Sinema Inferno

The senior senator from Arizona is paring down what were already pretty minimal proposed new taxes on corporations and the rich.

I’ve got some good news and some bad news.

The good news is that the Congressional Budget Office (CBO) thinks the Inflation Reduction Act (IRA) may actually reduce inflation as early as 2023 (though it also may increase it, and in either case the amount would be very, very small). The CBO also estimates that the IRA will reduce the deficit by $18 billion in fiscal year 2023, which begins in two months. This is much more optimistic than the Penn Wharton budget model, which until today was the best available scorecard. Penn Wharton said we wouldn’t get any inflation reduction until 2025, by which time there probably won’t be any inflation worth reducing, and that the bill wouldn’t start reducing the deficit until 2027.

The bad news is that Senator Kyrsten Sinema of Arizona (that’s her, above) is going to insist that her fellow Democrats remove from the bill their de facto elimination of the carried interest loophole, an accounting fiction that enriches rich hedge fund and private equity managers, and that she’s also going to require that the bill’s 15 percent minimum tax on corporations be scaled back. Since polls in her home state show overwhelming support for much higher taxes on corporations and the rich, we have to assume Sinema is demanding these changes because the financial industry bought her off with $2.2 million in political contributions since 2017. Or maybe that the U.S. Chamber scared her off with an ad campaign threatening disinvestment in Arizona.

This is infuriating, because the IRA was already feeling like kind of a disappointment after President Joe Biden’s fairly bold proposals to tax corporations and the rich, nearly all of which his fellow Democrats in Congress shot down. That’s the subject of my latest New Republic piece.