Sen. Kyrsten Sinema agreed Thursday night to “move forward” with her fellow Democrats on the scaled-back Inflation Reduction Act that another holdout Democrat, Sen. Joe Manchin, agreed to last week.
The Arizona Democrat’s approval of the $739 billion health care, climate and deficit-reduction package was contingent on allocating 40% of its spending to deficit reduction, and came after she was courted by lawmakers on both sides of the aisle ahead of the Senate’s summer recess next week.
“We have agreed to remove the carried interest tax provision, protect advanced manufacturing, and boost our clean energy in the Senate’s budget reconciliation legislation,” a statement from Sinema read.
The carried interest provision Sinema opposed would have raised taxes on private equity firm profits earned by executives to generate $13 billion over ten years. Manchin and many progressives had been in favor of the tax.
A new excise tax on stock buybacks replaced the maneuver, and was expected to produce more revenue for the government, according to a Democrat familiar with the deal, who wasn’t authorized to speak on the record.
Sinema did not provide specific details on how the new bill would protect manufacturing and boost clean energy.
“Subject to the Parliamentarian’s review, I’ll move forward,” the centrist said.
Senate Majority Leader Chuck Schumer, who brokered the compromise with Manchin, a West Virginia moderate, said in a statement the new “agreement preserves the major components” of the spending package.
If passed, the measure would be “reducing prescription drug costs, fighting climate change, closing tax loopholes exploited by big corporations and the wealthy, and reducing the deficit by $300 billion,” the leader from New York said.
The proposal had already been pared down from $3.5 trillion and economic experts predicted recent versions of the deal would have a scant effect on the country’s inflation rate, which is higher than it has been in more than four decades.
