With the last remaining holdout of Senate Democrats — Arizona Sen. Kirsten Cinema — tentatively signing a $739 billion revised reconciliation deal, her party’s leaders held the first procedural vote on their historic tax, climate and drug-pricing bill. are hoping. As early as Saturday.
The Senate is expected to eventually pass the Inflation Reduction Act of 2022, using a fast-track budget process known as reconciliation, beginning this weekend. If all Democrats stick together, they will be able to clear a massive legislative package with their very thin majority and avoid the threat of a Republican.
In a surprise move in late July, West Virginia Sen. Joe Manchin announced that he had struck a deal with Majority Leader Chuck Schumer on a revised version of a Democrat-only spending bill, as it looked like talks were on the door. was closed.
After reviewing the law, on Thursday evening the cinema offered her necessary but still conditional support for the bill. Her support was conditioned by Democrats to withdraw from the bill, a tax break in favor of wealthy hedge-fund managers called the “carried interest loophole” rather than adding a new excise tax on stock buybacks.
Photo: Sen. Kirsten arrives for the Senate Homeland Security Committee meeting at the Capitol on August 3, 2022 at Cinema. (J. Scott Applewhite/AP, FILE)
The current proposed text aims to increase job creation, increase taxes on large corporations and the mega-rich, allow the government to negotiate drug prices at a lower cost, expand the Affordable Care Act health care program and measure together invests in addressing climate change. Like giving tax credits for clean energy initiatives.
Together, the climate and ACA provisions would cost the government about $433 billion, and Democrats plan to put at least $300 billion in deficit reduction. Tax provisions, improved drug pricing and increased IRS tax enforcement will increase projected revenues that will increase the bill’s output to $739 billion.
Republicans have rejected the proposal, saying it is irresponsible to raise any taxes or spend packages when the country is in the throes of an economic downturn.
MORE: Cinema enthralls Democrats, signs tax bill
“It’s not about inflation reduction, it’s about spending everything they want to spend money on. I’m not going to support it. I don’t think any Republican is going to support it. Why is that? Well, that’s another tax and spending bill,” said Sen. Mitt Romney of Utah in response to the bill.
Tax analysts argue that the law would help American households who earn less than $400,000. Democrats say it will reduce inflation at least partly by reducing the deficit, which is a key priority for Manchin.
According to the nonpartisan Congressional Budget Office, the bill would reduce the federal budget deficit by $102 billion over 10 years.
“The law will have either little or no effect on taxes due or paid by any household with an income of less than $400,000 and is fully in line with the President’s Pledge. In fact, the Clean Energy Tax Credit and the Extended Premium Tax Credit Will cut taxes for millions of Americans,” Treasury Secretary Janet Yellen wrote in a letter to the leadership of Congress.
Photo: Senate Majority Leader Chuck Schumer holds a news conference to tout the $430 billion drug pricing, energy and tax bill championed by Democrats in the Capitol on August 5, 2022. (Jonathan Ernst/Reuters)
Cinema said she is still waiting to see the results of a scrub by the Senate’s nonpartisan rule defender before signing it, but if Schumer can put her caucus together and pass the bill. , then it will be a big victory for the democratic leaders. Hot upcoming medium term cycle.
“We have agreed to remove the interest tax provision made, protect advanced manufacturing, and boost our clean energy economy in Senate budget reconciliation legislation,” the Arizona senator said in a statement. “Subject to MP’s review, I will proceed.”
MORE: Munchkin announces surprise spending with Schumer – including on health care, climate
Details of the reconciliation bill were further uncovered on Thursday as lawmakers continued to comb through more than 700 pages of legislation ahead of this weekend’s votes. Once the Senate votes to begin debate on the bill, lawmakers will have the opportunity to offer an unlimited number of amendments, a cumbersome and time-consuming process.
Here’s what’s in the bill from Democrats’ top-line priorities: the economy, the environment, and health care.
The new proposal would invest $300 billion in “deficit reduction,” backers say, by “paying the biggest corporations and the ultra-wealthy their fair share” and providing funds to enhance IRS tax enforcement.
But the Democrats’ most ambitious efforts to tax some of the very wealthy were sidelined by cinema’s insistence that so-called “interest interest” tax breaks for wealthy hedge fund managers and private equity executives be upheld.
