Senate Republicans laid bare their political playbook for next year’s midterms during a lengthy “vote-a-rama” session on the fiscal 2022 budget resolution in which they offered 39 of the 47 amendments considered.
The GOP amendments — mostly nonbinding, messaging efforts — broke Democratic unity on thorny issues such as teaching critical race theory and federal funding for abortions. Centrist Democrat Joe Manchin III of West Virginia sided with Republicans on amendments to oppose both, which were adopted 50-49.
But the more potent GOP amendments were ones that highlighted Democratic divisions on actual policy issues the majority party wants to include in a $3.5 trillion reconciliation package that the budget resolution instructs committees to assemble.
Republicans oppose Democrats’ reconciliation plan to offset trillions of dollars in new spending mostly by raising taxes on the wealthy and corporations. They’re hoping some Democrats will join them, and the amendment debate showed there’s bipartisan opposition to some of President Joe Biden’s tax proposals.
John Kennedy, R-La., offered an amendment — to preserve the full deferral of capital gains taxes on like-kind property exchanges — that was adopted by voice vote. Taxpayers who reinvest profits from the sale of one property into a similar, or “like kind,” property can defer paying capital gains taxes on those profits under current law.
Biden has proposed curtailing that break and taxing any gains on like-kind exchanges that exceed $500,000 for individuals or $1 million for joint filers to raise nearly $20 billion over 10 years, per a Treasury estimate. Democrats allowed Kennedy’s amendment to sail through on a voice vote, which suggests Biden’s proposal — opposed by the real estate industry, farm groups and more — will have trouble making it into the reconciliation bill.
“Like-kind exchanges directly benefit Middle America by creating jobs and affordable housing. Congress should pursue economic policies that multiply opportunity and productivity, and I’m glad the Senate voted for an amendment that will support middle- and working-class Americans,” Kennedy said in a statement.
All Democrats joined Republicans in voting for an amendment from John Thune, R-S.D., regarding taxes on “privately-held businesses, farms, and ranches” that called for “preserving the full benefit of the step-up in basis for assets required from a decedent.”
But Arizona Democrat Kyrsten Sinema broke with her party on a side-by-side amendment offered by Catherine Cortez Masto, D-Nev., that called for “protecting family farms, ranches, and small businesses while ensuring the wealthy pay their fair share.”
The dueling amendments stem from Biden’s proposal to eliminate stepped-up basis, which would reset the value of inherited property to market value at the time of the original owner’s death, and to tax capital gains on inherited assets above $1 million. Biden has proposed exempting family-owned businesses and farms so long as their heirs continue to run the business, but there’s been debate about whether that would go far enough.
“I appreciate the support from my colleagues in acknowledging the full benefit of step-up in basis for all businesses, but they’re trying to have it both ways. Arbitrary exemptions and half measures would not provide sustained relief for family businesses, and they would be incredibly difficult to implement in practice,” Thune said in a statement.
Sinema’s vote against Cortez Masto’s amendment suggests she might not be on board with Biden’s proposal to eliminate-stepped up basis for valuable assets. Treasury has estimated that doing so, coupled with taxing millionaires’ capital gains like ordinary income, would raise $322 billion over 10 years.
Republicans offered several amendments designed to hold Democrats’ feet to the fire on Biden’s pledge not to raise taxes on anyone making above $400,000, but they largely remained united.
All but one Democrat, Delaware’s Thomas R. Carper, joined Republicans in a 98-1 vote to adopt an amendment from Todd Young, R-Ind., to prevent the Budget Committee from making the necessary adjustments to the resolution’s targets for legislation that would raise taxes on people making less than $400,000.
Democrats allowed a voice vote to approve an amendment from Steve Daines, R-Mont., to prevent tax increases on small businesses. But they all voted against an amendment from Mitt Romney, R-Utah, “to prevent reconciliation legislation from including trillions of dollars in job-killing tax hikes.”
An amendment from Charles E. Grassley, R-Iowa, to prevent adjustments to the state and local tax deduction that would cut taxes for anyone making over $1 million was nearly rejected along party lines, 48-51, but Kentucky Republican Rand Paul voted with Democrats in opposition.
Senate Finance Chair Ron Wyden, D-Ore., offered a side-by-side amendment to express support for “raising taxes on the wealthiest 0.1 percent of taxpayers while reducing taxes on low- and middle-income taxpayers.” Sinema and New Hampshire Democrats Jeanne Shaheen and Maggie Hassan — whose home state doesn’t tax income, and therefore doesn’t derive as much benefit from “SALT” deductions — helped Republicans defeat it, 47-51.
