Dems' $740 billion climate and tax bill expected to pass Senate after Sinema approves

Aug. 5 (UPI) -- President Joe Biden and Democrats are a step closer to passing major legislation that intends to fight climate change, reduce inflation and reform tax policies after they received support from frequent holdout Sen. Kyrsten Sinema.

Democrats scored a major victory last week when another frequent holdout, Sen. Joe Manchin of West Virginia, changed his mind and supported the sweeping Inflation Reduction Act. With the narrowest of majorities in the upper chamber, however, Democrats also needed Sinema to support the proposal.

After a few tweaks to the bill, Sinema said late on Thursday that she would vote for the package. The freshman Arizona senator, who has previously sided with Republicans on several issues, had opposed provisions in the bill that would have taxed wealthy investors and set a minimum tax level for corporations that presently pay nothing to the government.

Sinema's support means the Inflation Reduction Act will advance on a majority vote in the Senate and reach the House for final approval by next week. The Senate could vote as soon as this weekend.

Sinema's about-face was somewhat surprising, as the centrist has been a pivotal holdout in the chamber. Democrats will be able to pass the bill without any Republican support and avoid a filibuster because they're pushing it through the budget reconciliation process, which requires only a simple majority.

Sinema had opposed Biden's initial Build Back Better package, which the president was forced to whittle down from an original cost of $3.5 trillion. Negotiations two weeks ago between Senate Democratic leader Chuck Schumer and Manchin resulted in the newer bill that also targets $300 billion in deficit reduction.

"Tonight, we've taken another critical step toward reducing inflation and the cost of living for America's families," Biden said in a statement late Thursday. "I look forward to the Senate taking up this legislation and passing it as soon as possible."

Sen. Kyrsten Sinema (R), D-Ariz., speaks with Sen. Rob Portman, R-Ohio, on the South Lawn of the White House in Washington on November 15, 2021. Sinema has previously voted with Republicans on various issues, including an effort to eliminate the filibuster to pass Democratic priorities. File Photo by Sarah Silbiger/UPI

The Inflation Reduction Act still would be the United States' largest investment ever in climate and energy programs. The plan -- which would be paid for with new taxes, mostly for the wealthy -- would also for the first time allow Medicare to negotiate prescription drug prices and keep healthcare subsidies from expiring for three years.

Schumer said the eleventh-hour nod from Sinema had given his party a golden opportunity to overcome firm GOP opposition in the Senate, and predicted the vote would "receive the support" of all Democrats in the chamber.

"I am pleased to report that we have reached an agreement on the Inflation Reduction Act that I believe will receive the support of the entire Senate Democratic conference," Schumer said according to CNBC.

"The final version of the reconciliation bill, to be introduced on Saturday, will reflect this work and put us one step closer to enacting this historic legislation into law."

Sinema said she nixed a proposed $14 billion tax on carried interest, a loophole that allows hedge fund managers and private equity groups to pay lower taxes.

"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," she said according to CNN.

Sinema said she also scrubbed a provision that targeted a manufacturer's ability to take tax deductions for depreciated assets.

Instead, Democrats settled on implementing a new excise tax on corporate stock buybacks, which party leaders said would bring in far more revenue than carried interest.

Because Democrats are using budget reconciliation to pass the bill without GOP support, it must be -- and is expected to be -- approved by Senate parliamentarian Elizabeth MacDonough.