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- [00:00]
A
Hey, everybody. Tim Miller from the Bulwark here with Jonathan Cohn, author of the Breakdown, one of our best newsletters. I have an internal ranking of which newsletters are the best. I'm not going to share it right now, but people should go to the bulwark.com and subscribe. I wanted to talk to him about a new, I guess, political vulnerability that is emerging for Donald Trump and a new financial vulnerability that's emerging for regular Americans, and that is electricity bills rising. I'm just going to read one paragraph for from Forbes and then kind of let you cook on it here. Electricity bills have increased almost 10% since the start of the year and could rise even more thanks to the repeal of clean energy tax credits, new tariffs and rapid expansion of electricity hungry data centers to fuel a boom in AI. So we've got the tariffs, the cuts on the, you know, energy tax credits that the Biden administration have put in as well as AI all contributing to this. Does that summary sound right to you, Jonathan? And what are you seeing?
- [01:01]
B
Yeah, no, it does sound right. I mean, look, electricity prices, like any other market, there's like a bazillion things going on and you know, depends on what part of the country you're in. But we are seeing this rise in electricity costs. When you talk to people, when I talk to the people who know about this, the two factors they tend to cite for why they've gone up so far and why they're starting until now, the two big ones are what you just mentioned was this sort of surge in demand from data centers, AI. I mean, they just suck up so much power and then we've got this aging grid, right? The distribution is old and we've been sort of deferring the maintenance on it and the rebuilding of. So a lot of that's been going on that gets passed on to electricity bills. That's why it's getting. I mean, there's other things going on, but those are the two big drivers we're seeing right now going forward. The Biden administration, that's the second part of what you were just talking about. Remember, we had the Inflation Reduction act and put all this money into encouraging the development of renewable energy, especially wind and solar. And that was going to add a lot of capacity. So that was there to help meet that demand for power and that was going to help keep prices down. Well, Donald Trump and the Republicans just got rid of those subsidies, got rid of those incentives. So this thing we had that was going to create all this new power capacity and bring down prices is gone and as a result, prices are going to go up even higher.
- [02:27]
A
Yeah. And I've seen anecdotally, I've been hearing complaints from people, particularly down here in the sun belt, which makes sense in the summer. In the winter it'll start to hit the Northeast. You where you are up in Michigan, more. No complaints for me. I should just say my electricity bill is going. I'm like a salmon swimming upstream. We're going down because I finally got solar panels up on my roof this summer, like the hippie lib that I've become. And so I recommend that free advertising for the solar industry though I think the tariffs are probably harming them a little bit and even solar prices going up a bit. But the administration's initial answer to this, right. Was like, we have this liquid gold under our feet. It's going to be an everything approach. We're going to do everything. I clearly that is not just going to magically fix the problems at hand here. So, like, I mean, the interesting thing about this political problem is that they don't like have a ton of levers to pull besides tacoing on the tariffs. I mean, what could they even do?
- [03:25]
B
Yeah. First of all, welcome to the hippie liberal club. Nice to have you here.
- [03:30]
A
It's nice. I'm an immigrant. I'm an immigrant.
- [03:32]
B
And yeah, this was the theory they told, right, Was that, oh, we have this liquid gold, this natural gas, coal also, this is where we can get all electricity and we'd have more of it if it wasn't for all these terrible Biden policies suppressing that. Well, that was just never true. We've had record levels of output of natural gas, frankly, to the consternation of some environmentalists. You can't get that much more that quickly. In addition, there's this separate problem which is if you want to convert natural gas into energy, you got to have turbines. And there's like a seven year wait to get new turbines because there's a shortage worldwide. So there just isn't that much room to get more natural gas electricity in the short term. But you know what you can get quickly? Wind and solar. They are easy to deploy. They are now cheap. You got them on your house. Lots of people are getting them on their house. And again, you know, you don't have to be like a tree hugger to see the value here. You can be in sort of all of the above energy person. We just want as much energy as possible. The reality is if you want energy, you should love wind and Solar, because that's the way to get it as quickly as possible.
