Nothing is official, of course. Lots of details to be worked out, and all that. Maybe it will still fall apart. But if this is the outline of the deal, the middle class is once again screwed by politicians who said they would fight for them. Appalling. From the Washington Post:
Boehner offered to let tax rates rise for income over $1 million. The White House wanted to let tax rates rise for income over $250,000. The compromise will likely be somewhere in between. More revenue will come from limiting deductions, likely using some variant of the White House's oft-proposed, oft-rejected idea for limiting itemized deductions to 28 percent. The total revenue raised by the two policies will likely be a bit north of $1 trillion. Congress will get instructions to use this new baseline to embark on tax reform next year. Importantly, if tax reform never happens, the revenue will already be locked in.
On the spending side, the Democrats' headline concession will be accepting chained-CPI, which is to say, accepting a cut to Social Security benefits. Beyond that, the negotiators will agree to targets for spending cuts. Expect the final number here, too, to be in the neighborhood of $1 trillion, but also expect it to lack many specifics. Whether the cuts come from Medicare or Medicaid, whether they include raising the Medicare age, and many of the other contentious issues in the talks will be left up to Congress.
The deal will lift the spending sequester, but it will be backed up by, yes, another sequester-like policy. I'm told that the details on this next sequester haven't been worked out yet, but the governing theory is that it should be more reasonable than the current sequester. That is to say, if the two parties can't agree on something better, then this should be a policy they're willing to live with.
On stimulus, unemployment insurance will be extended, as will the refundable tax credits. Some amount of infrastructure spending is likely. Perversely, the payroll tax cut, one of the most stimulative policies in the fiscal cliff, will likely be allowed to lapse, which will deal a big blow to the economy.
As for the debt ceiling, that will likely be lifted for a year, at least. In contrast to a week or so ago, when the White House was very intent on finishing the debt ceiling fight now, they're sounding considerably less committed to securing a long-term increase in these negotiations. The argument winning converts, I'm told, is that since the White House won't negotiate on the debt ceiling now and won't negotiate on it later, there's little reason to make it the sine qua non of a deal.
As is always the case, the negotiations could fall apart, or the deal could change. But right now, the participants sound upbeat, surprised at how quickly the process has moved from evident disaster to near-agreement, and fairly comfortable with where they think they'll end up.
It is outrageous that Republicans are demanding cuts in Social Security to do this deal, but if the President who ran his entire campaign on fighting for the middle class agrees to it, it would be wrong. It would be bad policy, forcing middle class folks for generations in the future to pay for the tax cuts and wars and bad economic decisions of the Bush years. And it would be politically stupid, beyond the pale stupid- dividing the president from his base and from working class swing voters dependent on Social Security. And this is in a situation where he had all the leverage coming off a strong election victory and taxes scheduled to go up automatically at the end of the year.
Say it ain't so, Mr. President. And if it is, those of you Democrats who, unlike this President, have to actually run again, I'd strongly recommend a no vote, or you will have lots of seniors and progressives making things tough back home. A deal that hurts seniors, hurts the middle class, and doesn't even get what you want on taxes is a terrible deal.
This would such a disappointment.