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Democrats race to ready Inflation Reduction Act for vote this week

Party leaders need to work to keep the caucus united — and present — to finalize a vote on their long-stalled climate, health-care and tax bill

Democratic Sen. Joe Manchin III of West Virginia attends a Senate Energy and Natural Resources Committee hearing July 21 on Capitol Hill. Senate Democrats are rushing to finalize the Inflation Reduction Act this week. (Bill O'Leary/The Washington Post)

Senate Democrats on Tuesday raced to ready their health-care, climate and tax legislation for a grueling floor fight as soon as this week, even as some in the party remained fearful about the potential for last-minute political disruptions.

Six days after striking a deal to the shock of Washington, Democratic leaders found themselves with much to do in anticipation of a final vote. They needed to shore up support among their own ranks, steel themselves for new Republican attacks and prepare for the possibility that a coronavirus outbreak could rattle even the best-laid plans around the Inflation Reduction Act.

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The long list left President Biden’s agenda hanging in the balance, just three months before voters are set to head to the polls to decide if Democrats should keep their majorities in the House and the Senate. But party lawmakers still expressed a measure of confidence Tuesday that they might avoid the same stunning defeat on Capitol Hill that scuttled their economic ambitions last year.

For now, Senate Majority Leader Charles E. Schumer (D-N.Y.) has yet to secure the support of one of his caucus members: Sen. Kyrsten Sinema (D-Ariz.), a fiscal hawk and political moderate, has not yet revealed her views on the bill. Her aides have said she is reviewing the legislation, and privately, she has been “exchanging texts back and forth,” Sen. Joe Manchin III (D-W.Va.) said Tuesday.

But other political tensions surfaced late Tuesday, after Sen. Bernie Sanders (I-Vt.) took to the chamber floor to call attention to the provisions Democrats had slashed in a bid to win Manchin’s vote. Sanders pointed to the failed attempts to expand Medicare, the loss of free prekindergarten for youngsters and a raft of other safety-net programs for low-income Americans.

Sanders said the legislation had “some good and important provisions,” but that Democrats should “study this bill thoroughly and to come up with amendments and suggestions as to how we can improve it.”

In the meantime, party lawmakers have faced intensifying criticism from Republicans, who long have opposed their plans to combat climate change, reduce health-care costs and revise the U.S. tax code. On Tuesday, top GOP lawmakers continued to paint the Democratic package as a tax increase on Americans, citing an analysis that only looked at some of the elements in the broader spending bill.

The Republican attacks drew a sharp rebuttal from Treasury Secretary Janet L. Yellen, who said in a letter obtained by The Washington Post on Tuesday that the bill would have “no effect” on taxes paid by Americans earning under $400,000 annually, in keeping with Biden’s pledge during the 2020 election.

“The legislation would either reduce or have no effect on the taxes due or paid by any family with income less than $400,000 and is fully consistent with the President’s pledge,” Yellen said in the letter, distributed to congressional offices. “The loophole closers apply to large corporations and investment professionals making $400,000 or more per year.”

Even amid the uncertainty, Democrats remained jubilant, feeling they may be on the cusp of delivering on a long-stalled package of economic revisions after Schumer and Manchin clinched an agreement last week. The resolution marked a stunning turnaround from the collapse that befell the party seven months ago, when Manchin scuttled the broader roughly $2 trillion bill known as the Build Back Better Act.

“We are on schedule to consider this bill later this week,” Schumer said on the Senate floor Tuesday.

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The newer, smaller measure includes $433 billion to combat climate change and reduce the costs of health insurance and drugs for millions of Americans. The investments targeting global warming constitute the largest single burst in federal spending on clean energy and emissions-fighting programs in U.S. history.

To pay for the package, Democrats have put forward a wide array of revisions to federal tax law, including a new minimum tax on billion-dollar businesses that currently pay nothing to the U.S. government. Along with their prescription drug pricing provision, which would save Medicare money, the proposals together are expected to raise about $739 billion over the next decade. That is enough to offset the newly proposed spending while paying down the deficit by $300 billion.

Already, Democrats and Republicans have squared off fiercely over the bill and its fiscal implications. On the Senate floor on Tuesday, Minority Leader Mitch McConnell (R-Ky.) said the costs of the spending bill could come “crashing down on American manufacturers in particular,” a reference to recent data from the nonpartisan Joint Committee on Taxation (JCT).

