Kyrsten Sinema Caves, as Expected
Author: Greg Valliere
August 5, 2022
SINEMA GOT WHAT SHE WANTED: Manufacturing companies will not be hit by a 15% minimum corporate tax; a poorly defined drought relief provision for Arizona will be included; and most importantly, a provision killing the carried interest tax break will be excluded, confirming our belief that carried interest is like Rasputin — it can’t be killed.
REMAINING OBSTACLES: The Senate parliamentarian will have to rule within days on whether provisions in the bill, especially those covering prescription drugs, can be considered under budget reconciliation rules that waive the 60-vote filibuster barrier.
IF THE RULING IS FAVORABLE for the Democrats, the Senate in the next few days will begin a mandatory process called “Vote-O-Rama,” which will allow consideration of hundreds of amendments from both parties (we’re not making this up).
ONCE THE SENATE PASSES THIS COMPROMISE, the House will return to town later in August to vote on the bill, which could be signed into law by President Biden before Labor Day. As we wrote yesterday, the impact — on industry sectors, the macro economy and the markets — will be modest.
THE INTERESTING ANGLE will be political, as Biden signs another bill in his
effort to show the public that the White House is aggressively confronting inflation
and the softening economy. But Republicans will argue that any new taxes or fresh
spending will be harmful to the economy. So we think passage of this bill will have a
modest impact on the election.
THE BIGGER ISSUE, as we await the unemployment report this morning, is whether Democrats can make a case that inflation and interest rates have peaked, which some Wall Street analysts now suspect.
SIGNS THAT GASOLINE AND FOOD PRICES are beginning to soften could make a difference in the fall elections, as will the public’s reluctance to accept rigid new state laws banning abortion with no exceptions. The Kansas abortion vote was the biggest political story of the week, with major implications for the election — and it has blindsided the politicians.
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