A disagreement over a key tax provision in Senate Democrats’ new spending agreement could again derail key items on President Joe Biden’s agenda.
West Virginia Democratic Senator Joe Manchin said during an interview with ABC News’ This Week that his moderate Senator Kyrsten Sinema included “a lot” in the $740 billion package.
However, someone close to Sinema told NBC News that the legislation “contains a tax provision that she has clearly and consistently opposed.”
They also said the Arizona Democrat was “not upset” that she was not included in the recent negotiations, despite reports suggesting she was blindsided when she was unveiled in the Senate last week.
Manchin and Sinema were responsible for stymieing several of Biden’s attempts at legislation, including their party’s $1.75 trillion, Progress-backed Build Back Better agenda, as well as efforts to pass voting rights legislation and codify abortion rights.
Talks of passing a budget bill through reconciliation – which would allow it to be passed by a simple majority rather than the normal 60 vote threshold – were considered dead in the water until Manchin stunned even his Democrats last week when he unveiled a deal with Senate Majority Leader Chuck Schumer.
Manchin said earlier this month that he opposes further spending to fight climate change amid rising inflation. But the new bill earmarks $300 billion for fiscal deficit reduction, as well as funds that “cut energy costs, increase cleaner production and cut carbon emissions by about 40 percent by 2030.”
West Virginia Democratic Senator Joe Manchin appeared on the Sunday programs of all five major news networks after stunning his own party with an agreement on several key climate and health legislation
It also includes actions to reduce healthcare costs for millions of Americans.
Speaking on Sunday programs from all five major networks, the centrist argued the bill would help ease the burden of high costs.
But with a razor-thin majority in Senate Democrats, all 50 members must vote in lockstep for the bill to pass with Vice President Kamala Harris as the decisive vote.
And now all eyes are on Sinema, who has not yet said if she will support the law.
When asked about his colleague at ABC, Manchin confidently replied: “Senator Sinema is my dear friend. I have every respect for her, she is extremely smart and works very, very hard.’
“She’s very involved with this bill, the way it’s designed, down to the Medicare cuts… She’s very involved, and I appreciate that,” Manchin said.
He told CNN’s State of the Union that Sinema “formed part of it and worked very hard on it.”
However, he explained that she was not more directly involved in the talks as he had serious doubts about the viability of the package.
It’s unclear whether his moderate Senator Kyrsten Sinema will support the legislation. In particular, she was excluded from the negotiations
“The reason people weren’t brought to it was because I didn’t think it would come to fruition. I didn’t want to disappoint people again,” he said.
Whether or not to support the legislation, Manchin said, was “her decision and I respect that.”
He said on ABC: “When she said taxes we’re basically not going to raise taxes, I agree with that and I made sure we cleaned that up. There is no tax increase.’
But the inclusion of a carried-interest tax in the bill could be a turning point for Sinema.
The provision, which is estimated to rake in $14 billion in tax revenue, is the specific measure highlighted by NBC on Sunday that could cause it to oppose the deal.
The carried interest loophole allows hedge fund managers and private equity investors to pay a tax rate as low as 20 percent on income from certain investments. It’s almost half the top tax bracket for wealthy Americans — 37 percent.
It could be the Democrats’ last chance to pass a spending bill without Republican support before the November midterm elections
And while Sinema previously supported the 15 percent minimum corporate tax included in the bill, it’s not clear if her opinion has changed in the months since she first voiced that position.
With a thin majority of Democrats in the Senate, Sinema and Manchin had an outsized influence on the party’s agenda in Washington. This includes several private visits to the White House, during which Biden and his senior staff try to garner support from senators.
But she has apparently been left out of this latest round of negotiations, which could be the Democrats’ last chance to deliver reforms to voters ahead of November’s midterm elections.
Sinema only found out about the deal after it was publicly announced, a source trusted told The Wall Street Journal.
The announcement reportedly prompted her to ask, “What’s going on?” last week in the Senate.
She was also absent from Schumer’s meeting with Democrats to discuss the deal Thursday.