News & Politics

Sinema Wants Changes to Reconciliation Bill That May Torpedo the Whole Thing

(AP Photo/Ross D. Franklin)

And then there was one.

Arizona Senator Kyrsten Sinema is the last Senate holdout and the only member standing between the Democrats and a big legislative victory that could boost their flagging hopes to stave off midterm disaster. She is playing hard to get, however, and Majority Leader Chuck Schumer is anxious to know what it’s going to take to bring her on board.

There are hundreds of billions of dollars available to combat climate change, and Sinema wants a big chunk of that for Arizona. She also has concerns about how the minimum 15% corporate tax will impact Arizona businesses. And she’s opposed to closing the carried interest loophole used largely by hedge fund managers to lower their tax rates.

Axios:

Behind the scenes: Sinema has been meeting privately, both virtually and in-person, with key stakeholders in Arizona as she continues to work through her assessment of the bill.

Sinema last week visited Flagstaff, Arizona, where she met with local officials who are still reeling from recent flooding and a wildfire that ravaged the state.

Arizona is one of the fastest-warming states in the U.S., and the state’s largest county, Maricopa County, has already hit a record for heat-related deaths this year.

“There are some who were surprised to learn Kyrsten was enthusiastic about the climate provisions last year, because they rightly consider her a centrist. But she’s a Senator from Arizona, first and foremost,” John LaBombard, Sinema’s former communications director and SVP at ROKK Solutions tells Axios.

Coastal liberal elites, who are already grumbling about what isn’t in the bill, might reconsider their vote if the minimum corporate tax or the carried interest loophole are ditched. There are already a laundry list of changes the radicals want that could blow the whole process to hell if Schumer isn’t careful.

The private equity industry, which has contributed heavily to Sinema, is lobbying her heavily on shooting down the carried interest portion.

“I remember last year, she was hearing feedback from small business owners, concerned about the potential implications of any tax policy changes, and how it might affect their capital investment streams,'” LaBombard said.

“She is somebody who errs on the side of caution when it comes to changing tax policies. … obviously, I think [their input] shaped where she is on the economic parts of this bill.”

Related: Biden and the Democrats Are About to Raise Your Taxes

Sinema wants more funds for droughts and water security in the Southwest. Axios reports that she views the current $369 billion climate and energy portion of the bill as insufficient for addressing threat resiliency funding. That funding — insurance for if the earth heats up and disrupts the economy — is the kind of pork that politicians love.

But changing the tax portion of the reconciliation bill might cause enormous problems for Schumer on the far left. And since it will only take one Democratic defection to torpedo the entire process, the majority leader is going to have to tread carefully to prevent a disaster for the Democrats.