U.S. Senate Majority Leader Chuck Schumer, D-New York) softened a corporate tax increase to win crucial support from Sen. Krysten Sinema of Arizona. (Chip Somodevilla/Getty Images)
U.S. Senate Democrats’ wide-ranging tax, climate and health bill appears set to pass after Majority Leader Chuck Schumer and Sen. Kyrsten Sinema of Arizona struck a deal to soften the measure’s corporate tax increase and a second tax hike aimed at wealthy finance-sector workers, Schumer told reporters Friday.
The revenue lost to obtain Sinema’s support would be more than made up with a new provision targeting stock buybacks, Schumer said.
Democrats are also likely to add up to $5 billion for the Bureau of Reclamation to address drought resiliency in the Colorado River Basin, individuals familiar with those negotiations said. The basin includes all of Arizona and parts of Colorado, New Mexico, Nevada, California, Utah and Wyoming.
Schumer’s agreement with Sinema, an influential moderate seen as the last holdout on the bill, likely put the bill on a path to unanimity among the 50 Senate Democrats. That is a requirement for the bill to be approved under a legislative process known as reconciliation that allows Democrats to bypass the chamber’s normal 60-vote threshold.
Vice President Kamala Harris is expected to break a party-line tie on a vote for the bill’s final passage.
Concessions to Sinema included removing a provision changing the way certain compensation that hedge-fund managers and private equity executives are paid, known as carried interest, is taxed, Schumer said.
The New York Democrat said he strongly supported the change in taxation, but that it was a red line for Sinema.
“I pushed for it to be in this bill,” Schumer said. “Sen. Sinema said she would not vote for the bill — not even move to proceed — unless we took it out. So we had no choice.”
The nonpartisan Congressional Budget Office estimated that measure would have raised revenue by $14 billion over 10 years.
The Schumer-Sinema agreement would also change a separate provision setting a new 15% minimum tax rate on corporations with $1 billion or more in income.
Schumer didn’t provide details of the change, saying only “a piece was taken out,” but he said it would lower the expected revenue the provision would produce from $313 billion to $258 billion.
The tax revenue lost in removing those two provisions would be made up with a new excise tax on stock buybacks, where public companies buy their own stock on the open market to reduce the amount publicly available and drive up the price.
Schumer said “I hate” the buyback procedure because the money could otherwise be spent on creating jobs or research and development.
That tax would bring in $74 billion, he said, and should be encouraging to the caucus’ progressive wing.
Those changes would add up to an additional $5 billion in revenue — reportedly the exact amount Sinema is seeking in additional drought resiliency funding.
The exact spending figure on drought resiliency was still the subject of debate among Senate Democrats Friday afternoon, but was expected to land in the billions of dollars, sources said.
‘It’s going to be like hell’
A handful of Senate Republicans criticized the bill from all angles during a Friday morning media availability and indicated they would make the amendment process for it as painful for Democrats as possible.
All GOP senators are expected to oppose the bill on the floor.
Sen. Roger Marshall, a Kansas OB-GYN before he joined the Senate, said the bill’s changes to allow Medicare to negotiate the prices of certain prescription drugs would hurt drug development in the pharmaceuticals industry.
“Why do they want to destroy the innovations that pharma has given us that saved millions of lives?” Marshall said.
Sen. Bill Cassidy of Louisiana said the bill would do little to address inflation, despite Democrats’ title for the bill — the Inflation Reduction Act.
Tax breaks for electric vehicles, for example, would have little impact on Louisianans struggling to fill their gas tanks, he said.
“If their prescription for high fuel prices is that someone drives an electric vehicle, they have no understanding of the lives of those people whom I represent,” he said. “Folks don’t drive 15-year-old pickup trucks 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 has made it even worse.”
Sen. John Barrasso of Wyoming, the ranking Republican on the Senate Energy and Natural Resources Committee, said the measure would raise the energy costs that are driving inflation.
Democrats have said the bill’s spending on clean energy would reduce energy bills. The measure also includes provisions to boost fossil fuel development, negotiated with Schumer by moderate West Virginia Democratic Sen. Joe Manchin III.
Republicans will propose amendments to the bill on “energy, inflation, the border and crime” to force Democrats into tough votes, Barrasso, also the No. 3 member of Republican leadership in the chamber, said.
But amendments could still force Democrats — including those in tough reelection races — to take controversial positions. Republicans all but said Friday that was the point of the exercise.
Sen. Lindsey Graham of South Carolina said Democrats “deserve” a tough series of votes because they outmaneuvered Republicans to win GOP support of a bill to boost semiconductor manufacturing while keeping the Democrats-only spending bill alive.
Minority Leader Mitch McConnell had indicated he would not support the semiconductor bill if Democrats still planned to pursue a reconciliation bill. But several Republicans cast yes votes on that measure last week, only to see a 725-page Schumer-Manchin bill that formed the basis of the bill to be released hours later.
“So what will vote-a-rama be like?” Graham said. “It’s going to be like hell.”
Schumer said the Senate would meet Saturday to begin consideration of the bill.
The Senate parliamentarian, an official with the duty of determining whether each section of the bill can be considered under the reconciliation process reserved for legislation with a major effect on the federal budget, was still reviewing the measure Friday.
Once the Senate votes to proceed to debate the bill, expected Saturday afternoon, the chamber would have 20 hours to debate it, then unlimited time to consider amendments at a rapid pace in what is called a “vote-a-rama.”
A final vote is expected Sunday or Monday. House Majority Leader Steny Hoyer of Maryland said the House will return from its recess on Aug. 12 to take up the bill.
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