The U.S. Senate Democrats’ sweeping tax, climate, and healthcare bill looks set to pass after Majority Leader Chuck Schumer and Sen. Kyrsten Sinema of Arizona reached a deal to mitigate the measure’s corporate tax increase and a second tax hike targeting wealthy financial sector workers, Schumer told reporters on Friday.
Revenue lost to gaining support from Sinema would be more than offset by a new provision aimed at share buybacks, Schumer said.
Democrats are also likely to add up to $5 billion to the Bureau of Reclamation to address drought resilience in the Colorado River Basin, people familiar with those negotiations have 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 seen as the latest holdout on the bill, likely put the legislation on the path to unanimity among the 50 Senate Democrats. It’s a requirement for the bill to pass through a legislative process known as reconciliation that allows Democrats to bypass the normal 60-vote House threshold.
Vice President Kamala Harris is expected to break the party tie in a vote for the final passage of the bill.
Concessions to Sinema included removing a provision changing how certain compensation paid to hedge fund managers and private equity executives, called deferred interest, is taxed, Schumer said.
The New York Democrat said he strongly supports the tax change, but 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 go forward – unless we took it down. So we had no choice.”
The nonpartisan Congressional Budget Office estimated the measure would have increased revenue by $14 billion over 10 years.
The Schumer-Sinema deal would also change a separate provision establishing a new minimum tax rate of 15% for corporations with revenue of $1 billion or more.
Schumer did not provide details on the change, saying “only a portion was removed,” but he said it would reduce the expected revenue the provision would generate from $313 billion to $258 billion.
The tax revenue lost by removing 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 available to the public and drive up the price.
Schumer said he “hates” the buyout process 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 for the progressive wing of the caucus.
These changes would represent $5 billion in additional revenue, the exact amount Sinema is seeking in additional funding for drought resilience.
The exact figure for spending on drought resilience was still being debated among Senate Democrats Friday afternoon, but is expected to be in the billions of dollars, sources said.
“It’s Gonna Be Hell”
A handful of Senate Republicans slammed the bill from all angles at a news conference Friday morning and said they would make the amendment process as painful as possible for Democrats.
All GOP senators should oppose the prosecuting bill.
Sen. Roger Marshall, a Kansas OB-GYN before joining the Senate, said changes to the bill allowing Medicare to negotiate prices for certain prescription drugs would hurt drug development in the pharmaceutical industry.
“Why do they want to destroy the innovations that pharma has given us and which have saved millions of lives? said Marshal.
Sen. Bill Cassidy of Louisiana said the bill would do little to fight inflation, despite the Democrats’ title for the bill – the Inflation Reduction Act.
Tax breaks for electric vehicles, for example, would have little impact on Louisianans who struggle 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 I represent,” he said. “People don’t drive 15-year-old vans because they don’t want a new car. They don’t drive new cars because they can’t afford a new car. And high gasoline prices have made the situation worse.
Sen. John Barrasso of Wyoming, the most Republican on the Senate Energy and Natural Resources Committee, said the measure would increase energy costs that fuel inflation.
Democrats said spending on the clean energy bill would lower energy bills. The measure also includes provisions to spur fossil fuel development, negotiated with Schumer by moderate Democratic West Virginia Sen. Joe Manchin III.
Republicans will propose amendments to the “energy, inflation, border and crime” bill to force Democrats to vote strong, said Barrasso, the third member of the Republican leadership in the chamber.
Sen. Lindsey Graham of South Carolina says Democrats “deserve” a series of tough votes because they outwitted Republicans to win GOP support for a bill to boost semiconductor manufacturing while keeping the Democrat-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 voted yes to the measure last week, only to see a 725-page Schumer-Manchin bill released hours later.
“So what will Vote-a-rama look like? Graham said. “It’s going to be like hell.”
Schumer said the Senate would meet on Saturday to begin consideration of the bill.
The Senate congressman, an official tasked with determining whether each clause of the bill can be considered as part of the reconciliation process reserved for laws with a major effect on the federal budget, was still reviewing the measure on Friday.
Once the Senate votes to proceed to debate the bill, expected Saturday afternoon, the chamber would have 20 hours to debate it, and 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 would return from recess on Aug. 12 to consider the bill.
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