Democrats also rejected, 49-50, an amendment from Senate Finance ranking member Michael D. Crapo, R-Idaho, “prohibiting the Internal Revenue Service from using funds to monitor inflows and outflows of deposits or withdrawals in financial accounts of American taxpayers.”
That amendment sought to put Democrats on record against a Biden proposal to have financial institutions report annually to the IRS aggregate gross inflows and outflows above $600.
But Wyden offered a side-by-side amendment to allow for “reporting on large financial account balances to ensure those evading the tax system pay what they owe while protecting the privacy of American taxpayer and small business tax information” that Democrats supported instead. It was adopted 50-49.
Energy, immigration amendments
All Democrats also joined Republicans in a 99-0 vote to agree to Wyoming Republican John Barrasso's amendment calling for “limiting or prohibiting legislation or regulations to implement the Green New Deal, to ship United States companies and jobs overseas, to impose soaring electricity, gasoline, home heating oil, and other energy prices on working class families, or to make the United States increasingly dependent on foreign supply chains.”
To make that an easier pill to swallow, Democrats followed that up with unified party support for a Carper amendment that promoted “addressing the crisis of climate change through new policies that create jobs, reduce pollution, and strengthen the economy of the United States.” They even got Maine Republican Susan Collins to vote for it.
Republicans had some success splitting Democrats on energy and environment policy.
Most divisive was an amendment from Iowa Republican Joni Ernst, adopted 66-33, to prohibit any new federal methane requirements on livestock or “costly” permit requirements for farmers and ranchers.
Ernst’s amendment drew support from 17 Democrats across the political and geographical spectrum, from progressives like Ohio’s Sherrod Brown and Hawaii’s Brian Schatz to moderates like Sinema, Shaheen, Hassan and Montana’s Jon Tester. Notably, Manchin was among the 33 Democrats opposing it.
Eight Democrats from states that produce oil and natural gas voted for an amendment from North Dakota Republican Kevin Cramer to prohibit any potential federal rules that would ban hydraulic fracturing, or extracting oil and gas from rock formations.
An amendment from Nebraska Republican Deb Fischer to limit electric vehicle tax credits to individuals earning under $100,000 or vehicle purchases under $40,000 was narrowly adopted, 51-48, with Sen. Mark Kelly, D-Ariz., and Tester joining all Republicans in voting for it.
Kelly, Manchin and Sinema also joined Republicans in approving, 52-47, an amendment from John Hoeven, R-N.D., to promote “baseload power resources” like coal and natural gas-fired power plants with carbon capture and sequestration technologies.
Immigration was another policy area in which the GOP highlighted Democratic divisions.
Most Democrats joined all Republicans in an 88-11 vote to adopt an amendment from Roger Marshall, R-Kan., to push for COVID-19 testing, quarantine and treatment resources for migrants crossing the border.
Support dropped to just over half the Democratic Caucus on an amendment from Jerry Moran, R-Kan., suggesting “dramatically increasing funding for smart and effective border security measures, improving asylum processing, and reducing immigration court backlogs.” It was agreed to 76-23.
Only three Democrats — Cortez Masto, Hassan and Kelly, all of whom face tough races next year — voted for an amendment from Bill Hagerty, R-Tenn., to ensure Immigration and Customs Enforcement has “sufficient resources to detain and deport a higher number” of undocumented immigrants who’ve been convicted of a crime.
Some Republican amendments failed to divide Democrats and instead backfired by showing splits within their own party.
An amendment from Appropriations ranking member Richard Shelby, R-Ala., to give the Armed Services Committee a reconciliation instruction to spend up to $50.2 billion over 10 years was rejected, 46-53. Three Republicans — Paul, Mike Braun of Indiana and Mike Lee of Utah — joined all Democrats in opposition.
Collins and Romney joined Democrats in defeating, 47-52, an amendment from Cindy Hyde-Smith, R-Miss., to deny federal funding to local governments that decline to prosecute “certain violent offenses or serious offenses that result in damage or injury to the property of any other person.”
Collins also joined Democrats in rejecting, 48-51, a Kennedy amendment to impose penalties on health care providers who perform elective abortions at 20 weeks gestation or greater.
Missouri Republican Josh Hawley’s amendment to push funding to hire 100,000 new police officers nationwide was agreed to on a 95-3 vote. Two Republicans, Lee and Patrick J. Toomey of Pennsylvania, voted against it, as did Senate Budget Chairman Bernie Sanders, a Vermont independent who caucuses with the Democrats.