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Senator Kyrsten Sinema (D., Ariz.) announced Thursday night that she would support Democrats’ massive economic package after party leaders agreed to make tweaks to several new tax proposals.
With support from Sinema, who said late Thursday that she planned to “move forward” with the bill, the measure is expected to have the votes needed to pass in the Senate via a simple majority, with Vice President Kamala Harris as the tie-breaking vote. Democrats plan to pass the bill through budget reconciliation, which allows a measure to pass with a simple majority rather than needing to meet a 60-vote threshold, with only support from Democratic senators.
The legislation, the “Inflation Reduction Act,” is essentially a pared down version of President Biden’s Build Back Better package that was effectively put to rest last year when Senator Joe Manchin (D., W. Va.) pulled his support.
The plan would allocate $369 billion for energy and climate initiatives, while another $64 billion would be used to extend expiring federal subsidies for people buying health insurance for another three years. The bill would impose new taxes to pay for it.
Despite its name, the bill’s impact on inflation is “expected to be statistically indistinguishable from zero,” according to an independent analysis performed by the University of Pennsylvania Wharton School.
Sinema said Thursday that she was willing to support the bill after several changes had been made to its tax provisions, including removing the tax on carried interest. The tax would have impacted hedge-fund managers and private equity and would have raised $14 billion, according to CNN.
Instead, the bill would include a 1 percent excise tax on companies’ stock buybacks, which is expected to raise $73 billion, a Democratic aide told CNN.
“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 her statement on Thursday.
Senate majority leader Chuck Schumer (D., N.Y.) has scheduled a procedural vote on Saturday to advance the bill. If the vote passes with a simple majority, the Senate will undertake 20 hours of debate, after which a “vote-a-rama” would occur where senators vote on a series of amendments with no time limit. Then, if the measure passes a final vote, it would head to the House.
“The agreement preserves the major components of the Inflation Reduction Act, including reducing prescription drug costs, fighting climate change, closing tax loopholes exploited by 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 put us one step closer to enacting this historic legislation into law.”
Now Democrats must have the bill reviewed by Senate parliamentarian Elizabeth MacDonough to ensure the provisions in the bill comply with the rules of the budget reconciliation process.