WASHINGTON -- Democrats ran into trouble Sunday in their push toward Senate passage of an election-year economic package, working furiously to overcome a glitch in a proposed new corporate tax that would help pay for the party's deep-rooted goals of lowering health care costs, investing in climate change and reducing the deficit.
While the $740 billion measure is less ambitious than President Joe Biden’s original vision, it would be a substantial achievement and was the reason why senators stayed up all night in a voting session that began Saturday. So far, Democrats have swatted away more than two dozen Republican amendments designed to torpedo it.
Despite unanimous GOP opposition, Democrats in the 50-50 chamber were unified, buttressed by Vice President Kamala Harris' tiebreaking vote, suggesting the party was headed toward a morale-boosting victory three months from elections when congressional control is at stake.
“I think it's gonna pass," Biden told reporters as he left the White House early Sunday to go to Rehoboth Beach, Delaware, ending his COVID-19 isolation. The House seemed on track to provide final congressional approval when it returns briefly from summer recess on Friday.
But concerns over objections to the new 15% corporate minimum tax that private equity firms and other industries threatened to slow the progress.
Sen. John Thune, of South Dakota, the second-ranking Republican, was working on an amendment that would strip the tax for certain sectors. He was trying to pull draw support Democratic Sens. Kyrsten Sinema of Arizona and Joe Manchin of West Virginia, two holdouts who have bucked their party before.
Thune predicted several more hours of negotiations and debate. “Hopefully we’ll have a solution to land the plane,” he told reporters at the Capitol.
Despite the momentary setback, the “Inflation Reduction Act” would give Democrats a campaign-season showcase for action on coveted goals. It includes the largest ever federal effort on climate change, at close to $400 billion, caps out-of-pocket drug costs for seniors on Medicare to $2,000 a year and extends expiring subsidies that help 13 million people afford health insurance.
Barely more than one-tenth the size of Biden’s initial 10-year, $3.5 trillion rainbow of progressive aspirations in his Build Back Better initiative, the new package abandons its proposals for universal preschool, paid family leave and expanded child care aid.
Biden’s original measure collapsed after Manchin, opposed it, saying it was too costly and would fuel inflation. Nonpartisan analysts have said the current bill would have a minor effect on surging consumer prices.
Republicans said the measure would undermine an economy that policymakers are struggling to keep from plummeting into recession. They said the bill's business taxes would hurt job creation and force prices skyward, making it harder for people to cope with the nation's worst inflation since the 1980s.
In an ordeal imposed on all budget bills like this one, the Senate was enduring a nonstop “vote-a-rama” of rapid-fire amendments. Each tested Democrats' ability to hold together a compromise negotiated by Senate Majority Leader Chuck Schumer, D-N.Y., with progressives, Manchin and Sinema.
Sen. Bernie Sanders, I-Vt., offered amendments to further expand the legislation's health benefits, and those efforts were defeated. Most votes were forced by Republicans and many were designed to make Democrats look soft on U.S.-Mexico border security and gasoline and energy costs, and like bullies for wanting to strengthen IRS tax law enforcement.
Before debate began Saturday, the bill's prescription drug price curbs were diluted by the Senate's nonpartisan parliamentarian. Elizabeth MacDonough, who referees questions about the chamber's procedures, said a provision should fall that would impose costly penalties on drug makers whose price increases for private insurers exceed inflation.
It was the bill's chief protection for the 180 million people with private health coverage they get through work or purchase themselves. Under special procedures that will let Democrats pass their bill by simple majority without the usual 60-vote margin, its provisions must be focused more on dollar-and-cents budget numbers than policy changes.
But the thrust of their pharmaceutical price language remained. That included letting Medicare negotiate what it pays for drugs for its 64 million elderly recipients, penalizing manufacturers for exceeding inflation for pharmaceuticals sold to Medicare and limiting beneficiaries out-of-pocket drug costs to $2,000 annually.
The bill also would cap Medicare patients' costs for insulin, the expensive diabetes medication, at $35 monthly. Democrats wanted to extend the $35 cap to private insurers but it ran afoul of Senate rules. Most Republicans voted to strip it from the package, though in a sign of the political potency of health costs, seven GOP senators joined Democrats trying to preserve it.
The measure's final costs were being recalculated to reflect late changes, but overall it would raise more than $700 billion over a decade. The money would come from a 15% minimum tax on a handful of corporations with yearly profits above $1 billion, a 1% tax on companies that repurchase their own stock, bolstered IRS tax collections and government savings from lower drug costs.
Sinema forced Democrats to drop a plan to prevent wealthy hedge fund managers from paying less than individual income tax rates for their earnings. She also joined with other Western senators to win $4 billion to combat the region's drought.
It was on the energy and environment side that compromise was most evident between progressives and Manchin, a champion of fossil fuels and his state's coal industry.
Clean energy would be fostered with tax credits for buying electric vehicles and manufacturing solar panels and wind turbines. There would be home energy rebates, funds for constructing factories building clean energy technology and money to promote climate-friendly farm practices and reduce pollution in minority communities.
Manchin won billions to help power plants lower carbon emissions plus language requiring more government auctions for oil drilling on federal land and waters. Party leaders also promised to push separate legislation this fall to accelerate permits for energy projects, which Manchin wants to include a nearly completed natural gas pipeline in his state.