Tax deal takes shape

TAX DEAL TAKES SHAPE…. Negotiations between White House officials and congressional leaders continued through the weekend, and by all accounts, the “broad contours of a compromise” are coming into focus.

An agreement is not yet in place, and details are not yet final, but we’re basically looking at a deal in which Republicans would get a two-year extension on all Bush-era rates. In exchange, Democrats would get a 13-month extension of federal unemployment benefits, and tax breaks included in the Recovery Act, including the Make Work Pay and college-tuition tax credits. A few other provisions, including a New START vote and an increase in the debt ceiling, are still in the mix.

A whole lot of Democrats, as you may have noticed, are not at all pleased with the prospect of any deal that extends lower rates for the wealthy, even temporarily. Indeed, it’s worth emphasizing that much of the outgoing Democratic majority may not want to pass this deal — which would make significant Republican support a necessity.

Still, developments appear to be moving fairly quickly.

White House officials, meanwhile, expressed hope of sealing a deal swiftly, perhaps by midweek, and clearing the Congressional calendar for a long list of other priorities that they aim to accomplish by the end of the year, including ratification of the New Start arms treaty with Russia and the repeal of the “don’t ask, don’t tell” policy for gay service members as part of a wider Pentagon policy bill.

By that reasoning, don’t be too surprised if GOP leaders suddenly decide to drag out these talks as long as possible, causing needless delays in order to prevent progress on any other issues.

Also note the question of the duration of the temporary extension.

Administration officials said the negotiations were focused on the question of extending the tax rates for one or two years, with a three-year extension highly unlikely, even though that time frame would probably eliminate the tax fight as an urgent issue in the 2012 elections.

Many Republicans say they want a permanent extension of the rates, or as long an extension as possible. Democrats say they would not mind the issue coming up during Mr. Obama’s re-election bid, because they see it as politically helpful to them in painting Republicans as defenders of the rich.

Am I the only one who sees that as a pretty significant gamble?