Senate Democrats reached an agreement on the changesthey announced late Thursday, clearing a major hurdle in the coming days for one of President Joe Biden’s top election-year priorities.
Sen. Kyrsten Sinema, D-Ariz., the centrist who was seen as the key vote, said in a statement that she agreed with changes to the measure’s tax and energy provisions and was ready to “move forward” on the issue..
Senate Majority Leader Chuck Schumer (D-N.Y.) said lawmakers had reached a compromise “that I think will have the support of all Democrats in the chamber.” His party needs unanimity to pass the measure in the Senate 50-50, with Vice President Kamala Harris voting.
Schumer said he hoped the Senate could start voting on energy, environment, health and tax measures on Saturday. A vote in the House of Representatives, which Democrats hold little control over, could happen next week.
Final congressional approval of the election-year measure would complete a stunning eleventh-hour rescue of Mr. Biden’s far-reaching domestic goals, albeit in a more modest form. Democratic infighting 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, rendering the effort worthless.
The bill, brokered by Schumer and Sen. Joe Manchin, a conservative Democrat from West Virginia, would raise $739 billion. This would come from raising taxes on high earners and some huge corporations, increasing IRS tax collection, and lowering drug prices, all of which would save money for the government and patients.
Most of that would be spent on energy, climate and health care initiatives, leaving more than $300 billion to reduce the deficit.
Sinema said Democrats have agreed to repeal a provision that increases taxes on “carry-forward interest,” or profits accruing to executives at private equity firms. She has long opposed the proposal, even though it is a favorite of Manchin and many progressives.
Deferring interest carryforwards is estimated to save the government $13 billion over the next decade.
It will be replaced by a new excise tax on stock buybacks that will bring in more revenue, said one Democrat familiar with the deal, who spoke on condition of anonymity because he was not authorized to discuss the deal publicly. The official did not provide other details.
Although it did not provide any details, Sinema said it also agreed with the provisions “to protect advanced manufacturing and promote our clean energy economy.”
She noted that Senate Rep. Elizabeth MacDonough is still reviewing the measure to make sure that provisions for violating House procedures must not be removed. “Based on the MP’s review, I will go ahead,” Sinema said.
“Tonight, we took another important step toward reducing inflation and the cost of living for American families,” Biden said in a statement. “The Inflation Reduction Act will help Americans save money on prescription drugs, health premiums, and more. It will make our tax system fairer by making corporations pay a minimum tax. It won’t raise taxes on those making less than $400,000, which will reduce the deficit. That’s right is also the largest investment in history to fight climate change and increase energy security, creating jobs here in the U.S. and saving people energy costs. I look forward to the Senate passing this legislation and passing it as soon as possible.”
Schumer said the measure retained the bill’s language on prescription drug pricing, climate change, closing “tax loopholes used by large corporations and the wealthy” and reducing the federal deficit.
He said the party has “addressed some of the important issues that have been raised” in talks with fellow Democrats. He added that the final measure “will reflect this work and bring us one step closer to passing this historic legislation into law.”