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Slowly making progress.
House Speaker John A. Boehner has offered to push any fight over the federal debt limit off for a year, a major concession that would deprive Republicans of leverage in the budget battle but is breathing new life into stalled talks over the year-end “fiscal cliff.”

The offer came Friday, according to people in both parties familiar with the talks, as part of the latest effort by Boehner (R-Ohio) to strike a deal with President Obama to replace more than $500 billion in painful deficit-reduction measures set to take effect in January.

4:34 PM PT: CBS says a deal is close
Though many differences remain, President Obama and House Speaker John Boehner have never been closer to a deal, numerous congressional and White House sources confirm to CBS News.

Sources familiar with the Friday call from Boehner to Mr. Obama, placed after the president's emotional statement on the Connecticut elementary school massacre, was the most productive of the fiscal cliff process.

In that call, Boehner offered to raise marginal income tax rates on households earning more than $1 million in adjusted gross income. The tax rate Boehner offered was 39.6 percent, the top rate under the Clinton-era tax code Mr. Obama favors.

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Comment Preferences

  •  Considering that President Obama already (22+ / 0-)

    took the debt limit off the table, it's mighty nice of Boehner to agree with him. The question is, does Boehner have enough sway over his crazy economic terrorist caucus for them to go along with it?

    Filibuster reform now. No more Gentleman's agreements.

    by bear83 on Sun Dec 16, 2012 at 04:37:16 PM PST

  •  What if Obama compromised at $400,000? (2+ / 0-)
    Recommended by:
    johnny wurster, TexasTom

    Or at some other level higher than 250K?

    Could that be acceptable?  as policy?  as politics?

    •  I could live with that (7+ / 0-)

      Especially if there are no serious entitlement cuts and they take away the debt ceiling as a weapon.

      It depends also what they do about tax rates for unearned income. Most really rich people make more in unearned income, and it's inherently unfair to tax that at a lower rate than wages.

    •  No. We need to get more revenue. (5+ / 0-)

      Otherwise, just let them all go up and then offer a bill for the middle class cuts only.

      •  If revenue is the issue, $1 million is fine (3+ / 0-)

        The Tax Policy Center recently did a study showing that raising rates at $250,000 raises only $14 billion over 10 years -- $1.4 billion a year -- more than a $1 million threshold.  

        It's summarized here.

      •  playing defense (1+ / 0-)
        Recommended by:

        If we remember that the top marginal income tax rate was 90% under Eisenhower, and 70% under Nixon, and 50% under Reagan, doesn't it seem like we are playing on the wrong side of the field when we are fighting over whether the top rate should be 35% or 39%?  I am for raising the top rate back to 39%, but I don't see any significant difference between numbers like 35 and 39.  It's more important to get some Republicans to agree to the principle that sometimes you have to raise some taxes. Once they do that, we're just talking about arithmetic.

        •  joe - rates before 1986 and those after (2+ / 0-)
          Recommended by:
          JerryNA, coffeetalk

          are apples and oranges. The Tax Reform Act of 1986 so fundamentally changed the IRS code for individuals that top marginal rates before TRA86 and those after are not comparable. The fact that top marginal rates were as high as 90% means nothing because legal tax shelters were available that allowed top earners to lower their effective rate as low as single digits. For comparison purposes the focus needs to be of effective rates (the rates the top 1% actually paid). When the top marginal rate was 90% the effective rate was less than 40%.

          "let's talk about that"

          by VClib on Sun Dec 16, 2012 at 05:49:34 PM PST

          [ Parent ]

          •  that's all true but (0+ / 0-)

            not everybody could invest in tax shelters. And those high rates had the effect of moderating pay for business executives, professionals, athletes, etc. It's kind of wasteful to pay a CEO millions in salary if most of it is going to the government. So the high rates I think had an impact in terms of reducing inequality. It is not a coincidence that inequality has increased dramatically in the years since we dropped the top marginal rate below 70%.

            It's also important to note that one other important feature of the 1986 tax reform act was to INCREASE the capital gains tax rate to the same rate as paid on earned income. That didn't last long, however. But that was one of the tradeoffs that allowed low income tax rates to take hold. Reagan, who earned his money by working, could not understand why capital gains should be taxed at a lower rate. And as a result, nobody could get away at that time with paying the kind of tax rates that people like Mitt Romney pay. Now we still have the low top marginal tax rates, and we have even lower rates for capital gains. And that defeats a lot of the fairness arguments that were made in favor of the 1986 act, i.e., that wealthy people will actually pay more if we eliminate deductions and tax shelters.

            •  joe - the only reason that capital gains tax (0+ / 0-)

              and the top marginal rate on earned income were the same is because the top rate was 28%, about what many people were already paying for long term capital gains. It was a very modest effective increase in actual long term capital gains tax rates. Before TRA86 you paid half your top effective rate as the capital gains rate. That has been the long term standard in the US and the ONLY time the two rates were the same is the years after TRA86 before the next increase in the top marginal rates during the Presidency of GHWB. Every G20 country has a lower capital gains rate than earned income rate, although some are higher than ours. I favor return to the Clinton era rates for everybody which increases the top marginal rate to 40% and the capital gains rate to 20% plus the new 3.8% Medicare tax for a 24% capital gains rate.

              "let's talk about that"

              by VClib on Mon Dec 17, 2012 at 08:55:48 AM PST

              [ Parent ]

              •  Look how much has changed since 1986. (0+ / 0-)

                I think I need to write a much longer post about this, but for now let's just look at how different the arguments in favor of tax reform were in 1986 from what we are hearing now. Back then the argument in favor of lowering the top marginal rate was that wealthy people were wasting money on unproductive investments to shelter their income and that we would actually take more from them if we lowered their rates. And we would compensate for that to some extent by raising capital gains rates.

