As you probably have already surmised it is a tale as old as time, a tale of lobbyists, corruption and greed.
Kenny Stancil reports, Sinema received over $500K from private equity before shielding industry from tax hikes:
Senate Democrats passed a pared-backed reconciliation package on Sunday, but only after a pair of widely supported provisions that would have made it harder for Wall Street tycoons to reduce their tax bills were removed at the behest of Sen. Kyrsten Sinema—the right-wing Arizona Democrat who has taken more than $500,000 in campaign contributions from private equity executives during the current election cycle.
“Remember the days when taking half a million bucks from an industry, and then passing legislation that only benefits that industry, while passing the costs onto everyone else, would be called corruption?” Brown University political economist Mark Blyth asked on social media. “Today it’s just lobbying as usual.”
Remember the days when taking half a million bucks from an industry, and then passing legislation that only benefits that industry, while passing the costs onto everyone else, would be called corruption? Today its just lobbying as usual: https://t.co/TY6Atyi5mf
— Mark Blyth (@MkBlyth) August 8, 2022
Last week, Sinema agreed to back the Inflation Reduction Act as long as the so-called “carried interest loophole,” which benefits hedge fund managers and private equity moguls by allowing their investment income to be taxed at the long-term capital gains rate of around 20% rather than the ordinary top income rate of 37%, was preserved.
Democrats, who needed Sinema’s support to pass the filibuster-proof bill through the evenly split Senate, obliged, forgoing a modest reform that would have raised an estimated $14 billion in federal revenue over a decade by increasing the holding period for investments to qualify for preferential tax treatment from three to five years.
As the Financial Times noted Monday, the Arizona Democrat “is a beneficiary of significant contributions from the private equity industry—whose lobbying machine and political influence have grown increasingly powerful over the past two decades.”
Citing Federal Election Commission filings, the newspaper reported:
Sinema has received more than half a million dollars in campaign donations from private equity group executives in this election cycle alone, representing about 10% of her fundraising from individual donors. This includes individual donations totalling $54,900 from executives at KKR, $35,000 from Carlyle, $27,300 from Apollo, $24,500 from Crow Holdings Capital and $23,300 from Riverside Partners.
The securities and investment sector as a whole has donated more than $2.2 million to Sinema since she was elected in 2017, according to OpenSecrets. Former U.S. Labor Secretary Robert Reich quipped last week, amid reports of Sinema’s plans to undermine her party’s efforts to hike taxes on corporations and the wealthy, that Wall Street is “getting a huge return on their investment.”
In addition to stripping the carried interest provision from the Inflation Reduction Act, Sinema protected private equity-owned corporations from a new 15% minimum tax on billion-dollar firms.
As The Washington Post reported Sunday:
As originally written, the provision would have required private equity firms to tally profits from their various holdings and pay the tax if the total exceeded the $1 billion threshold.
Sinema, who for over a year has blocked Democratic ambitions to raise taxes, raised objections on Saturday, according to two people with knowledge of the matter, who spoke on the condition of anonymity to discuss private talks. The senator argued that, without changes to the bill, small and medium-sized businesses that happen to be owned by private equity firms would be exposed to the tax, violating a Democratic pledge to hike taxes only on the largest firms. A Sinema spokeswoman said several Arizona small businesses, including a plant nursery, had raised concerns.
The senator’s objections came days after she persuaded Democrats to abandon a different effort to raise taxes on private equity managers by closing the so-called “carried interest loophole,” which permits investment managers to pay lower rates on certain portions of their income.
Steve Wamhoff, an analyst at the Institute on Taxation and Economic Policy, a progressive think tank, told the Post, “The idea that billion-dollar private equity funds must be protected to save small businesses is absolutely absurd.”
Nevertheless, the newspaper noted, “the last-minute changes mark a significant victory for the private equity industry and an estimated savings of $35 billion over the next decade.”
Following the passage of the Inflation Reduction Act on Sunday, the progressive tax reform group Patriotic Millionaires ran a mobile billboard around the Capitol to thank Senate Democrats, with the exception of Sinema, who was denounced for being bought by private equity billionaires. The truck made stops at the offices of the American Investment Council and the Carlyle Group in Washington, D.C.
SOLD to private equity billionaires: @SenatorSinema!
