Sinema agrees to climate and tax deal, paving the way for votes

WASHINGTON — Sen. Kyrsten Sinema, D-Arizona, announced Thursday night that she would support advancing her party’s climate, tax and health care package, paving the way for a major piece of President Biden’s domestic agenda to pass from the Senate to the Senate. The following days.

To win Ms. Sinema’s support, Democratic leaders agreed to slap a $14 billion tax hike on some wealthy hedge fund managers and private equity executives that she had opposed, change the structure of the 15 percent corporate minimum tax and include drought money for benefit. Arizona.

Ms. Sinema said she was ready to move forward with the package, provided senior Senate rules officials signed off on it.

Ms. Sinema was the last leg of the package after Senator Joe Manchin III, D-West Virginia, struck a deal with top Democrats last week that revived a plan that appeared to have collapsed.

It brought Democrats one step closer to enacting the package and salvaging key pieces of their domestic agenda, starting with a series of votes this weekend. It came a little more than a week after Mr. Manchin and Senator Chuck Schumer of New York, the majority leader, stunned their colleagues with an agreement to include hundreds of billions of dollars for climate and energy programs and tax increases in the legislation , an additional proposal to lower the price of prescription drugs and expand expanded health insurance subsidies.

With Republicans united in opposition, the measure needs unanimous Democratic support to advance 50-50 in the Senate, so the party can’t afford a single offset.

Mr. Schumer confirmed in a statement that he had reached a deal “that I believe will have the support of the entire Senate Democratic conference.” He said the revised legislation would be released on Saturday.

“The agreement retains its main elements Act to reduce inflation, including reducing prescription drug costs, fighting climate change, closing tax loopholes exploited by big corporations and the wealthy, and reducing the deficit,” he said. The agreement “will bring us one step closer to enacting this historic legislation.”

Ms. Sinema pushed for the repeal of a provision that would limit preferential tax treatment for income earned by some wealthy hedge fund managers and private equity executives. Instead, Democrats added a new 1 percent excise tax that companies would have to pay on the amount of stock they buy back, said a Democratic official, who spoke on condition of anonymity to discuss details of the plan.

That provision, the official said, would ensure that the package would still reduce the federal deficit by up to $300 billion, the same amount that Democrats aimed for in the original deal and a key priority for Mr. Manchin.

Democrats also agreed to Ms. Sinema’s request to include billions of dollars for drought relief, according to officials briefed on the emerging plan, which is critical for Arizona as it suffers a devastating drought. They were expected to restructure the 15 percent minimum corporate tax to make it less burdensome on manufacturers. Earlier this week, business leaders in Arizona appealed directly to Ms. Sinema to streamline that proposal, which was included in part because she had resisted raising tax rates as part of the plan.

While most Democrats had been quick to rally around the deal Mr. Manchin struck with Mr. Schumer when it was announced last week, Ms. Sinema had declined to weigh in and privately noted that changes would be needed, particularly to the tax proposals. win her vote.

Ms. Sinema, an enigmatic centrist, had already forced her party to abandon plans to overhaul much of the tax code, and her characteristic silence frustrated Democrats who wanted to take up the bill.

Mr. Schumer said he planned to hold a tentative vote on the measure Saturday afternoon, preventing the Senate from leaving for a scheduled five-week August recess to finish work on the legislation.

The package still has to clear a number of hurdles before the Senate can pass it. Because Democrats use the arcane budget reconciliation process to protect the measure from failure, it must be blessed by a Senate lawmaker to ensure its components comply with the strict rules governing the process. That process was expected to continue on Friday and could lead to further changes to the measure if some pieces are deemed out of order.

Ms Sinema left herself room to change course should those changes raise any concerns, saying she would go ahead with the bill “subject to consideration by the MP”.

Republicans will have a chance this weekend to try to force changes before the legislation is finally passed during a marathon series of amendment votes known as a rama vote. If all Republicans are present, all 50 senators in the caucus with Democrats must stand together to protect the legislation as written.

In her statement, Ms. Sinema said she would work with Senator Mark Warner, D-Virginia, on separate legislation to address preferential tax treatment for hedge fund income, sometimes called the carried interest loophole. He said they would focus on “protecting investment in America’s economy and encouraging continued growth while closing the most egregious loopholes that some abuse to avoid paying taxes.”

But to do that outside of a reconciliation bill would require 60 votes to overcome a pretty certain Republican challenge, and it’s unlikely that enough GOP senators will join the effort to make that happen.

Alan Rapport contributed to the report.