November 28, 2023

(WASHINGTON) — Senate Democrats agreed to eleventh-hour changes to their economic legislation, they announced late Thursday, clearing a major roadblock to pushing one of President Joe Biden’s top election-year priorities through the chamber in the coming months days.

Sen. Kyrsten Sinema, D-Ariz., a centrist seen as the key vote in the 50-50 House, said in a statement that she agreed to revamp some of the measure’s tax and energy provisions and was ready to “move forward.” to the account.

Senate Majority Leader Chuck Schumer, D-N.Y., said he believes his party’s energy, environment, health care and tax compromises “will get the support of the entire” Democratic membership of the House. His party needs unanimity and the vote of Vice President Kamala Harris to pass the measure in the Senate because of some strong objections from Republicans, who say the plan’s tax breaks and spending will worsen inflation and hurt the economy.

The announcement came as a surprise, with some expecting talks between Schumer and Mercurial Sinema to drag on for days more with no guarantee of success. Schumer said he wants the Senate to begin voting on the legislation on Saturday, after which the summer recess will begin. Passage through the House, which Democrats tightly control, could happen when that chamber briefly returns to Washington next week.

Read more: The name of the Inflation Reduction Act says a lot about the fight against climate

Democrats revealed few details of their compromise, and other hurdles remained. But eventual congressional approval would complete a stunning resurrection of Biden’s wide-ranging domestic goals, albeit in a more modest form.

Democratic disputes had embarrassed Biden and forced him to scale back a much larger and more ambitious $3.5 trillion, 10-year version, and then a $2 trillion alternative, leaving the effort all but dead. Instead, Schumer and Sen. Joe Manchin, the conservative renegade West Virginia Democrat who derailed Biden’s earlier efforts, unexpectedly negotiated the slimmer package two weeks ago.

Its approval would allow Democrats to appeal to voters by boasting that they are moving to reduce inflation – though analysts say the impact would be small – tackle climate change and increase US energy security.

“Tonight, we took another critical step toward reducing inflation and the cost of living for America’s families,” Biden said in a statement.

Sinema said Democrats agreed to remove a provision that raises taxes on “carried interest,” or profits that go to executives of private equity firms. That’s a proposal he’s long opposed, though it’s a favorite of Manchin and many progressives.

The carried interest provision was estimated to generate $13 billion for the government over the next decade, a small portion of the measure’s total revenue of $739 billion.

It will be replaced by a new excise tax on stock buybacks that will bring in more revenue than that, said a Democrat familiar with the deal. The official, who was not authorized to discuss the deal publicly and spoke on condition of anonymity, did not provide further details.

Sinema said it had also agreed to unspecified provisions to “protect advanced manufacturing and boost the clean energy economy.”

He noted that Senate Rep. Elizabeth MacDonough is still reviewing the measure to make sure that provisions that violate chamber procedures should not be removed. “Subject to the congressman’s criticism, I will move forward,” Sinema said.

The measure must comply with those rules so that Democrats use procedures that will prevent Republicans from making filibustering, filibustering delays that require 60 votes to stop.

Schumer said the measure preserved the bill’s language on prescription drug pricing, climate change, “closing tax loopholes that take advantage of big corporations and the wealthy” and reducing federal deficits.

He said the bill “addressed a number of important issues” raised by Democratic senators during the talks. He said the final measure “will reflect that work and bring us one step closer to enacting this historic legislation.”

It remained unclear whether changes had been made to the bill’s 15 percent minimum corporate tax, a provision Sinema was interested in revising. It is estimated to raise $313 billion, making it the legislation’s largest revenue-raising vehicle.

That tax, which would apply to about 150 companies with more than $1 billion in revenue, has been strongly opposed by businesses, including Sinema’s Arizona groups.

The final measure was expected to include aid that Sinema and other western senators had been trying to add to help their states deal with the epic drought and wildfires that have become commonplace. Those lawmakers were seeking about $5 billion, but it was unclear what the final language would do, said a Democrat after the negotiation who would describe the effort only on condition of anonymity.

The measure will also have to endure a “vote-a-rama,” a barrage of continuous amendments expected to last through the weekend, if not beyond. Republicans want to kill as much of the bill as possible, either through resolutions or congressional amendments.

Even if their amendments lose — as they surely do for most — Republicans will consider mission accomplished if they force Democrats to make risky campaign-season votes on sensitive issues like taxes, inflation and immigration.

Democratic amendments are also expected. Progressive Sen. Bernie Sanders, I-Vt., has said he wants to strengthen health care provisions.

The total bill would bring in $739 billion in revenue. This would come from tax breaks for high earners and some huge corporations, enhanced IRS tax collections, and caps on drug prices, which would save money for the government and patients.

He will spend much of that on initiatives that help clean energy, fossil fuels and health care, including helping some people buy private health insurance. That would still leave more than $300 billion in the deficit reduction measure.

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