Every few years, American politics astonishes you. Yesterday was one of those days.

In the late afternoon, Senator Joe Manchin announced that he had reached a compromise with Senate Majority Leader Chuck Schumer over President Joe Biden’s long-ailing legislative agenda. In a move that seemed to shock almost all of their colleagues, the two men unveiled a nearly completed bill that will reduce the federal budget deficit, reduce greenhouse-gas pollution, invest in new energy infrastructure, and lower health-care costs…

…The new bill will significantly broaden the scope of these incentives, replacing them with technology-neutral tax credits that can be used for any low- or zero-carbon form of power generation. At the outset of a project, developers can make a choice: Either they can take the new investment tax credit, which will generally cover 30 percent of the cost of their project, or they can take the new production tax credit, which will pay them for every kilowatt-hour of zero-carbon electricity that they generate.

When economists at the University of Chicago and the Rhodium Group analyzed an earlier version of this proposal last year, they found that these technology-neutral tax credits were strikingly efficient, creating $1.5 trillion in economic surplus while eliminating more than 5 billion tons of carbon pollution. The tax credits had a benefit-to-cost ratio of about 3 to 1, Michael Greenstone, the Milton Friedman Distinguished Service Professor in Economics at the University of Chicago, told me. “It’s very rare that we get opportunities to have policies with a benefit-to-cost ratio of 3 or 4 to 1. Normally it’s, like, 1.3 to 1, and we economists get very excited,” he said…

Continue reading at The Atlantic…

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