And while the plan is scaled back from Biden’s original Build Back Better package, the latest bill — called the Inflation Reduction Act — would represent the largest investment in energy and climate programs in U.S. history, expand subsidies health care plans that expire in 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 Sen. Elizabeth McDonough, who must decide whether the bill’s provisions meet strict rules to allow Democrats to use the dead-end budget process to pass the legislation along straight party lines. But after days of talks with Senate Majority Leader Chuck Schumer, Sinema indicated she was ready to vote to move forward. “Subject to the congressman’s criticism, I will move forward,” she said in a statement after more than a week of silence on the bill. In the statement, Sinema said it won several changes to the package’s tax provisions, including the removal of tax on carried interest, which would have an impact on hedge fund managers and private equity. That proposal would have raised $14 billion. He also suggested he won changes to Democratic plans to reduce how companies can deduct depreciated assets from their taxes — a key demand of manufacturers who had lobbied Sinema over their concerns this week . “We agreed to remove the carried interest tax provision, protect advanced manufacturing and strengthen the clean energy economy in the Senate budget agreement legislation,” Sinema said. To make up for the lost revenue, Democrats agreed to add a 1 percent excise tax on the companies’ stock buybacks as part of the deal, raising another $73 billion, according to a Democratic aide. “The deal will include a new excise tax on stock buybacks that will bring in much more revenue than the carried interest provision, meaning the deficit reduction will remain at $300 billion,” a Democrat familiar with the deal told CNN. The $300 billion deficit reduction goal was a top priority for Sen. Joe Manchin, a West Virginia Democrat who signed the deal after negotiating with Schumer last week. “The deal preserves key elements of the law to reduce inflation, including reducing prescription drug costs, fighting climate change, closing tax loopholes that exploit big corporations and the wealthy, and reducing the deficit 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 passing this historic legislation into law.”
High risk negotiations
Earlier Thursday, top Senate Democrats engaged in high-stakes negotiations with Sinema, actively discussing possible changes to key tax items in order to secure the Arizona moderate’s support. In private discussions, Sinema had expressed concern about key parts of the Democrats’ plan to pay for their climate and health care package — imposing a 15 percent minimum tax on big corporations and taxing so-called carried interest, which would mean the imposing a new levy on hedge fund and private equity managers; As a result, Democrats have been scrambling to find new sources of revenue to meet their goal of $300 billion in savings over a decade. “Failure is not an option,” Sen. Richard Blumenthal, D-Connecticut, said, echoing the view of much of his caucus earlier Thursday that Cinema would eventually join. Schumer announced earlier Thursday that the Senate will reconvene on Saturday and plans to hold the first procedural vote to move the bill forward. If the vote receives the support of all 50 members of the Democratic caucus, then there will be up to 20 hours of debate. After debate time, there will be a process referred to colloquially on Capitol Hill as “vote-a-rama,” which is the marathon series of amendment votes without a time limit before the final vote. If the bill is finally passed, the House will have to act. Democrats are trying to wrap up negotiations and pass their fiscal passage before leaving town for a month in August. The measure would invest $369 billion in energy and climate change programs with the goal of reducing carbon emissions by 40 percent by 2030. For the first time, Medicare would be authorized to negotiate the prices of certain drugs and would limit the cap it costs $2,000 for those enrolled in Medicare drug plans. It would also extend expiring enhanced subsidies for Affordable Care Act coverage for three years. It is unclear whether all of these provisions will survive the MP’s review.
Great pressure on Cinema
Sinema was not part of the deal, as he found out when the news broke last week. She had declined to comment publicly on the deal, with aides saying only that she would wait until the Senate’s congressional review was done before taking a position. But she had cleared her demands with Democratic leaders, including seeking to add $5 billion to help the Southwest deal with its years-long 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 for a change in the minimum corporate tax. The president of the Arizona business group, Danny Seiden, told CNN that the business community expressed opposition to the 15 percent tax provision, noting that it would particularly hit manufacturers who benefit from an accelerated depreciation tax credit that lowers their tax burden. “Is this spelled badly?” Cinema asked, according to Seiden, the president of the Arizona Chamber of Commerce, who relayed the call to CNN. “It gave me hope that she’s willing to open it up and maybe improve it,” Seiden said. Two sources told CNN that Sinema had privately aired those concerns to top Democrats, arguing it would hurt manufacturers, including in her state. In an effort to break the impasse, Colorado Sen. John Hickenlooper, a freshman Democrat, proposed the excise tax on stock buybacks to Schumer as a way to make up for revenue lost to Sinema’s requests, according to a Democratic aide. At issue are changes proposed by Democrats to the GOP’s bonus depreciation in the 2017 tax law, which allows companies to deduct 100 percent of the cost of an asset in the year it is put into service. The new legislation proposed a phase-out from next year. It is not clear exactly how the new language is structured on this issue. Defending the new tax, the Democratic-led Senate Finance Committee released data Thursday from the nonpartisan Joint Committee on Taxation showing that up to $125 billion in companies had an average effective tax rate of just 1.1 percent in 2019 .The commission argues in the publication that this shows the “floor tax rates” that some companies are able to pay. “While we know that billion-dollar corporations avoid paying their fair share, these tax rates are lower than we might imagine,” said Senate Finance Chairman Ron Wyden, D-Oregon. “We’re going to put an end to that with our 15 percent minimum tax.” 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.
