Several sources are reporting that a fiscal cliff deal between President Obama and House Speaker John Boehner is coming together, maybe just in time for Christmas.
On Monday night the president offered to raise taxes on households earning $400,000 a year—a big concession from his long-held position that people making $250,000 a year should pay more.
Previously, Boehner had agreed to raise taxes on households earning $1 million a year. That, too, was a big concession for a Republican Party that opposed any tax increase whatsoever. But Boehner and the sane people in his caucus know which way the wind is blowing.
By hiking the threshold for tax increases, the president would be getting $1.2 trillion in additional tax revenue over the next decade, down from the $1.4 trillion of his most recent offer and his $1.6-trillion opening bid.
The president also agreed to change the indexing to inflation of Social Security, in effect a cut in benefits. Liberal Democrats are likely to push back big time against that.
And he abandoned his effort to continue the payroll tax cut, which was also in his opening bid. He’s still asking for extended unemployment benefits and more infrastructure spending—another “mini-stimulus,” if you will. And he wants to extend the debt ceiling another two years; Boehner has proposed one.
The sides right now are about $300 billion apart—but more importantly, the tone is a lot better than it was in the summer of 2011 when the president and Speaker Boehner failed to strike a “grand bargain.” Gone are the counterproductive daily group meetings in the White House, the acrimony between Boehner and House Majority Leader Eric Cantor, and the destructive leaks to news media. And unlike last time, even if they can’t reach an agreement, the U.S. won’t be threatened with immediate default.
Instead, we’ve seen a negotiating process that looks smooth in comparison. Even on Tuesday morning, when Boehner and Cantor put the heat on the president by proposing a “Plan B” for Congress to keep the Bush tax cuts on households earning under $1 million from expiring, they were careful—and uniform—in their language. The president is “not there yet” on spending, they both said. Which means they’re hoping he could be.
A lot of this is theater. Yes, the GOP suffered a sharp defeat in November—but not in the House of Representatives, where aggressive redistricting will likely leave them entrenched for years. Republican congressmen and women are worried more about primary challenges from their right than about general election fights with Democrats.
So, they’re going to need Boehner to deliver them a real trophy before voting for a deal that raises taxes. That could be the Social Security provision, spending cuts amounting to $1 trillion, or, the prize of all prizes, raising the Medicare eligibility to 67. The president has ruled that out, but never say never.
Compromise means each side has to do something it really, really hates. Some of those ideas already have surfaced, which is why I think we may be pretty close to a deal.