As we've been expecting for some time, the House and Senate aren't going to use the budget reconciliation process to pass a cap-and-trade regime on carbon emissions this year. That means Democrats can't just slide it quickly through the Senate with 50 votes. But this doesn't mean climate legislation is dead, as some of my esteemed co-bloggers on the site have been suggesting. Here was OMB Director Peter Orszag, clarifying the question in a press briefing this morning:

With regard to climate change, there's already legislation that is being considered on the House side. The Senate is also active. The fact that it's not treated in the budget resolution the same way that we proposed in no way means that the House and Senate can't take the legislation up. And in fact, I think some may argue that the political economy of getting climate change done this year may actually be better outside of the—outside of the budget resolution than inside of it.

Right. Henry Waxman's set to unveil his big carbon bill in the House by Memorial Day. Barbara Boxer's cobbling together a climate bill in the Senate (and a few other senators may be drafting their own bills, I've heard). Meanwhile, the EPA is laying groundwork to regulate carbon on its own, which will snap Congress to attention. So a cap on carbon emissions can still pass this year. It just can't get put in the budget reconciliation bill, which means it can be filibustered in the Senate. That makes passage more difficult, true, though I'd argue that with something as intricate and as far-reaching as cap-and-trade legislation, you really don't want to jam it through reconciliation with only a few hours to debate the thing anyway.

At least not on the first try. However, if, after hashing the bill out for months and months, opponents still want to filibuster climate legislation indefinitely and kill it, then the Democratic leadership could always stick the carbon-regulation bill in next year's budget and use reconciliation to get it through the Senate with 50 votes in 2010. I asked Jim Horney of the Center on Budget and Policy Priorities if this option was still open, and he replied, "Yes, nothing's stopping them."

One thing Horney noted, though, is that because of the arcane Byrd rule, there's a limit to what sort of cap-and-trade provisions you can stick in a budget reconciliation bill. For instance, if you have a cap-and-trade measure that simply auctions off carbon permits and uses the revenue for clean-energy spending and rebates for consumers, and the whole thing is deficit-neutral, then that's no problem at all. Stick it in reconciliation and it can sail through the Senate with 50 votes. But if Congress, as seems likely, wants to design a more intricate carbon bill, with additional regulations and directives to states and so on—well, then depending on the Senate parliamentarian, that stuff could all get stripped out of reconciliation. So there are trade-offs: Democrats could try to jam through cap and trade with only 50 votes next year, but they could be limited in what type of bill they can pass.

--Bradford Plumer