the U.S. Climate Action Partnership (USCAP), a coalition of environmentalists and corporations, including some fossil fuel companies. (A few USCAP members were former Global Climate Coalition members who were no longer denying the science.)

While Democrats are often rhetorically comfortable railing against corporations, they have a long history of smoothing the path for progressive legislation by picking off some corporations and dulling the edge of the opposition.

After two and a half years of internal deliberations, USCAP had crafted a version of “cap-and-trade”—in which companies are issued a finite number of tradable greenhouse gas emission permits, limiting the overall amount of pollution while giving companies some flexibility regarding how fast they reduce their emissions. As described by Pooley, Krupp “predicted [to Waxman] that industry would be relatively flexible about targets if it could get free allowances and [carbon] offsets needed to defray costs,” and defended the corporate case for free allowances on the grounds that their value would be passed on to consumers. Some climate hawks viewed this as corporate grift. Waxman and Markey were initially “leery” but were impressed by the support USCAP was getting from some of the larger environmental groups. In turn, Pooley wrote, the two congressmen “began to see the [USCAP] blueprint as a way to remake the politics of global warming.”

With Boucher’s help, Waxman and Markey worked closely with the utility industry, much of which relied on coal. As a result, utilities got lots of free permits in their bill—35 percent of what was available. Coal got $10 billion over 10 years for carbon-capture research and development, plus bonus permits for companies that use such technology in the future. (The bill also would prevent the EPA from using the Clean Air Act to regulate carbon emissions from existing coal plants.) But, per Pooley, “Big Oil, curiously, was sitting out of the early negotiations, so Waxman and Markey made a decision … Oil refiners would get just 2 percent of the allowances … This would cause Big Oil to go on the warpath, but that was bound to happen anyway. And the power sector was the key to the deal.”

In part because of the disagreements between the oil and utilities sectors, USCAP never formally endorsed the bill. But the compromises were still enough to squeak the bill through the House on a 219–212 vote, though 44 Democrats—mainly from the South and Midwest—broke ranks. Eight Republicans who crossed the aisle provided the margin of victory.

That victory was fleeting. Conservatives were fired up and scorched the bill as a “cap and tax” job killer. The main coal lobbying operation was implacable and scoffed at the goodies Boucher had secured. (The backbreaking efforts by Boucher, a 14-term congressman, to preserve for his constituents a role for coal in a green energy economy were rewarded with his defeat in the 2010 elections.) The American Petroleum Institute got off the sidelines and pounded the bill as well, and the divided USCAP couldn’t give Waxman and Markey any air cover.

The battered House bill limped across the finish line. Senate Democrats did not rush to revive it, and the White House wasn’t interested in trying to force it on them. (As soon as the House bill passed, White House Chief of Staff Rahm Emanuel expressed his doubt to Obama that the Senate would step up on climate.) Senators Barbara Boxer, Joe Lieberman, and John Kerry had been trying to craft their own bill, but they didn’t want to plow ahead without a Republican cosponsor. The 2008 presidential runner-up John McCain had previously cosponsored cap-and-trade legislation with Lieberman and, in 2003 and 2005, successfully pressured his party leadership to put it on the Senate floor. But McCain’s bipartisanship withered following his defeat to Obama, and he wouldn’t join Lieberman for a third act.

Then, in October 2009, hope appeared in the form of Lindsey Graham. With Kerry, Graham wrote a New York Times op-ed, “Yes We Can (Pass Climate Change Legislation).” Staying away from the now-charged phrase “cap-and-trade,” they proposed “a market-based system that will provide both flexibility and time for big polluters to come into compliance without hindering global competitiveness or driving more jobs overseas.” They emphasized support for nuclear power, insisted “we must recognize that for the foreseeable future we will continue to burn fossil fuels,” and urged America to “become the Saudi Arabia of clean coal.” All of that wasn’t very different from the substance, if not the perception, of Waxman-Markey. But while the House bill left the oil industry in the cold, Kerry and Graham offered to include a “compromise on additional onshore and offshore oil and gas exploration.”

In his memoir, A Promised Land, Obama wrote, “I wasn’t wild about having to depend on Graham,” and once joked with Emanuel that in a heist movie, “Lindsey’s the guy who double-crosses everyone to save his own skin.” But Emanuel replied, “Unless Lincoln and Teddy Roosevelt are walking through that door, buddy, he’s all we got.” And Graham had stuck his neck out far enough to risk losing support at home. At a South Carolina town hall the day after the op-ed ran, angry constituents accused Graham of making a “pact with the devil” and having “betrayed this nation.” The blowback didn’t scare Graham off, but as The New Yorker later reported, it prompted him to bring the Democrat-turned-independent Lieberman into negotiations with Kerry.