It's clear that she doesn't work for her constituents, she works for her private equity and hedge fund billionaire supporters. pic.twitter.com/sTcSUzDAHb
— Patriotic Millionaires (@PatrioticMills) August 8, 2022
“Bravo to 49 of the 50 senators who voted today to end an era of rampant criminal tax abuse at the highest levels of American society and American business,” Erica Payne, founder and president of Patriotic Millionaires, said in a statement. “In a journey of 1,000 miles, this is an impressive first step.”
“Shame on Sen. Kyrsten Sinema, who had to be dragged kicking and screaming across the finish line, carrying water for her private equity overloads to the bitter end,” Payne continued. “Thanks in large part to Sinema’s obstruction, there’s more work to be done, but the Inflation Reduction Act is a monumental step in the right direction.”
And then there is theWest Virginia coal baron. The New York Times reports, Manchin’s Donors Include Pipeline Giants That Win in His Climate Deal:
After years of spirited opposition from environmental activists, the Mountain Valley Pipeline — a 304-mile gas pipeline cutting through the Appalachian Mountains — was behind schedule, over budget and beset with lawsuits. As recently as February, one of its developers, NextEra Energy, warned that the many legal and regulatory obstacles meant there was “a very low probability of pipeline completion.”
Then came Senator Joe Manchin III of West Virginia and his hold on the Democrats’ climate agenda.
Mr. Manchin’s recent surprise agreement to back the Biden administration’s historic climate legislation came about in part because the senator was promised something in return: not only support for the pipeline in his home state, but also expedited approval for pipelines and other infrastructure nationwide, as part of a wider set of concessions to fossil fuels.
It was a big win for a pipeline industry that, in recent years, has quietly become one of Mr. Manchin’s biggest financial supporters.
Natural gas pipeline companies have dramatically increased their contributions to Mr. Manchin, from just $20,000 in 2020 to more than $331,000 so far this election cycle, according to campaign finance disclosures filed with the Federal Election Commission and tallied by the Center for Responsive Politics. Mr. Manchin has been by far Congress’s largest recipient of money from natural gas pipeline companies this cycle, raising three times as much from the industry than any other lawmaker.
NextEra Energy, a utility giant and stakeholder in the Mountain Valley Pipeline, is a top donor to both Mr. Manchin and Senator Chuck Schumer, Democrat of New York, who negotiated the pipeline side deal with Mr. Manchin. Mr. Schumer has received more than $281,000 from NextEra this election cycle, the data shows. Equitrans Midstream, which owns the largest stake in the pipeline, has given more than $10,000 to Mr. Manchin. The pipeline and its owners have also spent heavily to lobby Congress.
The disclosures point to the extraordinary behind-the-scenes spending and deal-making by the fossil fuel industry that have shaped a climate bill that nevertheless stands to be transformational. The final reconciliation package, which cleared the Senate on Sunday, would allocate more than $370 billion to climate and energy policies, including support for cleaner technologies like wind turbines, solar panels and electric vehicles, and put the United States on track to reduce its emissions of planet-warming gases by roughly 40 percent below 2005 levels by the decade’s end.
A spokesman for Mr. Manchin said the Mountain Valley Pipeline “will help bring down energy costs, shore up American energy security and create jobs in West Virginia.” An official in Mr. Schumer’s office said the pipeline deal “was only included at the insistence of Sen. Manchin as part of any agreement related to this reconciliation bill.”
Natalie Cox, a spokeswoman for Equitrans, said the company maintained a “high standard of integrity” while engaging with policymakers. She declined to say whether Equitrans had pressed either senator on the pipeline. NextEra Energy, which also develops renewable projects across the country and stands to benefit widely from the bill, did not respond to requests for comment.
Despite concessions like the pipeline deal, major environmental groups as well as progressives in Congress have praised the legislation. Senator Ron Wyden, Democrat of Oregon and chairman of the Senate Finance Committee, called it a “once-in-a-lifetime opportunity” for the country to enact meaningful climate legislation.
But in Appalachia, where the Mountain Valley Pipeline cuts through steep mountainsides and nearly 1,000 streams and wetlands, the deal has highlighted the economic and social tensions in a region where extractive industries over the generations have produced jobs in coal mines and on fracking rigs but have also left behind deep scars on the land and in communities.
