What it means to have Manchin backing a bill to fight climate change
CHERYL CORLEY, HOST:
Senator Joe Manchin of West Virginia surprised the country this week when he announced a landmark deal with Senate Majority Leader Chuck Schumer to fight climate change, lower health care costs and address inflation - all this while cutting the deficit by raising corporate taxes. The conservative Democrat has often stymied the party's efforts to combat climate change and to deliver progress on one of President Biden's key campaign promises. The deal is more moderate than Democrats' initial goals. However, it would spend nearly $370 billion in climate and energy provisions, the largest such investment in the country's history. So how did it happen? Through lots of negotiations with significant help reportedly from economist Larry Summers, who spoke with Senator Manchin about the proposal. Summers served as Treasury secretary in the Clinton administration, as well as director of the National Economic Council under President Obama. And he joins us now. Mr. Summers, welcome to ALL THINGS CONSIDERED.
LARRY SUMMERS: Very glad to be with you.
CORLEY: Well, you know, in the past, Senator Manchin has not supported the president's efforts on climate change. I'm not going to ask you to share details of the private conversations you had with the senator, but he has often expressed his concerns about cost. And people have counted on you and your financial acumen in very turbulent times. So what type of economic argument can be made to people who are just really hesitant to support investments in green energy?
SUMMERS: So I'm someone who's been very worried about inflation. I think we made a major mistake a year and a half ago in the stimulus bills and in their size that caused an overheating of the economy. And I'm someone who believes that the Fed blundered badly last year in keeping policy too easy for too long. And I'm someone who believes that inflation has devastating consequences for a society's morale and how well it functions. So I wouldn't want to do anything that exacerbated inflation problems in order to serve other objectives.
But I studied this bill pretty closely and concluded that it reduced inflation in three ways. It reduces demand because it brings down budget deficits because it raises more revenue than it spends. I also found that with respect to a number of key areas, notably in energy, the combination of the associated permitting reforms and the support for new energy incentives would reduce prices by increasing supply. And I noticed that it involved the government purchasing in more efficient ways, particularly for pharmaceutical products. And that leads to a reduction in prices.
So I saw a bill that, when fully analyzed, will have a positive impact on inflation - not a huge positive impact but a positive impact on inflation and at the same time will build a stronger country, downpayment on climate change, increase fairness and make people be healthier at a time when our life expectancy statistics have become pretty dismal. And that's why I've been saying to almost anyone who will listen that I think this is a very, very good bill.
CORLEY: Well, last year, as you mentioned, you were critical of the Biden administration's pandemic relief plan. You said that government stimulus should be more moderate in order to leave room for other public investment measures. You referenced the Build Back Better agenda that the president put forth. The deal that the senator announced this week is much more moderate than Build Back Better. So does this proposal do enough, in your view?
SUMMERS: I think it's just the right proposal for this year. I think over time, we need to do more to regenerate our country's infrastructure. Over time, we need to support care workers. We still have massive education gaps in our countries. There are important issues around affordable housing. So I would never call this the bill to end all bills. But I think Senator Manchin has made some very important contributions to the debate. We need to do things in disciplined ways. We need to pay for things when we do them rather than just put it on the comp (ph) in an inflationary economy like the one we have now. We need to pay a lot of attention not just to how much government does but how well government does it.
CORLEY: I want to talk to you about where we started, inflation. Americans are really feeling the effects of that right now. Some economists say this legislation would have a very moderate impact on inflation because its effect would likely not be felt any time soon. What do you make of that critique?
SUMMERS: I think the economists who have said that have not paid attention to the associated increases in fossil fuel permitting, not taken account of the very direct government renegotiation of pharmaceutical prices and have not recognized the importance of expectations and the sense that things are getting under control for breaking inflation psychology. So my analysis suggests that this will reduce inflation. And so if we can reduce inflation and save the planet at the same time, that's a good deal by my advice (ph).
CORLEY: All right. Well, Larry Summers is an economist and served as Treasury secretary in the Clinton administration. Mr. Summers, thank you so much for joining us.
SUMMERS: Thank you.
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