The US Senate Democrats’ sweeping tax, climate and health care bill looks set to pass after Majority Leader Chuck Schumer and Sen. Kirsten Sinema of Arizona struck a deal to soften the corporate tax hike and a second tax hike aimed at the wealthy financial sector workers, Schumer told reporters on Friday.
The lost revenue to get Sinema’s backing would be more than offset by a new provision targeting share buybacks, Schumer said.
Democrats are likely to add up to $5 billion for the Bureau of Reclamation to address drought resilience in the Colorado River Basin, people familiar with those negotiations said. The basin includes all of Arizona and parts of Colorado, New Mexico, Nevada, California, Utah, and Wyoming.
Schumer’s deal with Sinema, an influential moderate party seen as the latest pushback on the bill, is likely to put the legislation on a path to unanimity among the 50 Democrats in the Senate. That’s a requirement that the bill be approved under a legislative process known as reconciliation, which allows Democrats to bypass the chamber’s normal 60-vote threshold.
Vice President Kamala Harris is expected to break party lines in the final passage vote on the bill.
The concessions to Sinema include eliminating a provision changing the way certain compensation paid to hedge fund managers and private equity executives, known as carried interest, is taxed, Schumer said.
The New York Democrat said he strongly supports the tax change, but it’s a red line for Sinema.
“I pushed for that to be included in this bill,” Schumer said. “Sen. Sinema said he won’t vote on the bill — he won’t even move to continue — unless we take it out. So we had no choice.”
The nonpartisan Congressional Budget Office estimated the measure would raise revenue by $14 billion over 10 years.
The Schumer-Sinema deal would also change a separate provision setting a new minimum tax rate of 15 percent for corporations with revenues of $1 billion or more.
Schumer did not provide details on the change, saying only “one piece was taken out,” but said it would reduce the expected revenue the provision would bring in from $313 billion to $258 billion.
The tax revenue lost by eliminating these two provisions would be offset by a new excise tax on share buybacks, where public companies buy their own shares on the open market to reduce the amount publicly available and raise the price.
Schumer said he “hated” the buyback because the money companies spend on it could otherwise be spent on job creation or research and development.
The excise tax would bring in $74 billion, he said, and should be encouraging to the progressive wing of the faction.
Those changes will bring in an additional $5 billion in revenue — reportedly the exact amount Sinema is seeking in additional drought-resilience funding.
The exact figure for drought-resilience spending was still up for debate among Senate Democrats Friday afternoon, but was expected to run into the billions of dollars, sources said.
“It’s Gonna Be Hell”
A handful of Senate Republicans criticized the bill from all angles during a media briefing Friday morning and indicated they would make the amendment process as painful as possible for Democrats.
All GOP senators are expected to oppose the bill on the floor.
Sen. Roger Marshall, an obstetrician from Kansas before joining the Senate, said changes to the bill allowing Medicare to negotiate the prices of certain prescription drugs would hurt drug development in the pharmaceutical industry.
“Why do they want to destroy the innovations that pharmaceuticals have given us and that have saved millions of lives?” Marshall said.
Sen. Bill Cassidy of Louisiana said the bill would do little to address inflation, despite the Democratic bill’s title, the Inflation Reduction Act.
Tax breaks for electric vehicles, for example, would have little impact on Louisiana residents struggling to fill their gas tanks, he said.
“If their prescription for high fuel prices is for someone to drive an electric vehicle, they have no understanding of the lives of these people that I represent,” he said. “People don’t drive 15-year-old pickups because they don’t want a new car. They don’t drive new cars because they can’t afford a new car. And high gas prices made it even worse.”
Sen. John Barrasso of Wyoming, the Republican on the Senate Energy and Natural Resources Committee, said the measure would raise energy costs that lead to inflation.
Democrats said clean energy spending in the bill would lower energy bills. The measure also includes provisions to encourage fossil fuel development negotiated with Schumer by moderate West Virginia Democratic Sen. Joe Manchin III.
Republicans will offer amendments to the “energy, inflation, border and crime” bill to force Democrats into tough votes, said Barrasso, the No. 3 member of House Republican leadership.
Sen. Lindsey Graham of South Carolina said Democrats “deserve” a tough streak because they outlasted Republicans to win GOP support for a semiconductor stimulus bill while maintaining a Democrat-only spending bill.
Minority Leader Mitch McConnell indicated he would not support the semiconductor bill if Democrats still plan to pursue a reconciliation bill. But several Republicans voted for the measure last week, only to see the 725-page Schumer-Manchin bill released hours later.
“So what’s the vote-a-rama going to be?” Graham said. “It’s going to be hell.”
Schumer said the Senate will convene on Saturday to begin consideration of the bill.
The Senate lawmaker, the official tasked with determining whether each section of the bill can be considered under the reconciliation process reserved for legislation with a major impact on the federal budget, was still reviewing the measure Friday.
After the Senate votes to debate the bill, expected Saturday afternoon, the chamber will have 20 hours to debate it, then unlimited time to consider fast-paced amendments in what’s called a “frame vote.”
The final vote is expected on Sunday or Monday. House Majority Leader Steny Hoyer of Maryland said the House would return from recess on Aug. 12 to consider the bill.
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