Even before the President speaks, guess I should pass along now-widespread reports that popped up while I was writing the Lunch Buffet post, indicating that a fiscal deal at least in the Senate is close. Here’s a partial summary from HuffPost’s Sam Stein and Ryan Grim:
The preliminary deal being negotiated by Senate Minority Leader Mitch McConnell (R-Ky.) and Vice President Joe Biden would achieve $715 billion in debt reduction, almost entirely through revenue hikes….
Under the framework, the Bush-era tax cuts would be extended permanently for individuals at $400,000 and joint filers at $450,000. A second Senate Democratic source familiar with the state of play confirmed those details. The top rate on ordinary income would go back to 39.6 percent and raise an estimated $370 billion in revenue over 10 years.
The same thresholds would be applied for capital gains and dividends, with the top rates in that case going up to 20 percent — a concession to Republicans (the rate on dividends was set to return to 39.6 percent) but not far from the president’s position during the campaign.
An outstanding issue remains as to what to do with the $1.2 trillion in sequestration-related cuts that are triggered on Jan. 1, with the parties arguing over how long to stave off the cuts, and whether and how to offset them.
There would also be new limits on deductions for high-income earners, an item that Republicans have been using as a potential tradeoff for higher rates. On the estate tax exemption, it looks like Obama has largely given in, though it would be imposed a somewhat higher rate that Republicans prefer. Some good news:
The deal would include a five year extension of stimulative tax policies such as the Earned Income Tax Credit, the Child Tax Credit, and the college credit expansions.
Extended unemployment benefits would also get a one-year renewed lease on life.
It’s hard to assess this proposed deal with so many details missing, and of course, the odds remain high the House won’t go along anyway. But we won’t have to wait long to figure out if there’s a deal or this is just more Kabuki.
And let’s don’t forget: nobody’s talking about Republicans giving up their debt limit hostage as part of any “fiscal cliff” deal. So the White House’s negotiating position on that is the true kicker in any December 31 agreement. It needs to be very tough and credible or the next “crisis” will be real.