Fiscal Cliff


By Nancy Cook
Updated: December 18, 2012 | 5:53 p.m.
December 18, 2012 | 2:22 p.m.

If you stop listening to the political noise on Capitol Hill, you’ll realize the dirty secret about the current state of play of the fiscal-cliff negotiations: The Democrats and Republicans aren’t very far apart in their proposals to one another.

Let’s take taxes first. Remember taxes? Those seemingly unsexy marginal rates that consumed so much oxygen during the presidential campaign, as the candidates talked endlessly about the way taxes on families and investments could help or hurt the economy, small businesses, senior citizens, consumer spending, and the deficit. Remember all those speeches?

Well, right now, Republicans and Democrats are only $200 billion apart in the way they view Americans’ future tax bills based on the most recent offers the president and speaker have given one another—and that’s $200 billion over 10 years, mind you. This boils down to a difference of $20 billion per year–a disagreement that seems so minor that it could be solved by any number of wacky budget gimmicks used by Congress in years past. Spectrum sales, anyone?

President Obama’s latest offer, delivered to House Speaker John Boehner on Monday, called for $1.2 trillion in revenue, a drop from the White House’s previous calls for $1.6 trillion. Over the weekend, Boehner offered $1 trillion in revenue (up from an original offer of $800 billion). This included a tax increase on household income above $1 million a year, which was seen as a huge breakthrough for the party of no-new-taxes.

On the topline figure, the two parties are closer than they’ve been in weeks, so close that it seemed for a moment last evening like a compromise was possible.

It’s not just the topline revenue figure that holds promise. The two sides also both support a fast-track, comprehensive process to overhaul the individual and corporate tax codes: a long-sought goal of powerful lobbying groups such as the Business Roundtable and others in the business community. Any revenue that doesn’t come from tax increases will come from closing loopholes and limiting deductions, according to both sides’ proposals. Republican candidate Mitt Romney proposed a version of this idea in the final weeks of his campaign by capping deductions for American taxpayers at a dollar amount somewhere between $17,000 and $50,000. Obama has long supported limiting deductions for upper-income people to 28 percent. Broadly, it’s a place that both parties plan to look to for additional revenue to help pay down the deficit.

To read entire strory, click here.