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Monday, December 31, 2012

Apparent Breaththrough on Fiscal Curb

     This is what the Poltico headlines are screaming right now. Talking Points Memo says “McConnell: We Have a Deal…  Almost.”

     HuffingtonPost declares ‘Close.’

      From Politico:

     “With the clock ticking toward the midnight fiscal cliff, President Barack Obama said Monday that a deal to avert tax hikes and spending cuts in the new year “is within sight, but it’s not done.”
“There are still issues to resolve, but we’re hopeful that Congress can get it done,” Obama said.

     “As Obama spoke, Congress was closing on a $600 billion deal that would raise taxes on households that make more than $450,000 a year and individuals who make more than $400,000. The emerging deal would also permanently patch the Alternative Minimum Tax, raise the estate tax rates for high-value properties, extend unemployment benefits for a year, extend several middle-class tax cuts for five years and add a temporary fix to Medicare reimbursement rates.”

     “The breakthrough came in overnight negotiations between Senate Minority Leader Mitch McConnell (R-Ky.) and Vice President Joe Biden.

     “On the floor Monday afternoon, McConnell announced he had reached agreement with Biden on all the outstanding tax issues, though they were still haggling over how to modify the $109 billion in automatic spending cuts set to take effect in the new year. He said Congress should immediately clear the tax deal in order to prevent historic tax hikes starting Tuesday.”

      “Let’s pass the tax relief portion now, let’s take what’s been agreed to and get moving,” McConnell told his colleagues.

      “The agreement would reflect significant concessions by both sides, but particularly for McConnell. Obama campaigned on raising taxes for families who make more than $250,000, but McConnell has long been dead-set against any tax increases, warning they would jeopardize the economy. It would make the higher tax rates for wealthier families permanent, which McConnell would sell as a win for his party since it could avert future fights over expiring tax rates.”

    Read more:

     If the basic outline of the tax deal is coming into focus, this is less true of the sequester cuts:

     However, there has been no agreement over “turning off” the sequester, tens of billions of dollars in spending cuts that will hit the Pentagon and other federal agencies beginning on Jan. 2, the sources said. That remains the biggest sticking point in the talks. Democrats want to delay the sequester for a full year and pay for it with a mix of new revenue and spending cuts, while House Republicans have been demanding only spending cuts. Any deal without House Republicans will be a heavy lift.

     Obama did speak about an hour ago in a strong statement that insisted that any future deal over the sequester will not be paid solely with spending cuts as the GOP wants but will require significant revenue:

     “The emerging fiscal cliff deal in Congress will only delay scheduled spending cuts — the so-called “sequester” — and President Obama said he will look to add further revenue in any future deal to offset them in addition to new spending cuts.”

    “Revenues have to be part of the equation in turning off the sequester,” he said. He suggested that he might be open to reducing Medicare costs in the long term if it were accompanied with tax reform that eliminates deductions favoring wealthy Americans and large corporations.

       Jamie Bouie speculates on what the President was after in his rather combative press conference he gave an hour ago.

       Whatever his objective was, it clearly irked the Republicans: so I say it was worth it…

        “Republicans reacted immediately and with tremendous hostility to President Obama’s remarks at the White House Monday afternoon, and accused him of jeopardizing a deal to avoid the fiscal cliff.”

        “Senate Minority Leader Mitch McConnell and Vice President Joe Biden had been nearing agreement on legislation to avert broad tax increases and spending cuts next year, say aides with direct knowledge of the negotiations.”

       “But the evolving framework is unsatisfactory to members of both parties, including members of Democratic leadership, and one Democratic aide described the whole process was “hanging by a thread.”

      “That was before Obama’s remarks, in which he boasted that the nascent plan would protect major progressive priorities, and attacked Congress for threatening to derail it before the end of the day when all of the Bush tax cuts expire. Obama also issued a key demand regarding an issue at the heart of the remaining differences between the parties.”
“Revenues have to be part of the equation in turning off the sequester,” Obama said.
That may be a non-starter for Republicans.

      If the GOP plans on letting all this pain happen to 98% of taxpayers out of some personal pique against the President’s choice of words it underscores why the country voted against them so decisively on November 6 and they should expect more such debacles.

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