Democratic senators Kyrsten Sinema and Joe Manchin talk in a Senate elevator.
Kent Nishimura / Los Angeles Times via Getty Images
Sen. Kyrsten Sinema is ready to “move forward” with Democrats’ Inflation Reduction Act.
The update comes after days of silence from the Arizona moderate, who was the last holdout.
Senate Majority Leader Chuck Schumer said the final version of the bill will be introduced on Saturday.
Democrats in array.
After nearly a year and a half of turmoil that left them stalled on the size and scope of their economic ambitions, Senate Democrats had clinched an agreement to approve a legislative package, carrying many of their domestic priorities on climate, healthcare, and taxes.
“I am pleased to report that we have reached an agreement on the Inflation Reduction Act that I believe will receive the support of the entire Senate Democratic conference,” Senate Majority Leader Chuck Schumer said in a statement, referring to the $740 billion spending bill he secretly negotiated with Sen. Joe Manchin of West Virginia.
Schumer said the deal “preserves the major components” of the legislation. The package would still allow Medicare to negotiate the price of some prescription drugs, establish over $300 billion in clean energy tax credits, and extend financial assistance so Americans can purchase health coverage under the Affordable Care Act for three more years. Those made up the core pieces of the Manchin and Schumer bill.
Democrats like Sen. Brian Schatz of Hawaii hailed the agreement. “It’s happening,” he wrote on Twitter.
—Brian Schatz (@brianschatz) August 5, 2022
But Manchin and Schumer had to accommodate Sen. Kyrsten Sinema of Arizona, the lone Democratic holdout at this stage. Without her vote, Senate Democrats can’t approve the bill over GOP opposition using the budget reconciliation process. All 50 Democratic senators must band together to pass the legislation with a simple majority, wielding the tiebreaking vote from Vice President Kamala Harris.
In a statement, Sinema said Democrats had ejected a provision to narrow the carried interest loophole benefiting private equity and hedge fund managers. She had been long opposed to closing the loophole, conflicting with Manchin’s ardent desire to narrow it.
“We have agreed to remove the carried interest tax provision, protect advanced manufacturing, and boost our clean energy economy in the Senate’s budget reconciliation legislation,” Sinema said in a statement.
She added that she was willing to advance the “Inflation Reduction Act” pending further review from a top Senate official that ensures it complies with reconciliation’s strict rules. Sinema said that she wanted to deal with carried interest at a later date. But it seems unlikely Republicans would lend support for either narrowing or closing the loophole.
Removing carried interest knocks out roughly $14 billion in revenue from Manchin’s bill. But a Democrat familiar said that a 1% stock buyback tax had been added to the legislation. It would impose a 1% tax when a public firm purchases its own shares trying to enrich shareholders. It’s expected to raise a lot more money, the person said on condition of anonymity.
Schatz praised the climate provisions that appear to be on a path to final passage sometime early next week. “We have a climate deal that is equal to the moment,” he wrote on Twitter. “It is both enormous and not enough, it is both historic and only a down payment. This is the fight of our political generation, so this isn’t over.”