Yet another counter-offer just out, this time from the President. As I noted earlier, they could close a deal this week, or it could still fall apart. A month ago, I was at 75/25 we’re going over. I’m now 60/40 we’re not. At this point, the biggest outstanding question is less can they agree on numbers—that’s still big, but they’re moving closer with each offer. It’s: can Rep Boehner deliver the votes in the House?
See here for details of the President’s latest (from the NYT):
The White House plan would permanently extend Bush-era tax cuts on household incomes below $400,000, meaning that only the top tax bracket, 35 percent, would increase to 39.6 percent…[However, base broadeners, like the President’s proposal to cap deductions at 28% for incomes above $250,000 would still be in the deal. Also, cap gains and dividends go to 20% above $250,000…JB]
…the president’s plan would cut spending by $1.22 trillion over 10 years, compared with $1.2 trillion in cuts from the Republicans’ initial offer. Of that, $800 billion is cuts to programs, and $122 billion comes from adopting a new measure of inflation that slows the growth of government benefits, especially Social Security.
…The White House is also counting on $290 billion in savings from lower interest costs on a reduced national debt.
…Of the $800 billion in straight cuts, the president said half would come from federal health care programs; $200 billion from other so-called mandatory programs, like farm price supports, not subject to Congress’s annual spending bills; $100 billion from military spending; and $100 billion from domestic programs under Congress’s annual discretion.
The White House would insist that the benefit cut to low-income seniors caused by the switch to the chained-CPI would be offset with some bump-up in benefits. They also wants to keep the debt ceiling off the table for two years (Boehner offered one year in his last iteration). Sequestration would be turned off and they’re still pushing for some temporary measures to help the near-term job market, including another UI extension and infrastructure investment.
And so on…I wouldn’t get too wedded to any particular plan. The main point is that there’s convergence towards an agreement. On the plus side, from my perspective, are new revenues, higher rates, and broader base, all locked in as part of this deal. If it stands, it’s a huge accomplishment and a direct outcome of the election.
Also, good for the White House for sticking with some jobs measures next year.
On the negative side, I really don’t like the $100 billion more of cuts from the non-defense discretionary part of the budget. These are programs that mean a lot to folks trying to get ahead, and we’re already cutting them to the bone.
There’s no deal yet and a lot of disagreement so don’t get too excited. (I heard something today about the Senate maybe setting things up to vote on a package Dec 26. That’s my birthday—how cool would it be to resolve the fiscal cliff on my birthday—best present ever!)
But also, not to be dyspeptic, but any joy you might feel from solving the cliff before (or very shortly after) we go over should be akin to the joy you feel from when you stop banging a hammer on your head. T’was dysfunctional government that brought us to this precipice and while I’ll be glad to see it resolved, it never should have happened in the first place.
And frankly, there’s a lot more we need to be doing than setting and solving traps for ourselves.