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Rep. Stephanie Murphy. Photo: Chip Somodevilla/Getty Images/Bloomberg via Getty Images

House Democrats discussed with President Biden on Wednesday a plan to exempt billions of dollars of new climate spending from his requirement that his $3.5 trillion "soft" infrastructure plan be offset with additional revenue.

Why it matters: The accounting proposal — a version of "dynamic scoring" — would dramatically lower the amount of taxes Democrats would need to raise while creating wiggle room to increase the ultimate size of the package.

  • The bill's final size will depend on two factors: How much in new taxes the centrists in both chambers can stomach, and how much creative math lawmakers are willing to use to justify the budget reconciliation bill's price tag.
  • The maneuver under discussion has the potential to break a series of logjams involving progressives and centrists in the House and Senate.

What they're saying: "I'm a proponent for ensuring that the climate provisions within the reconciliation bill aren't subject to being paid for," said Rep. Stephanie Murphy (D-Fla.).

  • She was among the centrist lawmakers who met with Biden on Wednesday afternoon.
  • Murphy told Axios she "led" her White House remarks by suggesting that climate provisions should be exempt from “the president's desire to ensure that the entire bill is paid for.”
  • Democrats are arguing that the financial cost of inaction on climate will be so high — from paying for flood to forest fire recoveries — that they don't need to raise taxes to cover their green proposals.

The big picture: The Democrats' approach to climate spending is a version of the Republicans' argument that tax cuts pay for themselves, once economists factor in so-called dynamic scoring.

  • The theory is that any lost revenue from tax cuts is less than the higher overall tax receipts generated from a booming economy.
  • The challenge is dynamic scoring rarely produces the amount of revenue advocates predict.
  • Democrats long opposed the practice but embraced it to help justify the cost of the $1.2 trillion bipartisan infrastructure package that received both Republican and Democratic support in the Senate.

Go deeper: Democrats in both chambers are now willing to try the same concept with climate change.

  • “It's not like you apply dynamic scoring to everything,” Sen. Tim Kaine (D-Va.) told Axios. “But there are climate investments we could make that would not only bring down costs to society but would also bring down costs within the federal budget.”
  • With green projects, it’s difficult to calculate precisely how much hypothetical money might be saved, but some estimates put the health costs of climate change at $800 billion a year.

The other side: Republicans scoff at the notion climate spending will pay for itself.

  • "They really don't want to offset anything," said Sen. Ron Johnson (R-Wis.).

By the numbers: In the House Way and Means Committee's version of the $3.5 trillion bill, there are some $273 billion in tax credits to achieve Biden’s climate goals.

  • There's also an additional $150 billion for a Clean Electricity Payment Program in the Energy and Commerce Committee's wider package of climate provisions.
  • Finally, the Transportation and Infrastructure Committee voted for $715 billion in new spending for everything from traditional roads to zero-emission vehicles and high-speed rail.
  • If Democrats agree that none of that spending needs to be offset, that could lower the final tax requirement by hundreds of billions of dollars.

Go deeper: "Where the alarming economic damage stat in the new climate report came from"

Go deeper

Greta Thunberg: “Strange” that Biden would be considered a leader in climate

Greta Thunberg. Photo: Christopher Furlong/Getty Images

Climate activist Greta Thunberg slammed the Biden administration on climate policy in an interview with the Washington Post Monday, saying that it's "strange" to consider Biden a leader in the arena "when you see what his administration is doing."

What she's saying: "The U.S. is actually expanding fossil fuel infrastructure," Thunberg said. "Why is the U.S. doing that?"

Rep. Jayapal urges Biden to use executive action to deliver spending plan

Rep. Pramila Jayapal at an October hearing on Capitol Hill. Photo: Michael Reynolds/EPA/Bloomberg via Getty Images

Rep. Pramila Jayapal (D-Wash.) called on President Biden on Sunday to "use executive action" to deliver his signature climate and social policy legislation that's stalling in the Senate, after Sen. Joe Manchin (D-W.Va.) rejected the plan.

What they're saying: "Taking executive action will also make clear to those who hinder Build Back Better that the White House and Democrats will deliver for Americans," wrote Jayapal, chair of the Congressional Progressive Caucus, in a Washington Post op-ed.

Biden signs annual defense bill into law

Photo: Anna Moneymaker/Getty Images

President Biden signed into law the National Defense Authorization Act for 2022, giving the green light to $770 billion in defense spending over the next year, the White House announced Monday.

Why it matters: The annual bill provides funding and sets policy for the Pentagon for the next fiscal year. Key provisions of this year's bill include a pay increase for military service members and civilian Pentagon staff, 12 weeks of parental leave for all service members, and reforms for how the military investigates and prosecutes sexual assault and harassment.

Go deeper: The key provisions included, and not included, in the NDAA