Sinema wants changes to the Inflation Reduction Act, but so far they’re … not deal-breakers?

Sinema wants changes to the Inflation Reduction Act, but so far they’re … not deal-breakers?

August 4, 2022 0 By Ellen Novack

Axios cites the usual “sources familiar with” to report that Sinema is keying in on two changes she wants to see made. She’s always objected to any crackdown on the carried interest loophole, a perpetually-abused tax loophole relied on almost exclusively by parasit—er, by the rich, which Sinema has, for mysterious reasons, been peculiarly protective of. It’s a 15% minimum corporate tax that Republicans and Wall Street types are absolutely melting-the-climate-changed-hell down over.

Bloomberg reports that Republicans are on a “lobbying blitz” to encourage Sinema to kill that part of the deal, which they expect in turn would cause Manchin to back out of the whole thing. The carried interest loophole fix brings in about $14 billion, but the 15% minimum corporate tax would bring in roughly $300 billion.

In other words, Sinema could probably stake out a position demanding the precious carried interest cow remain unbutchered, and the deal would survive. If she decides that our corporate overlords cannot possibly handle a minimum tax rate, then Manchin loses a big chunk of the whole bill, and Sinema has just made him look like a chump.

The more mundane objection Sinema allegedly has to the deal, Axios reports, is that she doesn’t think the climate portion of the bill does enough. Specifically, it doesn’t do enough for Arizona, the state she theoretically represents, and specifically, she wants more money for “threat resiliency” funding in her state. That’s not money to stop climate change from happening, but money that goes toward hardening our infrastructure for the climate change that our past inaction has now made 100% unavoidable—something that we’ve delayed doing for so long that it, too, is now much more expensive. That’s a likely easy fix, and if throwing a bit more cash in Kyrsten Sinema’s personal direction would seal the deal, then the other 49 Senate Democrats would probably arrange for the money to be airdropped over the Phoenix suburbs, no questions asked.

The latest developments seem to be that Sinema will indeed be demanding that the gobsmackingly terrible carried interest loophole, the one that means Wall Street gamblers worth hundreds of millions pay a relative pittance in taxes compared to the rest of us, remain untouched. Once again, Wall Street denizens and only Wall Street denizens would keep their eternal tax scam, but in exchange Sinema would join Manchin in begrudgingly agreeing to not murder the planet outright.

Manchin, for his part, has been publicly pushing the elimination of that tax credit. It really is among the most obvious fixes to the tax code available, and has been for a political eternity. But it’s hard to kill a tax provision that specifically benefits the precise people most willing to throw money at lawmakers that will agree to not kill it.

Things look, then, moderately hopeful. It’s possible but unlikely that Manchin convinces Sinema that if even a crank like him can vote to tax the rich for the sake of stopping climate change, then she can suck up and do it, too. It’s more likely Sinema demands it be changed so that she can go back to the people bribing her and brag about it. Another $5 billion towards saving Arizona from the consequences of being itself is no deal breaker.

The biggest risk so far is that Republicans will convince Sinema that the other corporate taxes are simply too harmful to abide, upon which Manchin throws up his hands, says, “everyone saw I was serious there for a while, right?” and craters the whole deal on his own. Let’s put that at 50-50 odds, which doesn’t sound optimistic at first glance but is extremely optimistic given that we’re dealing with the two most gleeful saboteurs of Democratic priorities in national politics. If Manchin and Sinema can somehow not blow this, we’ll have to seriously consider making the day the bill passes a new national holiday.

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