Democrats reach agreement sending Inflation Reduction Act to Biden

Democrats dropped part of their proposed minimum tax on huge corporations and made other changes in their giant economic bill to appease erratic Arizona Senator Kyrsten Sinema.

Democrats overcame united GOP opposition to advance the long-stalled health, climate and tax bill, with hopes of approving it as soon as this weekend.

Sinema is the target of extreme criticism from actual Democrats over her support of the Senate filibuster—a hindrance that has allowed Republicans to stop progressive policies and emergency measures—as well as other inconsistent behavior that is at odds with the agenda President Joe Biden ran on.

Senate Majority Leader Chuck Schumer said Sinema’s support will drive Democrats toward delivering a campaign-season victory to Biden on his domestic agenda.

The sprawling bill, which aims to lower health-care costs, combat climate change and reduce the federal budget deficit, drew unanimous Republican opposition as it made another critical step in a grueling journey to deliver on Biden’s long-stalled economic agenda.

In an unusual peek at closed-door bargaining, Schumer said Democrats dropped a proposed tax boost on hedge fund executives after Sinema insisted she would oppose the Inflation Reduction Act unless leadership agreed to her tax policy changes.

In a statement, Sinema said Democrats had “agreed to remove” a key tax policy targeting wealthy investors that aimed to address what is known as the “carried interest loophole.” She also signaled they had made additional tweaks to a second provision that imposes a new minimum tax on corporations that currently pay nothing to the U.S. government.

Schumer said that in its place, the measure now has a new tax — which others said will be 1% — on the shares companies buy back of their own stock, netting the government far more revenue.

The latter set of revisions is likely to benefit some manufacturers, according to two people familiar with the matter, who spoke on the condition of anonymity to describe the unreleased details. Many corporate executives, including Arizona business leaders, had petitioned Sinema to consider the consequences of the tax in recent days.

With it, Democrats opted to seek a new 1 percent tax on corporate stock buybacks, a move that would make up at least some of the revenue that might have been lost as a result of the changes, the two people familiar with the matter said. And party lawmakers agreed to set aside new money at Sinema’s request to respond to climate issues including drought, according to the sources.

From there, Sinema said she would await a final review from the chamber’s parliamentarian — a critical step in the process that allows Democrats to move their spending bill — at which point she would “move forward” on the measure known as the Inflation Reduction Act of 2022.

Biden hailed the development, describing it as a “critical step toward reducing inflation and the cost of living for America’s families.”

Schumer called for the vote hours after Democrats received procedural green lights from the Senate parliamentarian, who for weeks has been reviewing critical sections of the bill — a customary process under special rules that allow Democrats to avoid a Republican filibuster on budget matters.

GOP lawmakers tried to strip multiple provisions from the legislation, known as the Inflation Reduction Act, but the package emerged from the parliamentary review largely unscathed.

By Saturday afternoon, Democrats had a new, 755-page version of the bill in hand, and Republicans were preparing to launch a fresh barrage of attacks in a marathon debate expected to extend at least through the night.

Previewing the fight, Senate Minority Leader Mitch McConnell (R-Ky.) blasted Democrats in a speech on the Senate floor for pursuing “another reckless taxing and spending spree.”

Democrats expressed confidence that they could repel any last-minute efforts to amend the bill — including by some of their own.

“We have an agreement. We’ve got to make it to the finish line. The only way to do this is with Democratic votes,” said Sen. Elizabeth Warren (D-Mass.). “We can’t afford to lose anyone, and that means we are in this boat together.”

The Inflation Reduction Act includes more than $430 billion in new spending, nearly all of it focused on the largest-ever U.S. investments to boost green energy and reduce planet-harming greenhouse gas emissions. Democrats also aim to protect millions of Americans from rising health insurance premiums by extending subsidies that would otherwise expire next year.

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