Lightning struck this Thursday near the White House, leaving four people in critical condition. In contrast with the thunderstorm that whipped through Washington DC, a political calm descended on the Democratic aisles in the US Capitol after Senator Kyrsten Sinema of Arizona agreed to support President Joe Biden’s flagship project, a $740 billion package that aims to reduce the deficit, implement climate change measures and lower healthcare costs.
Democratic Senator Chuck Schumer, the majority leader, had already won over another rebellious senator, Joe Manchin III of West Virginia, last week. It was a decisive step, but it could have come to nothing without the vote of Sinema, the Democrats’ other wayward senator.
To secure Senator Sinema’s support, Democrats have agreed to scrap a $14 billion tax hike for wealthy hedge fund managers and private equity executives and change the structure of a proposed 15% minimum corporate tax. In return, the package will incorporate a 1% excise tax on the repurchase of stock by large companies, The New York Times reported. It will also allocate funds to deal with the drought that is punishing Arizona.
Democrats and Republicans have 50 senators each in the chamber and the tie is broken by Vice-President Kamala Harris, who also serves as president of the Senate. But the Democrats cannot spare a single vote. They want the House of Representatives to begin discussing the project on Saturday and for Congress to approve it in a few days, before the August recess begins.
Of the original plan, called Build Back Better, not enough has been preserved to keep the name. Although inflation cannot be reduced by enacting a law, Biden has renamed his flagship project the Inflation Reduction Act, aware that rising prices are the main concern of American voters right now. Just three months before the mid-term elections, in which a third of the Senate and the entire House of Representatives (435 seats) are up for grabs, Biden needs to address that citizen concern.
The White House has sent dozens of press releases in recent days extolling the virtues of the project, which unblocks Biden’s economic agenda. “It’s the only bill that could reduce the cost of living for Americans immediately,” Biden proclaimed Thursday at an event of the Democratic National Committee in which he participated by videoconference from the White House.
While it is true that the bill incorporates measures to lower the cost of prescription drugs and health insurance premiums, it is also true that the weighting of these products in the price indexes is minimal.
The package also supports green energy with a $369 billion investment and the promise of reducing carbon emissions by 40% by 2030. Biden said the electricity bill of an average household would be reduced by $500 a year, although this would certainly not happen in the short term.
The bill also envisions a 15% corporate minimum tax to prevent large companies from paying nothing in taxes through deductions and credits. On Thursday he noted that his home state of Delaware has more registered corporations that all other US states combined. “Fifty-five of these largest corporations in the country paid zero...zero in federal taxes while making $40 billion in profits a year,” he said.
There are still hurdles to overcome. The package is being approved through a special budgetary procedure that skirts the requirement of 60 votes to submit a bill for approval, thus avoiding Republican filibustering.