Kirsten Senema says she’ll go ahead with economic bill, put Biden’s agenda on the cusp of Senate approval

Cinema’s support means Democrats will likely have 50 votes in their caucus to push the bill through their House by the end of the week, before it moves to the House next week for final approval.

And while the plan was scaled back from Biden’s initial Build Back Better package, the latest law — called the Inflation Reduction Act — would represent the largest investment in energy and climate programs in U.S. history, extend the end of health care subsidies by three years and give Medicare the power for the first time to negotiate a settlement. Prescription drug prices. The legislation will impose new taxes to pay for it.

The remaining hurdle for Democrats: a review by Senator Elizabeth McDonough, which must decide whether provisions in the bill meet strict rules to allow Democrats to use the stall-resistant budget process to pass legislation along partisan lines.

But after days of talks with Senate Majority Leader Chuck Schumer, Cinema indicated she was ready to vote going forward.

“Subject to parliamentary review, I will move forward,” she said in a statement after remaining silent on the bill for more than a week.

In the statement, Cinema noted that it won several changes to the tax provisions in the package, including eliminating the provision that would have tightened the carry-on interest loophole, which would raise taxes paid by hedge funds and private equity managers. This proposal would have raised $14 billion. It also suggested it won changes to Democrats’ plans to reduce how companies deduct expendable assets from their taxes — a key demand by manufacturers who have lobbied cinema over their concerns this week.

“We agreed to eliminate the carryover interest tax provision, protect advanced manufacturing, and promote our clean energy economy in the Senate Budget Adjustment Legislation,” Senema said.

To make up for lost revenue, Democrats agreed to add a 1% selective tax on corporate stock buybacks as part of the agreement, raising another $73 billion, according to Democrats Aid.

“The agreement will include a new selective tax on share buybacks that bring in much more revenue than the carryover interest clause, meaning the deficit reduction figure will remain at $300 billion,” a Democrat familiar with the agreement told CNN.

The $300 billion deficit reduction goal was a key priority for the senator. Joe Manchin, a West Virginia Democrat who signed the deal after negotiations with Schumer last week.

“The agreement preserves key components of the Inflation Reduction Act, including lowering drug costs, combating climate change, closing tax loopholes exploited by big business and the wealthy, and cutting the $300 billion deficit,” Schumer said in a statement. “The final version of the reconciliation bill, due to be presented on Saturday, will reflect this work and bring us one step closer to enacting this landmark legislation into law.”

high stakes negotiation

What's in the Mansion Schumer Deal on Climate, Healthcare, and Taxes

Earlier Thursday, top Senate Democrats engaged in high-stakes negotiations with the cinema, actively discussing potential changes to key tax components in order to secure Arizona’s moderate support.

In private discussions, Sinema has expressed concern about key parts of the Democrats’ plan to pay for the health and climate package — imposing a minimum tax of 15% on large corporations and narrowing the loophole for transfer benefits, allowing investment managers to pay. A lower tax rate on a large portion of their compensation.

As a result, Democrats have been scrambling to find new sources of income to achieve the goal of saving $300 billion over a decade.

“Failure is not an option,” the senator said. Richard Blumenthal, a Connecticut Democrat, expressed the view of many of his party earlier Thursday that cinemas will eventually join.

Schumer announced earlier Thursday that the Senate will reconvene on Saturday and plans to hold its first procedural vote to advance the bill. If the vote gets the support of all 50 members of the Democratic caucus, there will be up to 20 hours of debate. After discussion time, there will be a process colloquially referred to on Capitol Hill as “the rama vote,” which is a marathon series of amendment votes with no time limit before the final vote. If the bill does eventually pass, the House will have to take action.

Democrats are trying to wrap up negotiations and pass their economic corridor before leaving town for the August recess. The measure will invest $369 billion in energy and climate change programs with the goal of reducing carbon emissions by 40% by 2030. For the first time, Medicare will be empowered to negotiate prices for some drugs, capping out-of-pocket costs of $2,000 for those enrolled in Medicare drug plans. . It would also impose penalties on drug companies if they raise prices faster than inflation and extend the expiration of boosted subsidies to cover the Affordable Care Act by three years.

It is not clear whether all of these provisions will survive Parliament review.

Too much pressure on the cinema

Will the Senate Climate and Healthcare Agreement Reduce Inflation?  Depends who you ask

Sinema wasn’t part of the deal, he only learned of it when news broke last week. She had refused to comment publicly on the deal, with her aides saying only that she would wait until the senator was reviewed before taking a position. However, she has been articulating her demands with Democratic leaders, including seeking to add $5 billion to help the Southwest cope with a multi-year drought, according to multiple sources.

As Democrats courted her, Republicans and business groups voiced concerns. In a private call this week, the Arizona Chamber of Commerce and the National Association of Manufacturers urged Sinema to push for a change in the corporate tax floor. The president of the Arizona business group, Danny Seiden, told CNN he has voiced opposition from the business community to the 15% tax rule, noting that it would particularly hurt manufacturers who take advantage of the accelerated depreciation tax credit that reduces the tax burden.

Is this poorly written? The cinema requested, according to Seden, the president of the Arizona Chamber of Commerce, who relayed the call to CNN.

“It gave me hope that she’s willing to open up and maybe improve this,” Seiden said.

Two sources told CNN that Sinema privately conveyed those concerns to senior Democrats, arguing that it would hurt manufacturers including in her state.

Trying to break the deadlock, Colorado Moon. John Hickenlooper, a new Democrat, has proposed a consumption tax on Schumer’s share buybacks as a way to make up for lost revenue due to Sinema’s orders, according to Democratic Aid.

At issue are Democrats’ proposed changes to bonus depreciation enacted by the Republican Party in the 2017 tax law, which allows companies to deduct 100% of the cost of an asset in the year in which it is operated. The new legislation suggested reducing it in stages, starting next year.

It is unclear exactly how the new language is structured on this issue.

Defending the new tax, the Democratic-led Senate Finance Committee on Thursday released data from the nonpartisan Joint Committee on Taxation showing that as many as $125 billion from businesses averaged just 1.1% effective tax rate in 2019. The committee says in its report A press release explains that this shows “extremely low tax rates” that some companies are able to pay.

“While we know that billion-dollar companies are avoiding paying their fair share, these tax rates are lower than we could have imagined,” said Ron Wyden, the Senate’s chief financial officer, an Oregon Democrat. “We will end it with a minimum tax of 15 percent.”

This story and headlines were updated with additional developments on Friday.

CNN’s Tami Lube, Jessica Dean, Ella Nielsen, Claire Foran, and Alex Rogers contributed to this report.

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