“And the only things their ‘Inflation Reduction Plan’ will reduce is American jobs, wages, after-tax incomes, energy affordability, and new lifesaving medicines. Wow, what an accomplishment,” McConnell alleged.

But Democrats pointed to a follow-up analysis from JCT, released Tuesday morning, that found the manufacturing category includes tech, pharmaceutical and apparel companies. Lawmakers noted that some of the companies in those industries previously have been targeted in congressional investigations for dodging U.S. taxes, though no specific firm was mentioned in the new report.

Sen. Ron Wyden (D-Ore.), the chairman of the tax-focused Senate Finance Committee, said in a statement that it reflected companies “playing the most games, and avoiding tax by manufacturing their drugs, phones, and shoes abroad.”

GOP lawmakers also have argued the tax proposals violate Biden’s pledge not to raise rates on Americans who make less than $400,000 annually, pointing to another set of JCT data that suggests companies could pass a new minimum tax on to Americans.

Democrats, however, have sharply rejected that reasoning: They say their tax doesn’t target families and aims instead to make companies pay taxes that they should have been paying in the first place. And Democrats add that JCT did not factor into its math other benefits afforded by their bill, including provisions that would help Americans pay for prescription drugs and health insurance.

“The more this bill is analyzed by impartial experts, the more we can see Democrats are trying to sell the American people a bill of goods,” Sen. Mike Crapo (R-Idaho), the top Republican on the Senate Finance Committee, said in a statement.

In response, Manchin earlier this week stressed that there is “not one penny of change in taxes,” telling reporters that a minimum rate on companies is “only fair.” Schumer, separately, said previously that the bill would “close loopholes long exploited by the largest corporations.”

For now, Senate Democrats have focused much of their efforts on preparing the bill for the floor. The task has spanned countless meetings with the chamber’s parliamentarian, as party lawmakers look to ensure their spending proposal adheres to the strict rules of reconciliation. The tactic allows Democrats to adopt their bill using their 51-vote tiebreaking majority, rather than the usual 60 votes required in the chamber to get past a filibuster.

Sen. Tim Kaine (D-Va.) on Tuesday said many party lawmakers believe they can begin debate on the bill “late this week,” adding, “I think it’s wise for us all to just keep our schedules flexible.”

A final vote could still be even further away, because Republicans can seize on the reconciliation process to introduce delays — forcing the Senate to read aloud the text of the more than 700-page bill before lawmakers offer an unlimited number of amendments.

In a sign of the fight to come, Sen. John Barrasso (Wyo.), the leader of the Senate Republican Conference, said Tuesday the party would put forward a series of proposals on “a lot of topics” — including potentially challenging votes around immigration — in a bid to complicate Democrats’ efforts to stay united.

More unpredictably, however, the coronavirus could further dent Democrats’ plans, as the party cannot afford absences that deny them must-have votes. Manchin has recovered from his covid-19 diagnosis, but another Democrat, Sen. Richard J. Durbin, (Ill.), tested positive at the end of last week. Sen. Patrick J. Leahy (D-Vt.), meanwhile, has been out for weeks recovering from hip surgery, though he is expected to return for the consideration of a reconciliation bill.

And Republicans on Monday lost Sen. John Cornyn (R-Tex.) to a coronavirus infection, tipping the scales at least for now in Democrats’ favor. Cornyn, however, pledged to be back as soon as federal health guidelines allow — “if it happens,” he tweeted, referring to the prospect of a final vote.

Democrats could face additional roadblocks as a result of their own members, particularly Sinema, who has not yet offered her final views on the bill. Her earlier objections to the Build Back Better Act forced party leaders to whittle down their plans considerably. The Arizona moderate last year did not support Democrats’ initial efforts to raise tax rates on corporations and wealthy Americans, leaving them no choice but to abandon a central element of Biden’s agenda.

Instead, Democrats settled on the corporate minimum tax, which appeared at the time to have Sinema’s blessing. But it remains unclear if she still supports that policy, given the broader changes in the economy since her party last tried to move a spending package. Sinema previously expressed concern with other elements of the plan, including Democrats’ renewed effort to close what is known as the carried interest loophole. The policy allows private equity, real estate and hedge fund managers, among others, to pay less in taxes.

Jeff Stein contributed to this report.