Senate Democrats are confident they’ll be able to pass their health care, climate and tax package early this month, as Republicans plot amendments they’ll offer in an attempt to undermine the bill and boost their election-year messaging.
The Senate parliamentarian is still vetting the package, which on net would reduce deficits by roughly $300 billion, to ensure all the provisions Democrats proposed comply with the budget reconciliation rules. Still, Senate Majority Leader Charles E. Schumer insists the chamber is “on track” to take up the bill later this week.
“I'm very hopeful we're all going to stay united and pass this bill,” Schumer said.
Manchin told reporters after he spoke with Sinema Tuesday afternoon they “had a nice talk.”
“She'll make a decision based on the facts,” he said. “She’s extremely bright. She works hard. She makes a good decision based on the facts. And I’m relying on that.”
Manchin initially said he and Sinema were “exchanging text back and forth," but he later clarified that was not about changes to the legislative language but rather sharing analyses and other information on the bill. "Whatever I have that she hasn't seen," Manchin said.
Sinema previously opposed taxing investment fund managers' share of their clients' capital gains — known as carried interest — the same as ordinary income. Manchin fought to include that provision, which would lengthen the holding period required to benefit from more generous tax treatment. It would raise an estimated $13 billion over 10 years.
Manchin said last week he would not drop the carried interest tax increase to get Sinema’s support. But after speaking with Sinema, Manchin declined to take that hard of a line against changing the carried interest provision if needed to get her vote.
“Everyone’s still talking,” he said, while explaining the provision is about ensuring investment fund managers aren’t receiving the same preferential tax benefits as their clients, who are the ones putting their own money on the line. “That doesn’t seem right.”
In addition to carried interest, Sinema is likely anxious to see whether the prescription drug pricing provisions change significantly during the parliamentarian’s review. Democrats are adding insulin provisions and making other tweaks, like replacing a 95 percent excise tax penalty on drugmakers who won’t negotiate under the terms of the bill with a civil monetary penalty.
Schumer said he didn’t know the specific details on the excise tax matter but his aides and staff for the Finance and Budget panels are working with the parliamentarian. “We're optimistic we will get good outcomes,” he said.
The excise tax was designed to be so onerous it would force pharmaceutical companies to lower prices, so lawmakers like Sinema, who helped draft the bulk of the drug pricing provisions last year, will undoubtedly be interested in how the monetary penalty is structured.
Senate Budget Chairman Bernie Sanders, I-Vt., also has yet to commit to supporting the bill. In a lengthy floor speech Tuesday night outlining party priorities omitted from the package, Sanders said he wants to offer amendments for improving it and encouraged other senators to do the same.
If Sinema and all 50 Senate Democratic caucus members ultimately sign off on the package, passage likely becomes just a matter of timing. Majority Whip Richard J. Durbin, D-Ill., returned to the Senate Tuesday after recovering from COVID-19, meaning Democrats will have full attendance for votes on the reconciliation package so long as no one else falls ill.
Schumer said he doesn’t have a plan B should another Democrat test positive.
“We’re going to stay healthy,” he said, noting the caucus is holding meetings over Zoom this week to limit opportunities for the virus to spread.
GOP amendment strategy
Republicans, meanwhile, are beginning to outline the issues they’ll target during the “vote-a-rama,” when senators can offer unlimited amendments. GOP senators want to force Democrats into tough political votes ahead of November’s midterm elections.
“You can expect a lot of challenging votes,” Senate Budget ranking member Lindsey Graham, R-S.C., said.
Sen. Rob Portman expects votes on “dozens” of amendments. The Ohio Republican said he’ll focus on the bill’s tax pieces, likely targeting an issue Republicans have seized on over the last week — how the 15 percent minimum tax on corporate income reported to shareholders could undercut tax breaks for companies buying assets like machinery. Some purchases of tangible assets qualify for faster write-offs as an incentive, but that benefit isn’t exempted from Democrats’ minimum tax.
Finance's top Republican, Idaho Sen. Michael D. Crapo, declined to detail his party’s strategy. But he confirmed that recent Joint Committee on Taxation analyses he’s touted, including a distributional table showing how the bill would impact taxpayers in each income category and another showing half of the corporate minimum tax would be paid by manufacturers, would factor in.
“You can be sure that that’ll be in there,” Crapo said.
Sen. Todd Young, R-Ind., said he is planning a “clever but characteristically fair” amendment that would ensure “regular Americans aren’t bearing the burden of Democrats' tax and spend policies.”
The JCT tables don't factor in provisions like an extension of expanded health insurance premium tax credits, benefits for home energy-efficiency upgrades and for purchasing electric vehicles, which could reduce the tax hit on lower- and middle-income households, Democrats pointed out.
And Treasury Secretary Janet L. Yellen wrote to congressional leaders that the bill's tax increases would have no direct effect on what households earning less than $400,000 actually owe to the IRS. The JCT analysis assumes part of any corporate tax increases ultimately affect workers' wages, but Democrats argue that's not a literal tax increase and that households in that income category are specifically protected.
And citing separate JCT data, Senate Finance Democrats argued that nearly half of the manufacturing-related firms affected by the minimum tax would fall into categories such as apparel, software and pharmaceuticals that are paying little tax on their overseas profits.
Climate, health amendments
Republicans also plan to take aim at Democrats’ climate and health care provisions.
Finance member Sen. Bill Cassidy, R-La., said he’s interested in forcing an audit of how Democrats’ bill would impact carbon emissions overseas. He argued emissions are likely to climb elsewhere if Democrats’ new minimum tax leads manufacturers to relocate to Asia or increases demand for products made in China.
Sen. Marco Rubio, R-Fla., said in a news release that he’ll aim to tighten restrictions on credits for buying electric vehicles, blocking access to vehicles that source any critical minerals or battery components from China. In Democrats’ bill, restrictions aimed at limiting sourcing from China heighten over time.
Rubio also said he’ll offer an amendment to ensure the reconciliation measure can’t pass ahead of a permitting overhaul Schumer promised Manchin a vote on before Oct. 1. He is also planning one that would increase police funding, seeking to divide Democrats over the “defund police” issue that hurt the party in 2020.
Sen. Rand Paul, R-Ky., said he’ll have “at least one” amendment, which will aim to broaden access to health savings accounts by allowing anyone with health insurance to open one. HSAs allow pre-tax dollars to be stowed to pay for medical expenses, but they’re only allowed for people with high-deductible insurance plans.
Lauren Clason, Paul M. Krawzak, Aidan Quigley and Caroline Simon contributed to this report.