“The Democrats made several key concessions yesterday in the Fiscal Cliff negotiations.
As a result, the two sides are absurdly close together. If we don’t get a deal at this point, the entire country will be justified in being outraged.
Here’s the Democrats’ latest offer, as reported by Lori Montgomery and Paul Kane of the Washington Post:
* The Democrats agreed to raise the income threshold for tax increases to $450,000 a year (couples) from the prior $250,000. The Republicans are insisting on $550,000 threshold. This is a massive tax cut for almost the entire country relative to the rates that will otherwise take effect on January 1. (So agree on $500,000 already and call it a day.)
* However, to the Republicans’ chagrin, the Democrats insist on raise capital gains and dividend taxes to 20% on households over $250,000 and reducing some of the allowable deductions. Importantly, this, too, is a massive tax cut relative to the scheduled changes, which would boost dividend taxes to 40% on incomes over $250,000.
* The Democrats conceded on the estate tax: They’ll keep the threshold for taxable estates at $5 million, with a 35% rate over that level. This, again, is a massive tax cut over current law, in which the threshold will drop to $1 million with a much higher rate.
* The Democrats’ offer would permanently protect middle-class households from the Alternative Minimum Tax. No details on how this would work.
* On the spending side, the Democrats’ offer would delay the “sequester” (automatic spending cuts) until 2015. This would cost an estimated $200 billion. But it would avoid the cuts to the military budget that the Republicans are so desperate to avoid.
* The Democrats would also extend unemployment benefits for a year, extend farm subsidies for a year, and avoid a 27% cut in Medicare payments to doctors. The Republicans say they want offsets to these spending cuts.”
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