Democrats say they have reached an agreement on an economic package

WASHINGTON (AP) — Senate Democrats agreed to eleventh-hour changes to their economic legislation that they announced late Thursday, removing a major obstacle to advancing one of President Joe Biden’s top election-year priorities across the hall in the coming days.

Sen. Kirsten Sinema, D-Ariz., a centrist, considered a key vote in the 50-50 House said in a statement that it had agreed to rework some of the measure’s tax and energy provisions and was ready to “move forward” on the bill.

Senate Majority Leader Chuck Schumer, D-NY, said he believes his party’s compromise on energy, the environment, health care and taxes “will have the support of the entire” Democratic membership in the chamber. His party needs unanimity and the deciding vote of Vice President Kamala Harris to push the measure through the Senate against some stiff opposition from Republicans who say the plan’s tax increases and spending will worsen inflation and hurt the economy.

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

Democrats have released few details of their compromise, and other hurdles remain. Still, final congressional approval would complete an astonishing resurrection of Biden’s far-reaching domestic goalsalbeit in a more modest form.

Democratic infighting had embarrassed Biden and forced him to scale back a much larger and more ambitious $3.5 trillion, 10-year version, and then a $2 trillion alternative, leaving the effort all but dead. Instead, Schumer and Sen. Joe Manchin, the conservative West Virginia Democrat who scuttled Biden’s previous effort, unexpectedly negotiated the slimmer package two weeks ago.

His approval would allow Democrats to woo voters by bragging that they are taking action to reduce inflation — though analysts say the impact will be small — to address climate change and increase 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 eliminate a provision raising taxes on “carried interest,” or profits that go to executives of private equity firms. It’s a proposal she’s long opposed, even though it’s a favorite of Manchin and many progressives.

The provision for carried interest is estimated to cost the government $13 billion over the next decade, a small fraction of the measure’s total revenue of $739 billion.

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

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

She noted that Senate Rep. Elizabeth McDonough is still reviewing the measure to make sure no provisions to violate chamber procedures need to be removed. “Depending on the parliamentarian’s review, I will move forward,” Sinema said.

The measure must adhere to those rules so Democrats can use procedures that will prevent Republicans from mounting filibusters, delays that require 60 votes to stop.

Schumer said the measure preserves the bill’s language on prescription drug pricing, climate change, “closing tax loopholes used by big corporations and the wealthy” and reducing the federal deficit.

He said the bill “addresses a number of important issues” that Democratic senators raised during the talks. He said the final measure “will reflect that work and move us one step closer to passing this historic legislation into law.”

It remained unclear whether changes were made to the 15% minimum corporate tax in the bill, a provision that Sinema wanted to review. It would raise an estimated $313 billion, making it the largest revenue increase in the legislation.

That tax, which would apply to about 150 corporations with more than $1 billion in revenue, has been strongly opposed by businesses, including Arizona groups in Sinema.

The latest measure was expected to include aid that Sinema and other western senators had been trying to add to help their states deal with the epic drought and wildfires that have become commonplace. Those lawmakers are seeking about $5 billion, but it’s unclear what the final text will do, said a Democrat after the haggling who would describe the effort only on condition of anonymity.

The measure would also have to pass a “frame vote”, a stream of rolling changes is expected to continue through the weekend, if not beyond. Republicans want to kill as much of the bill as possible, either through congressional rulings or through amendments.

Even if their amendments lose — as they surely do for most — Republicans will consider mission accomplished if they force Democrats to take risky campaign votes on sensitive issues like taxes, inflation and immigration.

Democratic changes are also expected. Progressive Sen. Bernie Sanders, I-Vt., said he wants to make health care regulations stronger.

The overall bill would raise $739 billion in revenue. This will come from tax increases on high earners and some huge corporations, increased tax collection by the IRS, and curbs on drug prices that will save money for the government and patients.

He would spend much of that on initiatives supporting clean energy, fossil fuels and health care, including helping some people buy private health insurance. That would still leave more than $300 billion in the deficit reduction measure.

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