Senate Democrats have agreed on a massive new spending bill, they announced late Thursday, clearing the major impediment to push one of President Joe Biden’s election-year priorities through the chamber in the coming days.
Sen. Kyrsten Sinema, D-Ariz., a centrist seen as the pivotal vote in the 50-50 chamber, said in a statement that she had agreed to revamping some of the measure’s tax and energy provisions and was ready to “move forward” on the bill.
Senate Majority Leader Chuck Schumer, D-N.Y., said he believed his party’s compromise “will receive the support of the entire” Democratic membership of the chamber. His party needs unanimity and Vice President Kamala Harris’ tie-breaking vote to move the measure through the Senate over certain solid opposition from Republicans, who warn that the tax and spend bill will worsen inflation and damage the economy.
The announcement came as a surprise, with some expecting talks between Schumer and the mercurial Sinema to drag on for days longer without guarantee of success. Schumer has said he wants the Senate to begin voting on the legislation Saturday, after which it would begin its summer recess. Passage by the House, which Democrats control narrowly, could come when that chamber returns briefly to Washington next week.
Democrats revealed few details of their compromise, and other hurdles remained. Still, final congressional approval would complete an astounding resurrection of Biden’s wide-ranging domestic spending goals, though in a more modest form.
Democratic infighting had embarrassed Biden and forced him to pare down a massive $3.5 trillion spending bill down to a $2 trillion alternative, leaving the effort all but dead. Instead, Schumer and Sen. Joe Manchin, the maverick Democrat from West Virginia who derailed Biden’s earlier efforts, secretly negotiated the slimmer package two weeks ago.
Its approval would let Democrats appeal to voters by boasting they are moving to reduce inflation — though analysts say that impact would be either minor or have the opposite effect and exacerbate inflationary pressures.
Sinema said Democrats had agreed to remove a provision raising taxes on “carried interest,” or profits that go to executives of private equity firms. That’s been a proposal she has long opposed, though it is a favorite of Manchin and many far-left progressives.
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The carried interest provision was estimated to produce $13 billion in new tax revenue over the coming decade, a small portion of the measure’s $739 billion in total tax increases.
It will be replaced by a new excise tax on stock buybacks which will bring in more revenue than that, said one Democrat familiar with the agreement. The official, who was not authorized to discuss the deal publicly and spoke on condition of anonymity, provided no other detail.
Sinema noted that Senate parliamentarian Elizabeth MacDonough is still reviewing the measure to make sure no provisions must be removed for violating the chamber’s procedures. “Subject to the parliamentarian’s review, I’ll move forward,” Sinema said.
The measure must adhere to those rules for Democrats to use procedures that will prevent Republicans from mounting filibusters, delays that require 60 votes to halt.
Left unclear was whether changes had been made to the bill’s 15% minimum corporate tax, a provision Sinema has been interested in revising. It would raise an estimated $313 billion in taxes on employers, making it the legislation’s largest tax increase.
That levy, which would apply to around 150 corporations with income exceeding $1 billion, has been strongly opposed by businesses including by groups from Sinema’s Arizona.
The final measure was expected to include assistance that Sinema and other Western senators have been trying to add to help their states cope with epic drought and wildfires that have become commonplace. Those lawmakers have been seeking around $5 billion but it was unclear what the final language would do, said a Democrat following the bargaining who would describe the effort only on condition of anonymity.
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The measure will also have to withstand a “vote-a-rama,” a torrent of nonstop amendments expected to last well into the weekend, if not beyond. Republicans want to kill as much of the bill as possible, either with the parliamentarian’s rulings or amendments.
Even if their amendments lose — as is certain for most — Republicans will consider it mission accomplished if they force Democrats to take risky campaign-season votes on touchy issues like taxes, inflation, and illegal immigration.
Democratic amendments are expected as well. Socialist Sen. Bernie Sanders, I-Vt., has said he wants to make its health care spending provisions bigger.
The overall bill would raise $739 billion in tax revenue. That would come from tax hikes on high earners and large employers, beefed-up IRS tax collections, and curbs on drug prices.
It would spend all those new taxes on initiatives helping clean energy, fossil fuels, and health care, including helping some people buy private health insurance.
The Associated Press contributed to this article