Sen. Kyrsten Sinema, Arizona Democrat, broke her silence Thursday night on her party’s efforts to pass a major climate, tax, and spending bill, saying in a statement that she plans to “move forward.”
Her support means that Democrats have the votes they need to approve the legislation along party lines and deliver a significant victory to President Biden.
Ms. Sinema noted that her support for the $740 billion piece of legislation was contingent on changing its tax provisions targeting the wealthy and large corporations, about which she has long had reservations.
She also said her approval was conditional on the Senate Parliamentarian’s review of the bill, who has broad discretion to determine what can and cannot be included under budget rules that allow Democrats to pass the measure with a simple majority and circumvent the filibuster.
“We have agreed to remove the carried interest tax provision, protect advanced manufacturing and boost our clean energy economy in the Senate’s budget reconciliation legislation,” Ms. Sinema said in a statement. “Subject to the Parliamentarian’s review, I’ll move forward.”
The decision by the centrist Democrat, who has faced intense lobbying from both sides of the aisle and interest groups in recent days, is certain to frustrate Republicans. She was their last hope of sinking the Democrats’ bill in an evenly split 50-50 Senate.
Democrats’ other centrist member, Sen. Joe Manchin III of West Virginia, crafted the legislation with Senate Majority Leader Charles E. Schumer, infuriating Republicans because he previously indicated he could not support passing such a measure along party lines in the face of 40-year-high inflation.
Mr. Schumer, New York Democrat, quickly praised Ms. Sinema’s decision.
“I have had many productive discussions with members of our conference over the past three days and we have addressed a number of important issues they have raised,” he said. “The agreement preserves the major components of the Inflation Reduction Act, including reducing prescription drug costs, fighting climate change, closing tax loopholes exploited by big corporations and the wealthy, and reducing the deficit by $300 billion.”
According to a Democratic source familiar with the deal, the agreement will substitute limitations to the carried interest loophole, which Ms. Sinema opposed for targeting private equity and hedge fund managers.
Instead, the bill will feature a new excise tax on stock buybacks from corporations, the source said.
The carried interest provision would have generated about $14 billion in new revenue, per Democrats’ estimates. They predict the new provision will bring in at least that much, which would mean the bill’s deficit reduction number would remain at $300 billion over the next decade.
Deficit reduction was a red line for Mr. Manchin.
Republicans are vehemently opposed to the legislation because of a 15% corporate minimum tax rate that Democrats say would close loopholes on corporations that profit more than $1 billion and wealthy individuals who make more than $400,000.
Analyses of the legislation have been mixed, but GOP critics have cited independent reviews that predict the Inflation Reduction Act would do little — if anything — to reduce inflation and could result in the tax increases being passed down to the lower and middle class.
Republicans also strongly oppose the combined $433 billion that’s included for climate and health-care initiatices, such as $379 billion for clean energy production and tax credits, and tens of billions to extend Obamacare health-insurance subsidies.
Mr. Schumer plans to hold a procedural vote on the bill Saturday afternoon that will kick off what is expected to be a days-long process to get it passed and sent to the House.