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December 31, 2012 1:19 PM Deal Or No Deal?

By Ed Kilgore

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.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • K in VA on December 31, 2012 1:42 PM:

    Whatever the Senate passes will make it through the House -- because Pelosi will have to whip Democrats to vote for it.

  • jomo on December 31, 2012 1:56 PM:

    So does this make it through the House with mostly Dem votes and a couple of Republican crossovers?

  • Doug on December 31, 2012 1:58 PM:

    K in VA, that presumes Boehner, or more accurately the Tbaggers, will let it get to the floor...

  • c u n d gulag on December 31, 2012 2:04 PM:

    Anyone remember the days back when they used to call Congress together, to help fix some crisis, instead of causing them, one after another?

    And then, along came that terrorist Newt, who figured, 'What's the purpose of being the Speaker, if you can't burn down the House?'

  • Josef K on December 31, 2012 2:06 PM:

    a fiscal deal at least in the Senate is close.

    And what exactly is the House doing right now? As in right now, this very minute?

    Until we hear from the Speaker, I'm not holding even a dram of hope for a deal at this point.

  • c u n d gulag on December 31, 2012 2:09 PM:

    And just think, whether we go off this "Fiscal Cliff," or not, right after the new Congress starts, we get the fun of having threats of the ceiling fall down on our heads, when the same people who don't have the balls to pass laws to cut their own spending, will demand that Grandma, Grandpa, their children, and their children's children, have to pay for what they've already approved to be spent.

  • Mimikatz on December 31, 2012 2:30 PM:

    When Boehner couldn't get his caucus behind him, he ceded control to McConnell and the Senaye, saying that if something passed the Senate he would bring it to the House floor. If there is a deal that passes the Senate, Boehner has to keep his word or seriously antagonize McConnell. Plus, he knows that the deal would have to have substantial Dem votes to pass the Senate.

    So if there is a deal that passes the Senate Boehner will bring it to the floor and let it pass. What will be lost is the Hastert Rule, that anything that comes to the floor has to have a majority of the majority. Boehner knows, however, that it is that rule that has paralyzed the House, because it gave the Tea folk a veto. Since there is really no challenge to him, he can let the Hastert Rule go, and in fact probably wants it to go. This is a huge defeat from the House GOP perspective because of loss of the no tax band Hastert Rule.

  • Joel on December 31, 2012 2:31 PM:

    "Until we hear from the Speaker, I'm not holding even a dram of hope for a deal at this point."

    Unless we hear from the Speaker, I'm very hopeful that there will be no "deal," and we can wake up tomorrow with the hope of a real deal for the American people, instead of the swindle being discussed today.