- [04:42]
A
Yeah. And batteries. I mean, like, even Elon was out there. This was among the things he was criticizing, in addition to the debt, about the, about the one big bill, was how it got rid of a lot of these tax credits and incentives. So, I mean, like, that. That's pretty straightforward. But I guess just very briefly, like the. Those, like what. What are. What exactly got taken away. That is having an impact.
- [05:02]
B
So the Inflation Reduction act, it had a bunch of tax credits in there, some for consumers, some for producers, and they all have different details and whatever. But basically the idea was it was subsidizing the development of wind and solar. That money.
- [05:17]
A
Batteries too, right?
- [05:18]
B
Yeah. And then just got taken away. And, you know, and that's actually a pretty easy way to think about it. It's just as a straightforward shot. I mean, that was money that was going to sort of buy energy for the American people. And that money got taken away and now is, you know, being spent on tax cuts or whatever.
- [05:33]
A
What is the tariff impact? It's just like the equipment, essentially, that, you know, for building these things.
- [05:39]
B
Yeah. I mean, it's the supplies. Right. I mean, you know, you're. You're building power lines, you're building generators, you're building transform even to the extent it's not like renewables. Not like we're going to stop building renewables renewals. I mean, like you said, I mean, they're a good deal and people are going to still build them, but they're going to get more expensive. So that just all gets filtered down to our products. There's yet another way that tariffs filter down to your wallet in ways that you might not realize at first.
- [06:07]
A
I guess the AI part is the thing I have trouble wrapping my head around. And maybe this is just old, you know, entrepreneurial Tim. Loving the entrepreneurial capitalism. And it's like, well, it's easy to kind of blend to be like these big bad corporations are the ones that did it when they're like a lot of factors at play at heart. And it's like, how could the scale of this be that big that it is impacting the grid at that level already? You know, because they're just like all this. This is a relatively new phenomenon, like how much money they're putting into all these data centers. But, you know, there's a time story kind of about this that came out last week as it's headlined Big Tech AI Data Centers Are Driving Up Electricity Bills for Everyone. Do we think Is that like that's already happening, experts think, or like they're projecting it to make it worse or like what's your sense of that?
- [06:57]
B
I mean, my sense is a little bit of both. So I mean it's starting now. We're in the early phases of that and to some extent AI, when we talk about the drain of AI on energy, that's a bit of a catchphrase. It also refers to other data centers and operations. I mean there's just a lot of it stuff going on that sucks up power even, you know, in your home. Right. So I mean for now we're just sort of seeing the beginnings. But that story, it does seem like it is actually there is. The AI is such a power intensive thing. It is already starting to sort of, you know, drive up demand for power. And look, a lot of this is, you know, this sort of expected demand going forward. Projections could be wrong. They could not require as much power as they think, but it's clearly going to require a lot. And the power companies are sort of have to account for that as they plan.
- [07:44]
A
There's an article that said that it was just starting in June, electricity bill for a typical household in Ohio increased 15 bucks a month from data centers. Like, you know, again, people on a fixed income. This stuff adds up. In Virginia, they're expecting it to go up by as much as 25% because there's so many data centers there that Glenn Youngkin has brought in. Right. So it's like that. I guess that is their evidence that this is being driven by the data centers which is in the states that have, where there are more data centers sucking up electricity. Like you're seeing the prices go up more in those states and other places. But it is kind of going up everywhere.
- [08:17]
B
Yeah, no, I mean, and again, you know, you're going to see it in places like Virginia, like Texas. I mean, there's a huge.
- [08:25]
A
Home for.
