We’ll break down how Democrats found a way to get Sen. Kyrsten Sinema (D-Ariz.) on board with a major health care, climate and tax deal. We’ll also look at a stellar July job gain and the steep costs of Kentucky floods.
But first, some celestial chorizo.
Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.
Dems add and subtract to win Sinema over
Democrats are including a tax on stock buybacks to make up for the revenue lost in their climate change package to win over Sen. Kyrsten Sinema (D-Ariz.), whose vote is a necessity to advance a centerpiece of President Biden’s economic agenda.
- Senate Majority Leader Charles Schumer (D-N.Y.) said Friday that the buyback tax will raise $74 billion, more than making up for the loss of a $14 billion tax on carried interest and a $55 billion tax on depreciation costs that were mandated by Sinema.
- “I believe strongly in [closing] the carried interest loophole. I have voted for it. I pushed for it, I pushed for it to be in this bill. Sen. Sinema said she would not vote for the bill, not even move to proceed, unless we took it out. So we have no choice,” Schumer said.
Still, Schumer expressed confidence that all Democrats would support the stock buyback tax and noted that it’s particularly popular with progressive lawmakers.
The background: The concessions to Sinema were tax breaks favored by the private equity industry and the U.S. manufacturing sector.
Democrats needed to ensure that they could replace that tax revenue to fund their green energy and health care policies and significantly reduce the federal deficit, a key priority for centrist Sen. Joe Manchin (D-W.Va.), who privately negotiated the initial deal with Schumer.
Karl and The Hill’s Tobias Burns have more here.
Read more about the revamped Inflation Reduction Act:
- The U.S. Chamber of Commerce on Friday cheered Sen. Kysten Sinema (D-Ariz.) for softening her party’s corporate minimum tax measure but criticized a new stock buyback tax proposal included in the Inflation Reduction Act.
- How the battle over the Democrats’ climate, tax and health bill will play out.
- Republicans are sharpening their knives while the Senate prepares to hunker in for a long weekend as Democrats deploy a special process to pass the party’s sprawling health care, tax and climate plan without buy-in from across the aisle.
- House looks to take up climate, taxes, health care bill next Friday.
HOW DID THIS HAPPEN?
Economy adds whopping 528K jobs in July, shattering expectations
The U.S. added 528,000 jobs and the unemployment rate fell to 3.5 percent in July, according to data released Friday by the Labor Department, a stunning gain that defied predictions of a slowdown.
- Economists expected the U.S. to have added roughly 250,000 jobs in July and keep the jobless rate at 3.6 percent, according to consensus estimates released before the report.
- But the economy added more than double the number of jobs experts predicted, even as consumer confidence plunged and gross domestic product shrank over the first half of the year.
- The jobless rate also returned last month to its pre-pandemic level of
3.5 percent, which in February 2020 set a 50-year low for unemployment.
The stunning July jobs gain will raise questions about how close the U.S. economy actually is to a recession after months of growing concern over a sharp slowdown.
The resilience of the labor market also means the Federal Reserve may have more room — or at least feel more pressure — to rapidly raise interest rates and fight inflation without fears of triggering steep job losses.
Sylvan breaks it down here.
Read more: Biden takes victory lap on job numbers
‘THIS WILL TAKE YEARS’
Kentucky expected to face enormous costs after devastating floods
Kentucky is facing enormous financial costs to rebuild after massive flooding in the eastern part of the state that has left 37 people dead and hundreds homeless.
While the Federal Emergency Management Agency (FEMA) is still assessing the toll, Gov. Andy Beshear (D) said the state would need “significant dollars,” describing the disaster as “the most devastating flooding event our state has ever seen.”
Jonathan Jett, superintendent of public schools in Perry County, Ky., said in an interview with The Hill that he expects it will require millions of dollars to rebuild public infrastructure in his school district.
“This will take years,” Jett said.
Here’s more from The Hill’s Rachel Frazin and Tobias.
TOUGH PILL TO SWALLOW
AARP, Big Pharma locked in battle over drug pricing bill
The nation’s largest seniors group is locked in a battle with the pharmaceutical industry over Democrats’ drug pricing overhaul.
- AARP is blanketing the airwaves with ads backing the measure to counter drugmakers’ efforts to pressure key Democrats to vote “no” on the measure which would lower prescription drug prices.
- It’s also mobilizing its nearly 38 million members to lobby their representatives on the drug pricing plan.
“We’ve been hearing for decades from our members who are struggling to afford their prescription drugs,” said Bill Sweeney, AARP’s senior vice president of government affairs. “We know that pharma has a lot of lobbyists and a lot of money, but we have a lot of people.”
Karl tells us more here.
Good to Know
Sen. Ron Johnson (R-Wis.) said Wednesday that Social Security and Medicare should be up for congressional approval each year, instead of staying under their current status as federal entitlement programs.
“Social Security and Medicare, if you qualify for the entitlement, you just get it no matter what the cost,” Johnson said in an interview that aired Tuesday on “The Regular Joe Show” podcast.
Here’s what else have our eye on:
- The Chinese Ministry of Foreign Affairs on Friday said that the country would halt its cooperation with the U.S. on military and climate matters in response to Speaker Nancy Pelosi’s (D-Calif.) trip to Taiwan.
- Defense Secretary Lloyd Austin has turned down a request from Washington, D.C., Mayor Muriel Bowser (D) to deploy the National Guard to help with migrants being bussed into the city from Texas and Arizona, a defense official told The Hill.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you next week.
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