Photo: Sen. Kirsten arrives at the Capitol for the Cinema Vote, August 3, 2022. (Drew Anger/Getty Images)
The original bill was intended to increase the holding period and therefore force investors to hold on to the asset longer – a battle strongly fought by Wall Street.
Cinema specifically demanded changes to the Inflation Reduction Act to remove the provision for “interest interest” loopholes.
Schumer said during a press conference on Friday, “Sen. Cinema said she would not vote for the bill, would not proceed to move until we got it out. So we had no choice.” “
In its statement on Thursday evening, the cinema left the door open for discussion on revising the interest tax levied in future.
“After this effort, I look forward to working with Senator [Mark] Warner encourages us to implement interest tax reforms, protect investment in the US economy and encourage sustained growth, while avoiding paying taxes on the most serious loopholes,” she said in a statement Thursday night. said in.
MORE: Details emerge on Manchin-Schumer spending bill
Changes to secure Sinema’s support also include a proposed lowering of the 15% corporate minimum tax, to preserve manufacturers’ ability to quickly reduce capital purchases. The proposed changes to depreciation policies had some Republicans concerned that the IRA would disproportionately affect manufacturers.
“We are skeptical and will review the amended law carefully,” Jay Timmons, president and CEO of the National Association of Manufacturers, said in a statement. “We cannot afford to undermine manufacturing competitiveness.”
The proposed corporate minimum tax still only applies to large corporations.
But when Democrats took a loss in revenue to meet cinema demands, they added a provision aimed at investors to make up for it—a new 1% excise duty on stock buybacks that would pay companies on the amount of stock they repurchase.
Schumer has said this excise duty will ensure that the package still reduces the federal deficit to $300 billion, the same amount the Democrats targeted in the original deal and a key priority for Manchin.
“We’re adding excise taxes on stock buy backs that would bring in $74 billion,” Schumer said.
Chak Mar, vice president of federal tax policy at the Center on Budget and Policy Priorities, in a Twitter The thread called the tax an “excellent policy,” designed to correct tax policy inefficiencies and “raises $125 billion over ten years.”
Most of the $369 billion to be spent on climate in the Inflation Reduction Act will go to renewable energy tax credits that promote clean energy technology such as carbon capture, hydrogen, renewables and energy storage. Climate provisions will also provide “domestic energy efficiency improvements” and consumer tax credits for the purchase of clean vehicles.
Supporters say the package would cut the country’s carbon emissions by about 40% by 2030.
The bill includes a methane emissions reduction program, a series of reforms that would have a dramatic effect on both onshore and offshore federal oil and gas royalty rates, and undo a 10-year moratorium on offshore wind leasing established by former President Donald Trump. other provisions.
Democrats are also excited by the bill’s massive funding initiative — $60 billion in total — for environmental justice projects.
The cinema also sought a $5 billion boost in the bill’s spending on funding to combat drought in addition to the $575 million already written in the bill, which is funded by the Bureau of Reclamation and Tribes for Drought Response and Preparedness. $13 million will go to drought relief.
On Friday, Cinema’s Arizona affiliate Mark Kelly announced a deal to include $4 billion in resources to counter the draft in the western US in the bill.
Health care, prescription drug prices
In addition to climate spending, the reconciliation bill would also allocate $64 billion through 2025 to extend Affordable Care Act subsidies by three years.
It aims to do away with the long-held Democratic goal of lowering drug prices for senior citizens by allowing Medicare to negotiate drug prices directly.
According to the bill’s summary, “the new negotiating policy will ensure that Medicare patients get the best deal possible on high-priced drugs and that Medicare pays cost-sharing for those drugs based on the negotiated price.”
The bill would also reduce the $2,000 out-of-pocket cost for those using a Medicare drug plan, with the option to break that amount into affordable monthly payments. Currently, no cap exists.
It would also impose fines on drug companies if they increase their prices faster than inflation, which would encourage them to keep prices low and extend premium and co-pay support on drugs to low-income individuals. .
“While we’re not there yet, we’re on the verge of taking the most important step we can – help Congress to help reduce inflation,” Biden said in remarks at the White House. on Friday, citing healthcare victories for Democrats, among other climate and tax victories.
What’s In The Senate Democrats’ Historic ‘Inflation Reduction Act’? Originally appeared on abcnews.go.com