- [08:25]
B
All these data centers. And you know, I think it's clear we're going to see a surge. It's just a question of how much and in which parts of the country and who pays for it in the end. And you know, the whole gamble of what the sort of Biden administration and the Democrats did with the Inflation Reduction act is like, this is the future of energy. Let's invest in it now, let's get that capacity. It'll pay off in the future. I mean, once you build a wind plant, it's like cost almost nothing to run. Same with solar. You know, it's a lot better than a coal plant. It's a lot better than a natural gas plant. So these were investments that were going to pay off over time. And now you have this crazy situation where not only have they taken the money away, but I mean, they're sort of loading the incentives on the other side where actually there's this crazy thing in Michigan where they are forcing the local utility here to keep an old coal plant running even though it was said to be decommissioned. It's actually drive up rates. I mean, they're actually making our electricity bills higher. I mean, go figure.
- [09:24]
A
Yeah, it's, I do think this is kind of on the, just on the politics, I guess, more my beat than yours. But like the, you're, you know, you're seeing Trump softening the most in a few areas. But like, in particular, you know, it is among the voters that like, that really were economically focused. And like you're seeing right now in like kind of a basket of goods, you know, gas prices down a bit from where it would have been last year. But if grocery prices or electricity prices are up, that's offsetting it. Interest rates have not come down as Donald Trump bitches about all the time, like housing costs, rents not coming down, maybe rent in some, some parts of the country, but not, not across the board. And it's like people were expecting changes and they're not getting it. And here you have this like, topic, like really hitting ahead this summer and it's going to be really bad this winter in certain parts of the country. And like, they don't, they're not even, they're kind of just hoping people don't notice, I guess. Like, I mean, have you seen anything from right, right wing kind of, you know, rationale on this? I've seen a couple of places. Like Marjorie Taylor Greene posted a video of like a woman who is distraught talking about, you know, how much costs are going up for her, talking about how people, how the Republicans should focus on this more. But like, you're not seeing a lot of evidence that they're dialed in on the forgotten man's electricity bill.
- [10:45]
B
No, I mean, there's that quote from Secretary Wright, Energy Secretary Wright, who's, who said basically we're going to have to make it clear that these are Biden policies. Right. I think that's going to be their strategy. They're going to say, oh, it's not our fault, it's Joe Biden's fault. You know, that's always their excuse. Right. It was, you know, Joe Biden did this to, you not us. And you know, does that work? I don't know.
- [11:04]
A
I mean, good luck with that one. Yeah, I mean, I don't know. I think it works with Fox viewers. Right. But I don't know that it's going to help with kind of the types of voters they'll need to offset losses next year. But we're a ways away, so we'll, we'll see how it turns out, as Donald Trump likes to say. Jonathan, any other smart thoughts? Anything? I didn't ask you about any little nuggets.
- [11:25]
B
I would just note that you're listing the costs that were going to go up, you know, energy price. We got a health insurance spike coming for 20 million Americans in December if they let those subsidies for the Affordable Care act lap. So add that to the list and I'm sure they'll try to blame that on Biden and Obama too. But at some point you gotta think, at some point people get tired of this excuse. It's not my fault. It's not my fault. It's not my fault. I mean, well, you've been president for two years now. I mean, surely some of it's your fault. I don't know.
- [11:53]
A
But that's just, this is a man that owns his beat. He will not let me get by without a healthcare cost mentioned. So thank you. Jonathan Cohn. Sign up for his. That's a policy heavy, sometimes a little ephemeral. With me, me and Adam Kinzinger making fun of Pete Hegseth doing Lady pull ups. That's fun. That's like candy. But sometimes you need a nutritious diet at the Bulwark. So get all of it. Eat the entire plate.
- [12:20]
B
And you can wear your jeans too, right? While you do it.
- [12:22]
A
Yeah, exactly. Jonathan Cohn, thank you. The rfk. I don't want to see his legs. I think is what's happening. I think there's something really gross happening on his legs. All right, that's it. Subscribe to the feed. We'll see you guys soon.
- [12:35]
C
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