After Senate Majority Leader Harry Reid ran out of enticements to offer Senate Minority Leader Mitch McConnell, the Kentucky Republican turned to Vice President Biden, and the two invested several hours trying to work something out.
At this point, they appear to have the framework for a deal they can live with. Whether anyone else can live with it remains to be seen, but we’re getting a look this afternoon at some of the details.
The top tax rate rises to 39.6 percent for individuals making more than $400,000 and families making more than $450,000. Capital gains and dividends will be taxed at 20 percent with the same income thresholds. The Personal Exemption Phaseout (PEP) is set at $250,000 and the itemized deduction limitation (Pease) kicks in at $300,000. The AMT is patched permanently. The estate tax would exempt estates up to $10 million and tax them at 40 percent above that.
The various business tax credits – R&D, wind, etc – would be extended through 2013, as would unemployment insurance. The stimulus tax credits – namely, the expansions of the Earned Income Tax Credit, the Child Tax Credit, and the college credit – would be extended for five years, which is hugely important to the White House. The scheduled cuts to doctors in Medicare would be averted through spending offsets that neither side considers injurious.
And, of course, extended unemployment benefits would, as part of the deal, continue until 2013. The package would not include a debt ceiling increase. [Update: In case this wasn’t obvious, the payroll tax break would also expire tonight, as scheduled.]
It’s worth emphasizing that this isn’t the official blueprint, released publicly by negotiators, but rather, leaked details, some of which vary slightly from other reports based on other leaked details. In other words, nothing is written in stone just yet.
One of the key sticking points – if not the key sticking point – continues to be the sequestration cuts. McConnell has suggested a three-month suspension, setting up a March showdown over spending and offsetting cuts (followed by a February showdown over the debt limit), but Senate Democrats have said this is entirely unacceptable.
Indeed, it’s worth noting that a variety of progressive Senate Dems are increasingly making their voices heard, letting Reid know they believe this deal is too heavily tilted in the GOP’s favor. Among those raising concerns are Sens. Tom Harkin, Al Franken, Bernie Sanders, Jeff Merkley, and Jay Rockefeller.
President Obama is scheduled to deliver some public remarks in just a few minutes.