Sunday afternoon, after a Saturday/Sunday all-nighter, the Senate passed the Democratic agenda bill that started life as the $2.2T Build Back Better legislation. The new version that won approval by the Senate has morphed into the Inflation Reduction Act. The vote was 50/50 with the Vice President breaking the tie for a final tally of 51Y to 50N.
The deal was sealed last week when Senator Sinema joined with Leader Schumer and Senator Manchin to support the legislation. After the Schumer/Manchin deal was announced all attention turned to Senator Sinema who has been a holdout on other Democratic agenda items. The Arizona Senator went to bat for the private equity industry and got the modification of the so-called carried interest provision removed from the bill. Sinema also got some relief for manufacturing companies from the new 15% minimum tax. With the Sinema changes the final version offers a range of exemptions from the minimum tax for purchases of machinery and other equipment, amortization of wireless spectrum assets, pension plan contributions, net operating losses, tax credits for research expenses, investments in renewable energy and low-income housing projects and more.
To replace the income that was going to be gained by modifying the carried interest provision, a new 1% surcharge is placed on stock buyback programs.
One of the centerpieces of the legislation is a long-sought provision that will allow the government to negotiate directly with pharmaceutical companies for Medicare Part D prescription drugs and a $2000 annual cap on prescription drugs for Medicare Part D participants.
Additionally, the legislation contains the largest government programs ever approved to deal with climate change and lower America’s carbon footprint. The bill’s climate and energy provisions include tax credits for electric cars, major tax provisions for production of solar and wind energy equipment, $27 billion in grants to help attract private investment in “zero-emission technologies” such as rooftop solar, $20 billion in loans to establish new “clean vehicle manufacturing plants,” and a fee on emissions of methane, a potent heat-trapping gas, from oil and gas sites. The measure would also reinstate the lapsed “Superfund” tax on oil producers and importers at a higher rate, with the money going to help clean up contaminated sites.
To assuage Manchin, Schumer agreed to allow new lease sales for oil and gas development on up to 2 million acres offshore and 60 million on shore, over the next decade. Schumer, Pelosi and Biden all agreed to support legislation to streamline the approval process for energy projects, both fossil and clean energy.
Another provision added by Senator Sinema who represents drought ravaged Arizona was $4 billion dedicated to the Bureau of Reclamation to address drought.
The legislation will now go to the House where Speaker Pelosi will have her work cut out for her to steer the bill to passage with her narrow four seat majority. The original House passed $2.2T Build Back Better had broad support among progressive House Democrats and many of the provisions ranging from childcare to broader coverage for Medicare were removed in the Schumer/Manchin compromise.
The challenge for Pelosi and Biden is that progressive House Democrats won’t be able to add any amendments to the bill. The deal that passed the Senate on Sunday was carefully crafted and any change by the House could kill the deal. During Senate consideration of the legislation Senator Sanders tried to add some of the progressive proposals, but each Sanders amendment was defeated with nearly every Democratic Senator sticking with the Schumer/Manchin deal. Importantly, on the final vote, Bernie Sanders was a reluctant yes. Now House progressives will need to follow the lead of Senator Sanders. Democrats believe that this sweeping bill will put them in a positive message mode as they are now less than 100 days from the midterm elections where their narrow majorities will be on the line.
Bill text: This is a link provided by Senate Leader Schumer’s office to the bill that was introduced in the Senate.
Kansas abortion vote
In political circles there has been a lot of chatter after the SCOTUS action repealing the Roe abortion decision as to whether or not the Court’s action would make abortion an issue in the November midterms. Last week’s vote in Kansas, where by nearly 60% voters rejected an effort to allow Kansas to restrict abortions has created a lot of discussion.
A few points stood out. First, Kansas is a very Republican state that Donald Trump carried by nearly 14 points. The State legislature is overwhelmingly Republican. Perhaps most interestingly voter turnout broke all records for a non-Presidential primary election. Republicans in Kansas has picked this election believing that the voter turnout would be overwhelmingly Republican as most of the ballot races were to select Republican candidates in party primaries. But independents, who usually don’t vote in partisan primaries, came out in large numbers to vote on the abortion proposal.
During my partisan political days the rule of thumb was that voters who supported abortion rights would regularly vote for candidates on the other side of the issue as Roe was settled law and these voters favored Republican positions on issues ranging from economics to law and order. In the upcoming midterm election cycle where history and issues seem to run against Democrats there is some political talk that abortion could be an issue that changes the political calculus in some close races.
The elections are three months away which can be an eternity in politics, but the Kansas abortion vote creates an issue worth watching in the coming weeks.