It’s a moment producing a potent mixture of relief and irritation: Sen. Kyrsten Sinema has made her demands for changes to the Inflation Reduction Act and they seem to be things other Senate Democrats are willing to swallow, so the bill is expected to move forward over the weekend. The fact that the reconciliation package had to be painstakingly worked out, and Democratic ambitions slashed, in negotiations first with Sen. Joe Manchin and then with Sinema is a reminder of how important it is to increase the Democratic Senate majority to make Manchin and Sinema less important. But under current circumstances, if this bill can get through Congress and to President Joe Biden’s desk, it will be a major, major win.
As widely predicted, Sinema demanded the removal of the provision cutting back on the carried interest loophole, which lets massively wealthy private equity and hedge fund executives treat some of their earnings as capital gains, meaning it’s taxed at 20% rather than the income tax level for people in their elevated tax bracket. Sinema laughably insisted she “look[s] forward to working with Senator Warner to enact carried interest tax reforms, protecting investments in America’s economy and encouraging continued growth while closing the most egregious loopholes that some abuse to avoid paying taxes.” Anything she and Warner come up with outside of the reconciliation package will require 10 Republican votes, which it won’t get. So nice try pretending you didn’t just entirely kill this effort to close a tax loophole exploited by multi-multi-multimillionaires, Kyrsten.
Sinema also demanded changes to the provision creating a 15% minimum tax on corporations to “protect advanced manufacturing,” though details aren’t clear. Some of the revenue losses from Sinema’s demands will be made up for through a 1% tax on corporate stock buybacks. That tax seems like a great idea, but in a reasonable world, Democrats would be able to do that and close the carried interest loophole.
As a senator from a drought-stricken state, Sinema also called for the addition of billions of dollars to combat drought, which is something that fits in a climate bill.
In the end, it’s not as terrible as we might have feared from Sinema. It seems that, like Manchin, she ultimately decided Democrats do need to get something done with their razor-thin Senate majority. But watching someone who not all that many years ago portrayed herself as a “Prada socialist” shoot her shot by protecting private equity and hedge fund partners from paying the income tax rate on their income is nauseating. Just as it was nauseating watching a man making $500,000 a year from extra-dirty coal get to set the terms of a climate change bill.
Speaking of nauseating, the unelected Senate parliamentarian still hasn’t been heard from, and could force further changes to the bill in line with her practice of letting Republicans do what they want while imposing much stricter limits on Democratic priorities.
Senate Majority Leader Chuck Schumer is planning an initial vote on Saturday. “Vote-a-rama,” in which Republicans introduce a series of amendments intended to force Democrats into tough votes, could take up a significant chunk of the weekend, with amendments moving fairly quickly, but forcing senators to remain on the floor to vote. Schumer is delaying the start of the Senate’s extended August recess to get this done, which is excellent (and hopefully the thought of recess will give some Republicans second thoughts about how long vote-a-rama lasts).
Although really Schumer should delay recess a little longer to force a vote on the Respect for Marriage Act.