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Senate sends Democrat-drafted tax, health care, climate package to House

Humberto Sanchez
Humberto Sanchez
CongressGovernment
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Senate Democrats sought to help protect their vulnerable members, including Sen. Catherine Cortez Masto (D-NV), during the weekend’s marathon-amendment-offering session before passing their more than $700 billion climate, health care and tax package on a party-line vote Sunday.  

The measure now goes to the House, which will consider the measure, known as the Inflation Reduction Act, on Friday.

The Senate took 40 roll call votes on a slew of amendments during the Senate's so-called vote-a-rama, including one reducing energy prices and another extending the public health law known as Title 42, which allows for the quick removal of migrants, including those seeking asylum.

To protect their endangered members, Democrats offered amendments on policies such as eliminating the excise tax on a barrel of oil that were similar to GOP amendments. But the Democrats used procedural sleight-of-hands so that their amendment votes would be subject to a 60-vote threshold for passage. The Democratic tactic, which made use of procedures involving waiving budget rules, allowed Democrats in tough races and centrists to vote for the policies but not change provisions of the package. 

During the debate, Sen. Lindsey Graham (R-SC) called the tactic “phony and cynical.”

“They wouldn't let you do this in professional wrestling,” Graham said.

Democrats wanted to prevent any changes to the package, which had been carefully negotiated among Sen. Joe Manchin (D-WV), Sen. Kyrsten Sinema (D-AZ) and Senate Majority Leader Chuck Schumer (D-NY). 

All 50 Democrats were needed to pass the bill to allow Vice President Kamala Harris to cast the tie-breaking 51st vote and pass the package under the so-called reconciliation process, which allowed Democrats to avoid a GOP filibuster. Sixty votes are needed to overcome a filibuster, the threat of which had kept Democrats from passing their agenda under regular Senate rules.

An example of the Democrats' defensive work came after Graham offered an amendment that he said would have prevented higher gas prices. The amendment would have killed the reinstatement of an expired per-barrel-of-oil tax to help clean up hazardous waste sites known as Superfund sites. The underlying climate and health bill imposes a 16.7 percent tax, up from the 9.7 percent when it expired in 1995.  

Cortez Masto and all Democrats opposed the Graham amendment, which failed on a tied vote. But Cortez Masto and three other endangered Democrats voted for an amendment subsequently offered by Sen. Maggie Hassan (D-NH) that would have removed the tax. The other Democrats were Mark Kelly (D-AZ) and Sen. Raphael Warnock (D-GA).

Sen. Bernie Sanders (I-VT) raised a point of order that the Hassan amendment violated budget rules. Then a vote was taken to waive budget rules to pass the amendment, which requires 60 votes. The amendment fell short in a 55 to 45 vote, with all Republicans voting with the five Democrats in favor.

Sen. Jacky Rosen (D-NV) joined the 44 remaining Democrats in voting against the amendment.

The same scenario took place on an amendment from Sen. James Lankford (R-OK) to provide funding to keep Title 42 in place for 120 days after the termination of the COVID-19 public health emergency, which is scheduled to end Oct. 13.

Cortez Masto and all Democrats opposed Lankford's amendment, which failed on a 50 to 50 vote. Then Sen. Jon Tester (D-MT) offered an amendment extending the border policy for 60 days after the termination of the public-health emergency and required the administration to submit a plan to Congress on dealing with the expected migrant surge. The proposal needed 60 votes but failed 56 to 44.

Cortez Masto, Hassan, Kelly and Warnock voted for Tester's amendment. Rosen opposed it along with most Democrats.

Cortez Masto and Rep. Susie Lee (D-NV) had been among congressional Democrats who had been critical of Biden for lifting Title 42. They were concerned that no plan was in place to deal with a surge of migrants expected to come to the U.S. after the policy was changed.

Includes $4 billion for drought

Both Cortez Masto and Rosen praised the bill's passage and stressed that it includes $4 billion for drought mitigation, with priority given to states bordering the Colorado River — a provision Cortez Masto helped include.

The bill is the product of negotiations stretching back into last year. The House passed a nearly $2 trillion version of the package in November, but Manchin killed that bill over concerns about rising inflation. Talks continued and Manchin announced the latest agreement in July.

Before Democrats made some last-minute changes to the bill, budget analysts estimated that the package would raise about $740 billion over ten years and spend roughly $430 billion on policies to address climate change, and extend Affordable Care Act premium subsidies for three years. The subsidies were part of the 2021 American Rescue Plan and expire at the end of the year. According to the Congressional Budget Office, the remaining $300 billion goes to deficit reduction, which includes $200 billion from more robust tax enforcement.

Almost $370 billion would go to climate change, including tax credits for home energy efficiency consumers. The bill also provides credits for renewable energy, including solar.

Costs in the measure are offset by a provision to reform prescription drug prices, including language to allow Medicare to negotiate with drug makers on certain medications. That provision is estimated to save more than $200 billion over 10 years. It also includes a 15 percent minimum tax that would apply to companies earning an average of more than $1 billion annually.

Republicans removed a provision in the package that would have capped insulin costs to $35 a month for those getting insurance in the private market. The language needed 60 votes to remain in the bill after the Senate parliamentarian ruled it did not comply with budget reconciliation rules. The amendment to keep the provision in the bill failed 57 to 43, with seven Republicans joining all Democrats.  

A similar $35 monthly cap provision for Medicare enrollees remained in the package. 

The bill also includes a 1 percent excise tax on stock buybacks, estimated to generate $74 billion over 10 years. That made up for revenue lost when Democrats preserved accelerated depreciation for the large, profitable companies that would be newly subject to a 15 percent minimum tax. The decision to continue allowing accelerated depreciation came after Sinema insisted on it after the Joint Committee on Taxation found that the extra tax burden under the 15 percent minimum would be borne primarily by manufacturers. 

Accelerated depreciation allows companies to claim benefits on investments in equipment and buildings on a quicker timetable. 

Democrats also added a last-minute revenue raiser, offered by Sen. Mark Warner (D-VA), extending for two years limits on losses for pass-through companies used to lower taxable income. The Warner amendment, which passed 51 to 50, was needed to replace a provision offered by Sen. John Thune (R-SD), which passed 57 to 43, with seven Democrats, including Cortez Masto and Rosen, voting to for it. Thune’s amendment would have extended for one year the $10,000 limit on state and local tax (SALT) deductions.

The SALT cap was imposed by the 2017 tax reform law, pushed through by Republicans and President Donals Trump, and hit taxpayers hard in states with high taxes such as New York, New Jersey, and California. The provision could have jeopardized passage of the bill.  

This story was updated on Aug. 8, 2022, at 3:35 p.m. to note that Sen. Kyrsten Sinema is a Democrat from Arizona.

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