Six months after the joint op-ed, the “tripartisan” team had a deal. Senators kept makers of petroleum products out of the permit trading system. They would, though, be able to purchase allowances at a fixed price instead. While that wasn’t enough to get an endorsement from the American Petroleum Institute, Kerry, Lieberman, and Graham extracted a backroom promise of silence. “They would not run ads, they would not lobby members of Congress, and they would not refer to our bill as a carbon tax,” an anonymous participant told The New Yorker. On April 22, 2010, Kerry announced that three oil companies would explicitly endorse the bill at a rollout event in four days’ time.

Something else happened on April 22. The Deepwater Horizon rig sank in the Gulf of Mexico, causing a colossal oil spill that would take five months to contain. The rig was owned by BP, one of the oil companies prepared to endorse the climate bill. Not only did the disaster lessen the value of BP’s endorsement, but it also prompted calls on the left for tougher offshore drilling requirements, the exact opposite of what Graham wanted from a climate compromise.

And another thing happened on April 22. Several news outlets ran stories, based on information from anonymous aides, reporting that Senate Majority Leader Harry Reid planned to address immigration reform before taking up any climate bill. (The New Yorker later attributed some of the leaks to Reid’s office.) As there was no immigration bill to speak of at the time, this sounded to Graham like a vote of no confidence in the climate deal.

Moreover, Reid had already upset Graham that day regarding the climate bill’s oil industry compromise. Graham wanted Reid to issue a statement batting down characterizations of the deal as a “gas tax.” A week had passed since FoxNews.com ran a story headlined “WH Opposes Higher Gas Taxes Floated by S.C. GOP Sen. Graham in Emerging Senate Energy Bill,” sourced to anonymous senior administration officials. Graham was livid, convinced that the White House was trying to sabotage the deal and wreck his standing in South Carolina. Knowing that the Fox story jeopardized their agreement, Kerry and Lieberman successfully pressed the Obama White House to issue a statement saying, “The Senators don’t support a gas tax, and neither does the White House.” Graham wanted Reid to issue something similar, but according to The New Yorker, he got only a tepid statement promising to “review” the bill. Why? Because Reid did not trust Graham and thought the whole proposal was a trap to hang what could be branded a gas tax around the Democrats’ necks.

On April 24, Graham backed out of the deal, with a letter blaming the press reports that immigration was taking precedence over climate. However, The New Yorker reported that “immigration was mostly just an excuse for his anger” over Reid’s handling of the gas tax flap. And in early May, Graham told Climatewire, “Forget about immigration. There’s something new here,” referring to the Deepwater Horizon spill. “I realize that drilling politics has changed. But … [if] we abandon drilling, OPEC becomes the biggest winner. And that’s the whole reason for getting involved in this bill.”

Schumer and Manchin provided a template that Democrats will need to replicate if they are to build on their recent environmental success. Because whenever Democrats have tried to steamroll fossil fuel interests, they’ve been flattened. When they’ve divided those interests, they’ve won.

As Obama recounted in his memoir (without mentioning anything about the gas tax matter), “Rumors began circulating that [Graham] was looking for an opportune time to abandon the effort altogether … before the Deepwater accident. With newscasts suddenly flashing hellish images of a burning rig, we knew that environmental groups were sure to back off any bill that expanded offshore drilling. That, in turn, would give Graham the excuse he needed to jump ship.”

Later in May, Kerry and Lieberman introduced the bill, with new provisions making it easier for states to stop offshore drilling plans. They retained support from the three oil companies and the American Petroleum Institute’s pledge for silence, secured in the previous month. But without Graham’s support, the bill was doomed. No other Republican was interested in rounding up a sufficient number of Republican votes, and Reid never tried bringing the bill to the Senate floor.

That failure effectively ended, for the next several years, Democratic attempts to solve the climate crisis by compromising with corporations. Climate activists, who had been somewhat deferential during the sausage-making process, changed tack. “So now we know what we didn’t before: making nice doesn’t work,” wrote 350.org leader Bill McKibben in a TomDispatch essay nearly four months after the collapse of Kerry-Lieberman-Graham. “It was worth a try, and I’m completely serious when I say I’m grateful they made the effort, but it didn’t even come close to working. So, we better try something else.” That something else was “a movement … Since we’ll never have the cash to compete with Exxon, we better work in the currencies we can muster: bodies, spirit, passion.”

