The cornerstone of President Joe Biden’s domestic agenda appears back on track after Democrats agreed on a revised version of their tax and climate bill late on Wednesday.
But it came at a price: dropping a provision that would have narrowed a tax break for carried interest, altering a 15 per cent minimum tax on corporations and adding a new 1 per cent excise tax on stock buybacks.
The key was getting Kyrsten Sinema over the line. She was the pivotal Democratic vote in the 50-50 Senate and wanted the levy on wealthy hedge fund managers to be abandoned.
Democrats have been eager to finish work on the legislation, even though it has been drastically scaled back from Mr Biden’s original vision for an expansive tax and social spending package that would advance the party’s climate goals.
From the White House, where he remains in isolation due to Covid-19, Mr Biden praised it as “another critical step towards reducing inflation and the cost of living for America’s families” and urged the Senate to pass it quickly.
“This bill is a game-changer for working families and our economy,” he said during remarks at the White House on Friday.
“I look forward to the Senate taking up this legislation and passing it as soon as possible.”
Voting will begin this weekend.
But Senate Democrats are still waiting for the parliamentarian to determine whether parts of the bill meet the chamber’s strict budget rules.
This means things such as the domestic content requirements for cars eligible for electric vehicle tax credits, caps on insulin out-of-pocket costs and penalties for drug companies raising prices higher than inflation could be struck.
That would dilute the bill even further.
Senate Majority Leader Chuck Schumer said in a statement that the revised legislation will be brought to the chamber floor on Saturday, setting the bill on the way to passage with a simple majority vote.
He believes all 50 members of the Democratic caucus back it, including West Virginia's Joe Manchin, who was a critical partner in resurrecting the bill.
Removing the measure to raise taxes on private equity managers from the bill means that the legislation, which Democrats initially envisioned as a way to overhaul the tax code, will not include any new taxes on the rich.
It is definitely a compromise, but Democrats are running out of time, given they are expected to suffer heavy losses in midterm elections in November.