There are still three outstanding issues.
Sen. Joe Manchin (D-WV) is finally on board with a budget reconciliation bill. But just because Democratic leadership and President Biden have cleared their biggest hurdle, that doesn’t mean there aren’t others.
This week, Manchin announced that he would support the Inflation Reduction Act of 2022, which includes significant climate, health care, and tax policy reforms. It’s notable since he was the most vocal holdout on Build Back Better, the previous incarnation of legislation addressing these issues.
But there are still some outstanding issues that could affect the provisions in the bill or jeopardize its chances of passing altogether. Ensuring that sufficient Democrats back it is a major concern in both the House and the Senate. And the narrow time frame that lawmakers have to pass the bill before recess also poses a challenge.
The bill’s future hinges on three big questions:1) Will Sen. Kyrsten Sinema support it?
Besides Manchin, Sen. Kyrsten Sinema (D-AZ) was the other big holdout in the Senate on Build Back Better, and she hasn’t yet said where she stands on the Inflation Reduction Act.
Previously, she opposed closing the carried interest tax loophole — a key provision of the Inflation Reduction Act — and it’s possible that could be a sticking point again.
Closing the loophole would force money managers to pay the same tax rate on their compensation as other professions do. Currently, their income can be taxed at a lower rate of up to 23.8 percent, while income is typically taxed at up to 37 percent. Eliminating the loophole has been a central objective of Manchin’s. And this new proposal is also a critical part of the way the bill decreases the deficit, something else Manchin is very concerned with. If Sinema’s position is unchanged, that would put her in direct opposition with Manchin.
Sinema spokesperson Hannah Hurley told Bloomberg that the senator was still reviewing the bill and would wait to see what emerged from the Senate parliamentarian’s review. Manchin, meanwhile, has repeatedly said he’s interested in keeping the carried interest provision in the bill.
