Energy & Environment Fallout from the Debt Deal

When President Obama signed into law a compromise plan to increase the $14.3 trillion U.S. debt ceiling this week, he authorized nearly $2.5 trillion in cuts over the next decade. This massive budget reduction means numerous government agencies and funding programs are the chopping block, but what will it mean for energy and environment funding? energyNOW! interviewed National Journal reporter Coral Davenport to discuss the new reality of environmental and energy-related cuts.

The first round of cuts requires a $917 billion reduction in government spending, and while there are no guarantees on which agencies will be cut, energy and environmental programs will likely be the first to have their funding reduced, especially on issues that have been controversial this year.

"What lawmakers on the hill are already saying, it's very clear, environmental regulations, climate change programs, the kinds of things that have already been hot political targets are clearly going to be subject to the biggest cuts," said Davenport.

The second round of $1.5 trillion reduction in spending, to be decided by Congress this Fall, may result in the repeal of billions in oil and gas tax incentives. With gas prices at extreme highs and oil companies taking in record profits, taxpayers are furious, and the incentives will be among the hottest items going into the debate.

A congressional "super-committee", equally comprised of Democrats and Republicans, will negotiate these cuts, and outcome of which incentives and funding programs are reduced will be decided by which members are appointed to the committee.

"If the Democrats in the committee are of the ilk that have long been crusading for rolling back these oil and tax breaks, they will push as hard as they possibly can," said Davenport. Regardless, they will likely experience strong resistance from Republicans and oil industry lobbyists, as well as the current reluctance to increase taxes.