Soon that movement had a focus: stopping the proposed Keystone XL pipeline project, which would extract oil from Canadian “tar sands” and ship it to America. In a YaleEnvironment360 piece, McKibben explained the strategy: 

North American environmentalists are now fighting a simpler, more basic battle—not for overhauling laws and economies, but simply to keep carbon in the ground. It’s not an elegant battle with lots of complicated legislation; it is an elemental one, easy to understand, worth going to jail for. We know that we’re simply buying time … But if we can stop them, maybe the planet will come to its senses about global warming.

After years of grassroots civil disobedience, Keystone became a political football. Obama responded favorably to the political pressure, and his State Department rejected a critical permit. Then Donald Trump reversed that decision, and Joe Biden reversed Trump’s decision.

What Keystone did not become is a catalyst for resolving the climate crisis. The broad environmental-labor-business coalition that supported Waxman-Markey, however tenuously, splintered, as only devout environmentalists were interested in stopping individual fossil fuel projects.

However, “keep it in the ground” became an organizing focus for the Democrats’ growing faction of sharper-edged progressives. When Representative Alexandria Ocasio-Cortez came to Washington in 2019, she immediately rallied progressives behind her sweeping vision for a “Green New Deal.” She drafted a controversial resolution that called for moving toward fueling America with 100 percent renewable energy in 10 years, with no offers of help for fossil fuel companies in the rapid transition. Her Senate partner? Ed Markey, who 10 years earlier was by Waxman’s side wheeling and dealing with the carbon-emitting crowd.

The Green New Deal resolution was a legislative bust. Senate Republicans put a version of it on the floor, hoping to embarrass Democrats. Still, in a procedural vote, most Democrats sidestepped with a “present” voice, while a few joined Republicans in supporting a filibuster. Nancy Pelosi never gave it a vote in the House.

Once Democrats controlled Washington again in 2021, albeit with no margin for error, climate was back on top of the agenda. But party leaders did not pursue a bipartisan
strategy—understandably, considering how politically polarized the climate issue had become. Less understandable was why the Biden administration crafted its initial climate plan without the input of Joe Manchin. Everyone knew that the West Virginia senator was far more partial to fossil fuel interests than anyone else in the Democratic Caucus. Still, Senate Democrats could not reach the minimum 50 votes to pass legislation through reconciliation without him. Only after Manchin publicly rejected the sprawling Build Back Better package, and expectations for climate action in 2022 hit rock bottom, did his fellow Democrats accept a climate bill compromise on his terms.

Many environmentalists were skeptical that Manchin could or would play a positive role in the climate fight. But Manchin showed that he could bring some corporations on board and dull the criticism of others. And that helped avoid the backlash that felled Waxman-Markey. Climate policies may be popular in the abstract, but they are often vulnerable to being attacked unfairly as being disruptive to daily life and costly to household budgets. Any attempt by opposing corporations to smear a Manchin-backed bill as some sort of socialist plot to take away your cars or your charcoal briquettes would have looked silly, so they didn’t bother.

Climate activists drew the wrong lesson from the Kerry-Lieberman-Graham debacle. “Making nice” with corporations “didn’t even come close to working,” McKibben wrote. But that’s wrong. It came really close to working. With some more trust between Reid and Graham, and fewer explosions in the Gulf of Mexico, Obama might well have signed a transformative climate bill. What didn’t work at all was the strategy to save the climate by blocking one pipeline at a time or drafting ideologically pure legislation without any plan to neutralize corporate America’s capacity to drown Democrats in disingenuous messaging.

Evenly divided Senates that give any member outsized power, especially in the reconciliation process, are rare. Manchin won’t always be mathematically capable of stymying legislation all by himself. In a more Democratic Senate, climate hawks might entertain bypassing Manchin altogether and drafting legislation without him. But Clinton and Obama had much bigger Senate majorities upon taking office than Biden had, and yet still could not ram through ideologically pure legislation. Regardless of future Senate math, Democrats should not forget that the path to legislative success is much smoother when corporate America is divided, not united.

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Bill Scher is political writer at the Washington Monthly. He is the host of the history podcast When America Worked and the cohost of the bipartisan online show and podcast The DMZ. Follow Bill on Twitter @BillScher.