Democrats Reach an Agreement on an Economic Package
(WASHINGTON) — Senate Democrats have agreed to eleventh-hour changes to their marquee economic legislation, they announced late Thursday, clearing the major impediment to pushing one of President Joe Biden’s paramount election-year priorities through the chamber in coming days.
Sen. Kyrsten Sinema, D-Ariz., a centrist seen as the pivotal vote in the 50-50 chamber, said in a statement that she had agreed to revamping some of the measure’s tax and energy provisions and was ready to “move forward” on the bill.
Senate Majority Leader Chuck Schumer, D-N.Y., said he believed his party’s energy, environment, health and tax compromise “will receive the support of the entire” Democratic membership of the chamber. His party needs unanimity and Vice President Kamala Harris’ tie-breaking vote to move the measure through the Senate over certain solid opposition from Republicans, who say the plan’s tax boosts and spending would worsen inflation and damage the economy.
Surprised, some expected that talks between Schumer & Sinema could drag on for several days more without success. Schumer indicated that he wanted the Senate’s Saturday vote to pass the bill. The Senate would then begin their summer recess. If the House returns briefly to Washington next Wednesday, it could be passed by Democrats, who control it narrowly.
Continue reading: The Inflation Reduction Act’s Name Says A Lot About The Climate Fight
While the Democrats did not reveal details about their compromise, there were other issues. Still, final congressional approval would complete an astounding resurrection of Biden’s wide-ranging domestic goals, though in more modest form.
Biden had been embarrassed by Democratic infighting, which forced him to cut down on a larger, ambitious, $3.5 trillion version over a 10-year period. He also had to consider a $2 Trillion alternative. This left the project almost doomed. Instead, Schumer and Sen. Joe Manchin, the conservative maverick Democrat from West Virginia who derailed Biden’s earlier efforts, unexpectedly negotiated the slimmer package two weeks ago.
Its approval would let Democrats appeal to voters by boasting they are moving to reduce inflation — though analysts say that impact would be minor — address climate change and increase U.S. energy security.
“Tonight, we’ve taken another critical step toward reducing inflation and the cost of living for America’s families,” Biden said in a statement.
Sinema said Democrats had agreed to remove a provision raising taxes on “carried interest,” or profits that go to executives of private equity firms. That’s been a proposal she has long opposed, though it is a favorite of Manchin and many progressives.
The carried interest provision was estimated to produce $13 billion for the government over the coming decade, a small portion of the measure’s $739 billion in total revenue.
One Democrat who is familiar with the deal said that it will be replaced by an excise tax for stock buybacks, which will generate more revenue. According to the condition of anonymity, this official was not allowed to talk publicly about the deal and did not provide additional details.
Sinema said she had also agreed to unspecified provisions to “protect advanced manufacturing and boost our clean energy economy.”
She noted that Senate parliamentarian Elizabeth MacDonough is still reviewing the measure to make sure no provisions must be removed for violating the chamber’s procedures. “Subject to the parliamentarian’s review, I’ll move forward,” Sinema said.
To prevent Republicans from filing filibusters (delays that require 60 votes) the measure must be in compliance with those rules.
Schumer said the measure retained the bill’s language on prescription drug pricing, climate change, “closing tax loopholes exploited by big corporations and the wealthy” and reducing federal deficits.
He said the bill “addressed a number of important issues” that Democratic senators raised during talks. He said the final measure “will reflect this work and put us one step closer to enacting this historic legislation into law.”
Left unclear was whether changes had been made to the bill’s 15% minimum corporate tax, a provision Sinema has been interested in revising. It would raise an estimated $313 billion, making it the legislation’s largest revenue raiser.
That levy, which would apply to around 150 corporations with income exceeding $1 billion, has been strongly opposed by business, including by groups from Sinema’s Arizona.
Sinema and the other Western senators were expected to finalize their efforts to provide assistance for states that are struggling to cope with wildfires and extreme drought. Those legislators had been looking for $5 billion, but the final language was not clear. A Democrat who spoke on condition of anonymity said that the attempt to describe the outcome of the negotiations left them unsure.
The measure will also have to withstand a “vote-a-rama,” a torrent of nonstop amendments expected to last well into the weekend, if not beyond. Republicans want to kill as much of the bill as possible, either with the parliamentarian’s rulings or amendments.
Even if their amendments lose — as is certain for most — Republicans will consider it mission accomplished if they force Democrats to take risky campaign-season votes on touchy issues like taxes, inflation and immigration.
As well, Democratic amendments will be accepted. I-Vt. progressive senator Bernie Sanders said that he wanted to improve the health care system.
Overall, the bill will generate $739 billion revenue. The revenue would be generated by tax hikes for high-earners and corporations as well as increased IRS tax collections.
Most of it would go to initiatives that promote clean energy and fossil fuels as well health care. It could also help some individuals buy private health insurance. This would leave more than $300 billion for deficit reduction.
Read More From Time