For years, environmental and civil rights activists as well as many Democratic state lawmakers have opposed the pipeline project, which would carry more than two billion cubic feet of natural gas per day out of the Marcellus shale fields in West Virginia and through southern Virginia. Construction on the pipeline was supposed to be complete by 2018, but environmental groups have successfully challenged a series of federal permits in court, where judges have found the pipeline developers’ analyses about the effects on wildlife, sedimentation and erosion lacking.
The pipeline deal means Appalachia is again becoming a “sacrifice zone” for the greater good, said Russell Chisholm, a Persian Gulf war veteran and a member of Protect Our Water, Heritage, Rights, a coalition of groups that oppose construction.
“If working people, poor people reaped the benefits, this bill could really help,” Mr. Chisholm said. “But it’s all beyond us, because it turns out they’ve been negotiating behind the scenes. It turns out the pipeline was on the negotiating table, and we weren’t at that table.”
“There’s a tendency to write off our region as a red state that got what was coming to them,” he added.
The concerns in Appalachia underscore the real-world fallout of the Democrats’ concessions to fossil fuels. The climate bill requires the federal government to auction off more public lands and waters for oil drilling as a prerequisite for more renewable energy sources like wind and solar. It expands tax credits for carbon capture technology that could allow coal- or gas-burning power plants to keep operating with reduced emissions.
Mr. Manchin has also secured pledges for a follow-up bill that would make it easier to greenlight energy infrastructure projects and make it tougher to oppose such projects under the National Environmental Policy Act and the Clean Water Act.
Those provisions could encourage further construction of pipelines, gas-burning power plants and other fossil fuel infrastructure to the detriment of low-income neighborhoods, which already disproportionately host these industries and often have fewer resources to negotiate with developers.
[T]he concessions to natural gas pipelines come amid what has been a dramatic turnaround in the industry’s fortunes. For years, a glut of natural gas had depressed prices, and the coronavirus pandemic further cut demand. But Russia’s invasion of Ukraine, as well as the U.S. economic rebound, has pushed prices higher.
As a result, natural gas pipelines and export terminals have become a key growth opportunity as Europe looks for ways to wean itself from Russian gas. And even as the United States takes steps to add more renewable sources of energy, natural gas and oil remain the bedrock of the U.S. economy, and much of that fuel moves around the country through pipelines.
Gov. Jim Justice, Republican of West Virginia, has said that the pipeline should be finished and has called on the Biden administration to encompass all forms of energy … Gov. Glenn Youngkin, Republican of Virginia, has also said the pipeline is vital to his state.
Supporters point to other benefits that the legislation would bring to West Virginia. It would cement a federal trust fund to support coal miners who have black lung disease, for example, and offer incentives for building wind and solar farms in areas where coal mines or coal plants recently closed.
“If you look to the future, it’s going to help,” David Owens, a retired local firefighter, said after he had filled up his S.U.V. outside Blacksburg, Va. Pipeline opponents were only “delaying the inevitable,” he said. “It’s going to happen.”
It remains unclear precisely how Mr. Manchin’s pipeline deal will work. According to terms released by the senator, the agreement requires federal agencies to take “all necessary actions” to permit the Mountain Valley Pipeline’s construction and operation. The terms of the agreement, which would be included in the follow-up bill, would also give the U.S. Court of Appeals for the District of Columbia Circuit jurisdiction over all future legal challenges, rather than keep that authority with the Fourth Circuit in Richmond, Va., where environmentalists had found success.
The Fourth Circuit has overturned permits issued by the Fish and Wildlife Service, the Bureau of Land Management and the Forest Service, saying that their analyses about adverse effects on wildlife, sedimentation and erosion were flawed. The pipeline project has particularly struggled to get approval to cross streams or wetlands in a part of the country with so many of them.
Joseph M. Lovett, an attorney at the legal nonprofit Appalachian Mountain Advocates who is fighting the pipeline, said that any change in legal jurisdiction mandated by Congress “was ridiculous.”
“We’re a nation of laws. The powerful people don’t have the right to choose judges,” he said, adding, “If rich people can pay to get a better day in court, that’s just corruption.”
Mr. Manchin has made clear his view that fossil fuels will continue to be necessary. He became a millionaire from his family coal business and has taken more campaign cash from the oil and gas industry than any of his colleagues have.
Mr. Manchin has attracted more contributions in part because he is the chairman of the Senate energy committee. Major pipeline companies that have made contributions include Enterprise Products Partners, Energy Transfer LP, Plains All American Pipeline and Williams Companies.