Sinema’s support means Democrats will likely have 50 votes to pass the bill in their chamber by the end of the week, before it goes to the House next week for final approval.
And while the plan is scaled back from Biden’s original “Build Back Better” package, the latest bill, dubbed the Inflation Relief Act, would make the largest investment in energy and climate programs in U.S. history, extend expiring health care subsidies by three years and give Medicare bargaining power for the first time. on prescription drug prices. The law would impose new taxes to pay for it.
The remaining hurdle for Democrats: A review by Senate Rep. Elizabeth MacDonough, who must decide whether the bill’s provisions meet strict rules that would allow Democrats to use the illegal budget process to pass legislation along party lines.
But after days of negotiations with Senate Majority Leader Chuck Schumer, Sinema said she was ready to vote to proceed.
“Subject to the MP’s review, I will move forward,” she said in a statement after more than a week of silence on the bill.
In a statement, Sinema said it won several changes to the tax package, including the repeal of the tax on carried interest, which would have affected hedge fund managers and private equity. The proposal would have raised $14 billion. She also offered to win changes to Democratic plans to reduce how companies can deduct depreciated assets from their taxes, a key demand from producers who lobbied Sinema this week over their concerns.
“In the Senate Budget Reconciliation Act, we agreed to eliminate the carryforward tax provision, protect advanced manufacturing and boost the clean energy economy,” Sinema said.
To make up for lost revenue, Democrats agreed to include a 1% excise tax on corporate stock buybacks in the deal, raising another $73 billion, a Democratic aide said.
“The deal will include a new excise tax on stock buybacks that brings in much more revenue than the carried interest provision did, meaning the deficit reduction rate will remain at $300 billion.” USD,” a Democrat familiar with the deal told CNN.
The $300 billion deficit reduction goal was a top priority for Sen. Joe Manchin, the West Virginia Democrat who signed the deal last week after negotiating with Schumer.
“The deal preserves key components of the Inflation Reduction Act, including reducing prescription drug costs, fighting climate change, closing tax loopholes used by large corporations and the wealthy, and reducing the deficit by $300 billion.” USD,” Schumer said in a statement. “The final version of the Reconciliation Bill, which will be introduced on Saturday, will reflect this work and bring us one step closer to making this historic legislation law.”
Big money negotiations
Earlier Thursday, the Senate’s top Democrats engaged in high-profile talks with Sinema, actively discussing possible changes to key tax components in an effort to secure the support of Arizona moderates.
In private debates, Sinema expressed concern about key parts of the Democrats’ plan to pay for the climate and health care package – imposing a 15% tax floor on large corporations and taxing so-called carried interest, which would mean imposing a new risk tax on hedge fund managers and private equity funds.
As a result, Democrats have been scrambling to find new sources of revenue to meet their goal of saving $300 billion over a decade.
“Failure is not an option,” Sen. Richard Blumenthal, D-Connecticut, said earlier Thursday, echoing the view of most members of his caucus that Sinema would eventually come on board.
Democrats are trying to wrap up negotiations and an economic resolution before leaving town for the month-long August recess. Under this measure, 369 billion would be invested in energy and climate change programs. USD in order to achieve by 2030 reduce carbon dioxide emissions by 40 percent. For the first time, Medicare would be given the power to negotiate certain drug prices and would cap out-of-pocket costs at $2,000 for those enrolled in Medicare drug plans. It would also extend expiring increased subsidies for Affordable Care Act coverage for three years.
It is unclear whether all of these provisions will survive the parliamentary review.
Heavy pressure on Sinema
Sinema was not part of the deal, it learned when the news broke last week. She declined to comment publicly on the deal, with aides saying only that she would wait for a Senate parliamentary review before taking a position. Still, she made her demands clear to Democratic leaders, including a push to add $5 billion to help the Southwest deal with a multiyear drought, multiple sources said.
– Is it badly written? Sinema asked, according to Seiden, president of the Arizona Chamber of Commerce, who relayed the call to CNN.
“It gave me hope that she wants to open it up and maybe do it better,” Seiden said.
Two sources told CNN that Sinema took those concerns to top Democrats privately, saying it would hurt manufacturers, including in her state.
Colorado Sen. John Hickenlooper, a freshman Democrat, has proposed to Schumer that he impose an excise tax on stock buybacks to make up for lost revenue from Sinema’s requests, according to a Democratic aide.
At issue are changes proposed by Democrats on additional depreciation that the GOP passed in 2017. in a tax law that allows businesses to deduct 100% of the cost of an asset in the year it is put into use. The new law proposes to gradually reduce it from next year.
It is not clear exactly how the new language was created in this regard.
In defense of the new tax, the Democratic-led Senate Finance Committee on Thursday released a date from the nonpartisan Joint Committee on Taxation showing that up to $125 billion in corporate taxes in 2019. the average effective tax rate was only 1.1 percent. The Committee states in its report. reports that it represents the “lowest tax rates” that some companies can pay.
“While we know that billion-dollar companies are avoiding paying their fair share, these tax rates are lower than we could have imagined,” said Senate Finance Chairman Ron Wyden, D-Oregon. “We’re going to stop that with our 15 percent minimum tax.”
This story and headline were updated Thursday with additional developments.
CNN’s Jessica Dean, Ella Nilsen, Clare Foran and Alex Rogers contributed to this report.