Democrats say they have reached agreement on economic package

WASHINGTON (AP) — Senate Democrats have approved 11th-hour changes to their economic legislation, they announced late Thursday, removing the main impediment to one of President Joe Biden’s top priorities for the election year. push across the room in the coming days.

sen. Kyrsten Sinema, D-Ariz., a centrist seen as the pivotal voice in the 50-50 chamber, said in a statement that she had agreed to revamp some of the measure’s tax and energy provisions and was ready to “move forward” with the bill.

Majority leader Chuck Schumer, DN.Y., said he believed his party’s energy, environmental, health and tax compromise “will gain the support of full” Democratic membership of the chamber. His party will need unanimity and a casting vote from Vice President Kamala Harris to pass the measure through the Senate amid strong opposition from Republicans, who say the plan’s tax increases and spending would exacerbate inflation and hurt the economy.

The announcement came as a surprise, with some expecting talks between Schumer and the mercurial Sinema to drag on for days with no guarantee of success. Schumer has said he wants the Senate to begin voting on the legislation on Saturday, after which it begins its summer recess. Passage through the House, which Democrats closely monitor, could come when that chamber briefly returns to Washington next week.

Democrats revealed few details of their compromise, and other hurdles remained. Still, Congressional final approval would complete an astonishing resurrection of Biden’s broad domestic goalsalbeit in a more modest form.

Democratic infighting had embarrassed Biden and forced him to take down a much larger and more ambitious version of $3.5 trillion for 10 years, then a $2 trillion alternative, nearly killing the effort. Instead, Schumer and Senator Joe Manchin, the conservative West Virginia maverick Democrat who derailed Biden’s previous efforts, unexpectedly negotiated the leaner package two weeks ago.

His approval would allow Democrats to appeal to voters by bragging about taking steps to reduce inflation — though analysts say the impact would be small — tackling climate change and increasing U.S. energy security.

“Tonight we took another critical step toward reducing inflation and the cost of living for American families,” Biden said in a statement.

Sinema said Democrats had agreed to scrap a provision that raises taxes on “carried interest,” or profits that go to executives of private equity firms. That’s a proposal she’s long opposed, though it’s a favorite of Manchin and many progressives.

The carry-interest provision is expected to bring in an estimated $13 billion for the government over the next decade, a small fraction of the measure’s total $739 billion revenue.

It will be replaced by a new tax on share buybacks, which will bring in more revenue than that, said a Democrat familiar with the agreement. The official, who was not authorized to discuss the deal publicly and spoke on condition of anonymity, did not provide further details.

Sinema said she had also agreed to unspecified provisions to “protect advanced manufacturing and boost our clean energy economy”.

She noted that Senate MP Elizabeth MacDonough is still reviewing the measure to ensure no provisions have to be dropped for violating the chamber’s procedures. “Depending on the MP’s assessment, I will proceed,” Sinema said.

The measure must comply with rules for Democrats to use procedures that will prevent Republicans from setting up filibusters, delays that require 60 votes to stop.

Schumer said the measure kept the language of the bill on prescription drug pricing, climate change, “closing tax loopholes exploited by big business and the wealthy” and reducing federal deficits.

He said the bill “addresses a number of key issues” raised by Democratic senators during the talks. He said the latest measure “will reflect this work and bring us one step closer to translating this landmark legislation into law.”

It was unclear whether changes had been made to the minimum corporate tax rate of 15% in the bill, a provision Sinema would like to review. It would bring in an estimated $313 billion, making it the legislation’s biggest revenue booster.

That tax, which would apply to about 150 companies with incomes over $1 billion, has been hotly contested by the business community, including groups from Sinema’s Arizona.

The latest measure was expected to include the aid Sinema and other Western senators have been trying to add to help their states cope with epic droughts and wildfires that have become commonplace. Those lawmakers have asked for around $5 billion, but it was unclear what the final language would do, said a Democrat after the negotiations who would describe the effort on condition of anonymity only.

The measure will also have to pass a “vote-a-rama”, a flurry of non-stop changes expected to last well into the weekend, if not beyond. Republicans want to destroy as much of the bill as possible, either with the MP’s statements or with amendments.

Even if their amendments lose — as most are certain — Republicans will consider it successful if they force Democrats to take risky campaign-season votes on sensitive issues like taxes, inflation and immigration.

Democratic amendments are also expected. Progressive Senator Bernie Sanders, I-Vt., has said he wants to make his health care facilities stronger.

The total account would bring in $739 billion in revenue. That would come from tax hikes for high earners and some large corporations, increased tax collections from the IRS and lowering drug prices, which would save money for the government and patients.

It would spend much of that amount on initiatives that contribute to clean energy, fossil fuels and healthcare, including helping some people buy private health insurance. Then there would still be more than $300 billion left for deficit reduction.

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