It needs a lot of work, but Rep. Boehner’s latest fiscal cliff offer moves the ball down the field. Here it is, as I understand it:
–Tax rates go up on households with incomes above $1 million (the top 0.3%!) as opposed to $250,000 raising allegedly $460 billion over ten years (but see below on this).
–Another $500 billion in revenue over 10 years from unspecified tax reform changes next year, so awfully iffy stuff relative to President’s proposal.
–Extend debt ceiling for a year (but see below).
–Chained CPI in; higher Medicare eligibility age out.
–They’re pretty far apart on spending cuts, with Rep Boehner throwing around unrealistically large numbers without specifying where you’d find the savings.
Still, this is progress…as I read somewhere, “now they’re haggling over price” which means real negotiations are underway. However, that far from guarantees resolution before we go over the cliff:
–I’ve seen no convincing evidence that Boehner can bring his troops along.
–The$1 million income threshold is simply too high to raise the needed revenue and far below where the WH is.
From the NYT:
The president’s plan, which also would include higher tax rates on capital gains, dividends and inherited estates, would raise $960 billion over 10 years. Congressional tax experts estimated on Sunday that a 39.6 percent rate on incomes over $1 million would raise $269.3 billion over 10 years. If limits on tax deductions and credits for high-income families that were repealed in the 2001 tax cut are allowed to return, that figure would top $300 billion.
–So how does Rep. Boehner get to the $460 billion reported by the WaPo last night (see first link above)? Who knows?…And that’s not a good sign.
–On the debt ceiling, R’s have continued to insist on dollar-for-dollar spending cuts for a debt-ceiling-headroom deal that the WH cannot and must not accept. So, when they throw around numbers like over $1 trillion in cuts without any specifics, it’s hard to see how that maps onto reality.
–It’s unclear whether R’s will accept any stimulus in the first stage agreement, including UI or payroll tax cut extensions.
Still, both sides are now negotiating over the two key issues that must be resolved: higher rates on the wealthy, which R’s have conceded, and the debt ceiling, which they’re now negotiating. There’s been some talk that this could be resolved this week would might give them time to write and pass legislation before year’s end. If that doesn’t happen this week—if we don’t quickly see some compromising on the above problems, or if it starts to look like House R’s are not on board—then fasten your seatbelts and check your parachute. We’re goin’ over.