Krysten Sinema agrees to climate and tax deal

WASHINGTON — Senator Kyrsten Sinema, Democrat of Arizona, announced late Thursday that she would support the advancement of her party’s climate, tax and health care package, paving the way for a major item on the national agenda of the President Biden to move to the Senate in the coming days.

To win Ms. Sinema’s support, Democratic leaders agreed to scrap a $14 billion tax hike on some wealthy hedge fund managers and private equity executives she had opposed, change the structure of a minimum 15% corporate tax and to include drought money to benefit Arizona.

Ms Sinema said she was ready to go ahead with the package, provided the top Senate rules official approves it.

Ms Sinema had been the latest to resist the package after Sen. Joe Manchin III, Democrat of West Virginia, struck a deal with top Democrats last week that resurrected a plan that appeared to have crumbled.

That brought Democrats closer to enacting the package and reclaiming key elements of their national agenda, starting with a series of votes this weekend. It came just over a week after Mr. Manchin and Senator Chuck Schumer of New York, the majority leader, stunned their colleagues with a deal to include hundreds of billions of dollars for climate and energy programs and tax increases in legislation, in addition to a proposal to reduce the price of prescription drugs and expand expanded health insurance subsidies.

With Republicans united in opposition, the measure needs the unanimous support of Democrats to advance to the Senate 50-50, so the party cannot afford a single defection.

Mr Schumer confirmed in a statement that he had reached an agreement “which I believe will receive the support of the entire Senate Democratic conference”. He said the revised legislation would be released on Saturday.

“The agreement preserves the main components of the The Curbing Inflation Act, including cutting prescription drug costs, tackling climate change, closing tax loopholes operated by big business and the wealthy, and reducing the deficit,” he said. -he declares. The agreement “will bring us closer to the enactment of this historic legislation”.

Mr Biden called on the Senate to quickly pass the measure, praising the deal as “another critical step towards reducing inflation and the cost of living for American families”.

Ms Sinema insisted on scrapping a provision that would have limited preferential tax treatment of income earned by some wealthy hedge fund managers and private equity executives. Democrats instead added a new 1% excise tax that companies would have to pay on the amount of stock they buy back, said a Democratic official, who released details of the plan on condition of anonymity.

The provision, the official said, would ensure the package would still reduce the federal deficit by up to $300 billion, the same amount Democrats were aiming for with the original deal and a key priority for Mr. Manchin.

Democrats also agreed to a request by Ms. Sinema to include billions of dollars for drought relief, according to officials briefed on the emerging plan, which is crucial for Arizona as it suffers a devastating mega-drought. They were expected to restructure the 15% minimum corporate tax to make it less burdensome for manufacturers. Earlier this week, business leaders in Arizona appealed directly to Ms Sinema to streamline the proposal, which was included in part because she resisted raising tax rates as part of plan.

“Manufacturers remain concerned that this bill will stifle new remedies and therapies,” said Jay Timmons, president and CEO of the National Association of Manufacturers. on Twitter, while welcoming the abolition of certain tax provisions. He added: “We remain skeptical and will carefully review the revised legislation.”

While most Democrats were quick to rally around Mr Manchin’s deal with Mr Schumer when he announced it last week, Ms Sinema declined to intervene and privately signaled that changes , particularly to the tax proposals, would be needed to win his vote.

Even as she contested an unusually bipartisan voting margin on Thursday for a judge she argued for the United States Court of Appeals for the Ninth Circuit – securing the support of nearly 20 Republicans – Ms Sinema was under pressure from both sides of the aisle. She and Mr. Manchin huddled in the bedroom at one point, talking in low voices.

Ms. Sinema, an enigmatic centrist, had already coerced her party into abandoning plans to overhaul much of the tax code, and her characteristic silence has frustrated Democrats eager to take up the bill. After learning that she had pledged her support for the bill, several Democratic senators and aides celebrated, confident that final passage was within reach.

“We are about to pass some monumental legislation that is needed and popular,” said Sen. Brian Schatz, Democrat of Hawaii, adding, “It is happening.”

Mr Schumer said he planned to hold a test vote on the measure on Saturday afternoon, preventing the Senate from leaving for a planned five-week recess in August to finish work on the legislation.

The package still has to clear a series of hurdles before the Senate can adopt it. Because Democrats are using the murky budget reconciliation process to shield the measure from a buccaneer, it must be blessed by the Senate congressman to ensure its elements adhere to the strict rules that govern the process. This process was due to continue on Friday and could lead to further changes to the measure if certain parts are deemed out of service.

Ms Sinema left herself open to changing course if the changes raised concerns, saying she would go ahead with the bill “subject to parliamentary review”.

Republicans will have a chance this weekend to try to force changes before the legislation is finally passed in a marathon series of amendment votes known as the vote-a-rama. If all the Republicans are present, the 50 senators who caucus with the Democrats must remain united to protect the legislation as written.

In her statement, Ms Sinema said she would work with Sen. Mark Warner, Democrat of Virginia, on separate legislation to address the preferential tax treatment of hedge fund earnings, sometimes called the carried interest loophole. She said they would focus on “protecting investments in the U.S. economy and encouraging continued growth while closing the most glaring loopholes that some abuse to avoid paying taxes.”

But to do so outside of a reconciliation bill would require 60 votes to overcome a near-certain Republican filibuster, and it’s unlikely enough GOP senators will join the effort to allow that to happen. .

Alan Rappeport contributed report.