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The good news is that the government found a way to do something about climate change. The bad news is that lawmakers did it in a very inefficient way.
We spent a lot of time covering the passage of the massive climate and health care bill Democrats have offered up as a major step toward combating climate change. Among many provisions, the legislation includes tax credits for electric vehicles.
So I was gobsmacked to read in a CNN story that, according to an industry group, zero of currently available EVs will be eligible for the full tax credit next year.
Companies will have to adjust their production to meet requirements for US production of vehicles and sourcing of batteries. The hope is that these requirements will make the US economy more independent from China.
Further, income and price limits will cut a large portion of the EV market off from eligibility.
These requirements and more were added to gain the essential vote of West Virginia Sen. Joe Manchin, who had torpedoed the inclusion of more robust climate provisions in a prior version of the bill and who insisted on substantial changes during subsequent negotiations.
Read Matt McFarland’s full report to see a rundown of the complicated new rules around the EV tax credits. I reached out to McFarland with some follow-up questions about how effective these credits will be at changing American roads – something for which he said there is no perfect answer.
WHAT MATTERS: What do we know about how long it will it take car companies to adapt to these new rules and get more fully eligible vehicles on the market?
MCFARLAND: It’s hard to know how long it will take. Depends on a lot of factors. What changes do they (auto companies) make? How will the federal government measure what vehicles qualify? There are significant gray areas right now.
It also could potentially be expensive for automakers to make certain changes. So they’ll have to weigh the financial merits (of making cars eligible for EV credits).
WHAT MATTERS: What do we know about how long it will take these credits to drastically cut down on the number of carbon-emitting cars on the road?
MCFARLAND: EVs are growing but still such a small part of our fleet. Drastic change will be many years away.
Gas prices are falling. Is that good news?
The other thing that might hurt EV uptake is the fact that gas prices continue to fall from their record highs earlier this summer.
That’s good news for consumers struggling to deal with inflation – and maybe bad news for the environment.
The ups and downs of the economy are still impossible to understand.
CNN’s Christine Romans calls it the Dr. Jekyll and Mr. Hyde economy. The good guy, Jekyll, is winning this week, she writes.
“That recession obsession has faded a bit over the past 10 days or so amid continued signs of labor market strength, falling gas prices and hints that runaway inflation may be peaking,” Romans writes.
Falling gas prices are allowing consumers to spend more. They’re showing some frugality to get more bang for their buck.
But she notes the polling still shows “the public feels pretty lousy about the economy.”
So far, it’s high-income people who might be driving the continued consumer strength – so it is, as ever, uneven.
The metaphor CNN’s John King used on “Inside Politics” was that of a seesaw – mortgage rates are down in the short run, suggesting inflation may be cooling, but home sales are down, too.
CNN’s Matt Egan told King that home sales are down 30% in the South and West. But prices continue to rise, albeit more slowly, to $404,000, building on 10 straight years of home price increases.
One burning question is how the cautious optimism that inflation is cooling and the economy has pulled through the worst of it will affect the political situation.
Some optimism for Democrats for November
Before he talked to Egan, King talked to Amy Walter, the publisher of the Cook Political Report (and my old boss at a different news organization).
She’s seeing some more optimism for Democrats in November and notes that in polling in Senate races in particular, Democratic candidates are outperforming President Joe Biden’s dismal approval rating.
The Cook Political Report has changed its race ratings to slide Pennsylvania’s key Senate race from “tossup” to “lean Democrat.”
She argued the major political conversation over abortion this summer and the new focus on former President Donald Trump could hurt Republicans in November.
“The focus has been almost entirely on Republicans, and not in a good way,” Walter said.
Republicans still hold a historical advantage heading into the midterm elections, when the president’s party almost always loses some seats – and Democrats only hold the barest of majorities in the House and Senate. The end result could be bare majorities for Republicans after November, rather than the shellacking some Democrats have feared.
“We’re seeing a touch of optimism creep in, in terms of voters’ opinions about the economy,” Walter said. “It’s not going to turn around overnight. But at least if the trend line is going in the right way, that’s good for Democrats. The more Donald Trump is in the spotlight, that’s also good for Democrats.”
Trump will be in the spotlight to some extent as Election Day approaches. The Trump Organization goes on trial in October, and Trump, who has been consolidating power in the party, continues to dominate headlines with the universe of legal issues that circles around him.
But the economy could be more Mr. Hyde by then, which could completely change the political equation.