Kyrsten Sinema says she will ‘move forward’ on economic bill, putting Biden’s agenda on top of Senate approval

Sinema’s support means Democrats will likely have 50 votes in their caucus to push the bill through their chamber at the end of the week, before moving to the House next week for final approval.

And while the plan scales back from the initial Biden Build Back Better package, the latest bill, called the Reduce Inflation Act, would represent the largest investment in energy and climate programs in US history, extend the health care subsidies that expire for three years and give Medicare the power for the first time to negotiate prescription drug prices. The legislation would impose new taxes to pay for it.

One remaining hurdle for Democrats: a review by Senate Rep. Elizabeth MacDonough, who must decide whether the bill’s provisions meet strict rules to allow Democrats to use the filibuster-proof budget process to pass legislation following direct party lines.

But after days of talks with Senate Majority Leader Chuck Schumer, Sinema indicated she was ready to vote to proceed.

“Subject to MP’s review, I will move forward,” he said in a statement after being silent on the bill for more than a week.

In the statement, Sinema said it won several changes to the tax provisions of the package, including the elimination of the tax on accrued interest, which would have affected hedge fund managers and private equity. That proposal would have raised $14 billion. He also suggested he won changes to Democrats’ plans to reduce how companies can deduct depreciated assets from their taxes, a key demand from manufacturers who had pressed Sinema over their concerns this week.

“We have agreed to remove the accrued interest tax provision, protect advanced manufacturing and boost our clean energy economy in the Senate budget reconciliation legislation,” Sinema said.

To make up for lost revenue, Democrats agreed to add a 1% excise tax on company share buybacks as part of the deal, raising another $73 billion, according to a Democratic aide.

“The deal will include a new special tax on share buybacks that will generate far more revenue than the accrued interest provision, meaning the deficit reduction figure will remain at $300 billion,” a Democrat familiar with the matter told CNN. with the agreement.

The $300 billion deficit-reduction goal had been a key priority for Sen. Joe Manchin, a West Virginia Democrat who signed the agreement after negotiations with Schumer last week.

“The agreement preserves major components of the Reduce Inflation Act, including lowering prescription drug costs, combating climate change, closing tax loopholes exploited by large corporations and the wealthy, and deficit reduction by $300 billion,” Schumer said in a statement. “The final version of the Reconciliation Bill, to be introduced on Saturday, will reflect this work and bring us one step closer to enacting this landmark legislation.”

High risk negotiations

Earlier Thursday, top Senate Democrats engaged in high-stakes negotiations with Sinema, actively discussing potential changes to major tax components to secure support from the Arizona moderate.

In private discussions, Sinema had raised concerns about key parts of the Democrats’ plan to pay for her climate and health care package: imposing a minimum 15% tax on large corporations and taxing so-called accrued interest, which would mean imposing a new levy on hedge fund managers and private equity.

As a result, Democrats had been scrambling to find new sources of revenue to meet the goal of saving $300 billion over a decade.

“Failure is not an option,” said Sen. Richard Blumenthal, a Democrat from Connecticut, voicing the view of much of his caucus earlier Thursday that Sinema would eventually join.

Schumer announced earlier Thursday that the Senate will reconvene on Saturday and plans to hold the first procedural vote to proceed with the bill. If the vote obtains the support of the 50 members of the Democratic caucus, there will be up to 20 hours of debate. After the debate time, there would be a process that is colloquially referred to on Capitol Hill. like “vote-a-rama”, which is the marathon series of votes on amendments with no time limit before the final vote. If the bill finally passes, the House would have to act.

Democrats are trying to wrap up negotiations and pass his economic bill before leaving town for a month-long August recess. The measure would invest $369 billion in energy and climate change programs with a goal of reducing carbon emissions by 40% by 2030. For the first time, Medicare would be empowered to negotiate the prices of certain drugs and cap out-of-pocket costs of $2,000. for those enrolled in Medicare drug plans. It would also extend the expiring enhanced subsidies for Affordable Care Act coverage for three years.

It is not clear whether all of these provisions will survive parliamentary review.

Heavy pressure on Sinema

Will the Senate Climate and Health Care Deal Reduce Inflation?  Depends who you ask

Sinema wasn’t part of the deal, and she found out when the news broke last week. She had refused to comment publicly on the deal, and her aides said only that she would wait until the Senate MP did the review before taking a position. However, she had made her demands clear with Democratic leaders, including seeking to add $5 billion to help the Southwest cope with its multi-year drought, according to multiple sources.

As Democrats courted her, Republicans and business groups made their concerns known. In a private call this week., the Arizona Chamber of Commerce and the National Association of Manufacturers urged Sinema to push to change the corporate minimum tax. Arizona Business Group President Danny Seiden told CNN he expressed the business community’s opposition to the 15% tax provision, noting that it would particularly affect manufacturers who take advantage of an accelerated depreciation tax deduction that reduces their burden. fiscal.

“Is it written in a way that is bad?” Sinema asked, according to Seiden, president of the Arizona Chamber of Commerce, who relayed the call to CNN.

“It gave me hope that she’s willing to open this up and maybe make it better,” Seiden said.

Two sources told CNN that Sinema had privately aired those concerns to top Democrats, arguing it would hurt manufacturers, even in her state.

In an effort to break the logjam, Colorado Sen. John Hickenlooper, a freshman Democrat, proposed the excise tax on share buybacks to Schumer as a way to make up for lost revenue from Sinema’s filings, according to a Democratic adviser.

At issue are the Democrats’ proposed changes to additional depreciation that the GOP enacted in the 2017 tax law, which allows businesses to deduct 100% of the cost of an asset the year it is placed in service. The new legislation proposed to phase that out starting next year.

It is not clear exactly how the new language on this topic is structured.

Defending the new tax, the Democratic-led Senate Finance Committee on Thursday released data from the nonpartisan Joint Committee on Taxation showing that as many as 125 billion-dollar companies averaged just a 1.1 percent effective tax rate in 2019. The committee argues in its report that this shows the “minimum tax rates” that some businesses can afford to pay.

“While we know that billion-dollar companies avoid paying their fair share, these tax rates are lower than we could have imagined,” said Senate Finance Chairman Ron Wyden, D-Ore. “We are going to put an end to it with our minimum tax of 15 percent.”

This story and headline have been updated with additional developments on Thursday.

CNN’s Jessica Dean, Ella Nilsen, Clare Foran and Alex Rogers contributed to this report.

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