                Now we are hearing wealthy people talk as if they have a God-given right to pay rates of 35% or less, and that this is justified because they spend their money in so much more productive ways than ordinary working class people who seem to waste so much money on mundane items like food, clothing and shelter. Better to let the "job creators" keep even more of their income because they will spend it on better things (like vacation homes, jewelry, fancy European cars, or fine wines perhaps?). And this nonsense is combined with disparaging remarks about the so-called 47% whose incomes are so low we have decided they are not worth taxing at the federal level. Suddenly these people, for the most part low wage workers, are being portrayed as freeloaders who are not paying their fair share.  We had a multi-millionaire presidential candidate who ironically scored 47% of the vote who bragged about paying 14% of his income in taxes, and who thought that was fair.

                So we have traveled very far from a world where we were actually trying to get the wealthy to pay more (the world where the 1986 tax reform act attracted bi-partisan support), to a world where Republicans are openly calling for the wealthy to pay less and the poor to pay more. And this at a time when the disparity in favor of the wealthy is much, much greater than it was in 1986.

                Now we are in a world where Democrats have to fight tooth and nail to get back to a pathetic top rate of 39%. And we haven't even started talking about capital gains, something for which Republicans will fight even harder than they are fighting to preserve the 35% top marginal rate.

                You don't think we're playing defense?

      •  Note .... 250K in 1993 = 383K today (1+ / 0-)
        Recommended by:
        Dream It Real

        So moving the rate up to the 400K range makes inflationary sense.  The issue is getting to the revenue and expense numbers needed to make things work.  And for that, we need some serious defense spending cuts.

        I also wonder - if we let the tax cuts expire ... what if we just adjusted all the Clinton rates for inflation come 2013... and put in an inflation adjuster so middle incomes don't creep into higher brackets with inflation?

    •  Yeah, depends on the level (1+ / 0-)
      Recommended by:
      Dream It Real

      I think Pelosi has even suggested a higher level(500k?), I believe.

      Policy-wise, it would depend on how revenue it brings it, and what Dems would have to give up on the spending side.

    •  1 million is too high nt (1+ / 0-)
      Recommended by:
    •  DIR - I would guess that $500,000 (2+ / 0-)
      Recommended by:
      Dream It Real, coffeetalk

      might be the magic number. It would also make the term "millionaires and billionaires" more accurate.

      "let's talk about that"

      by VClib on Sun Dec 16, 2012 at 05:44:15 PM PST

      [ Parent ]

      •  If you are earning $500,000 in wage income a year (0+ / 0-)

        You are almost certainly making a significant amount in capital gains and deducting large amounts in charitable contributions to keep your rate low. Unless you were one of the mythical small businesses that counts business income as personal income.

        •  MrobDC - I had a different point (0+ / 0-)

          Families with annual incomes of $250,000 are likely not "millionaires", while families with incomes of twice that are almost certainly millionaires. So when the President talks about raising taxes on millionaires and billionaires the $500,000 number is more appropriate. With a top marginal rate of 35%, or even 40% no one makes charitable contributions to lower their tax rate. If you kept the money and paid the tax you are always ahead. Families who have annual incomes of $500,000 receive the overwhelming amount of their income from W2 income, not capital gains. It's only the very top income earners that obtain most of their income from capital gains.

          "let's talk about that"

          by VClib on Mon Dec 17, 2012 at 07:40:58 AM PST

          [ Parent ]

  •  Oh joy. nt (1+ / 0-)
    Recommended by:

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sun Dec 16, 2012 at 04:38:02 PM PST

  •  Hmm (5+ / 0-)

    So that means the deal has the debt limit raised?  In the bill that is voted on?

    Or is it just John Boehner's promise?  He promises to not not raise the debt limit later?  Gentleman's agreement.

    I smell a fish.

    Republicans: Taking the country back ... to the 19th century

    by yet another liberal on Sun Dec 16, 2012 at 04:38:38 PM PST

  •  A year? (7+ / 0-)

    Make it forever and you're finally offering something worth dealing about...

  •  It will be interesting to see what Boehner gets (4+ / 0-)
    Recommended by:
    democrattotheend, Losty, nchristine, VClib

    in return on entitlements.  

    It's been pretty clear over the last several days -- the last week, actually -- that Republicans would concede something on rates - I've been saying it would likely be at something higher than $250,000 so the Republicans can say they were "protecting small business."  However, I can't imagine Boehner would do a deal giving on those two things without something significant on spending, and specifically on entitlement spending.  Not after his "spending is the problem" press conference this week.  More importantly, every single Republican who has said that he is willing to raise tax rates has made it clear it has to be in exchange for "significant entitlement reform."  There's no way Republicans will agree to higher rates AND taking the debt ceiling off the table this February/March without it.  

  •  Not a concession. Because Obama and Dems (3+ / 0-)

    will not give in to that hostage taking again anyways.  This is Boehner wanting to give it up because of the nuts in the far right of his own caucus.  

    If a deal is close, I worry.  Let's go off the cliff!

    The NRA is the Gun Manufacturer Lobby. Nothing more. Their pontification about the second amendment is nothing more than their ad jingle. They're the domestic version of the Military Industrial Complex.

    by Jacoby Jonze on Sun Dec 16, 2012 at 04:46:40 PM PST

    •  They can say they won't give in (1+ / 0-)
      Recommended by:

      But no responsible president is going to actually let the US default on its debts. The Republicans know that, so regardless of how tough the president talks about not negotiating about the debt ceiling, at the end of the day he'd have to give in to prevent default. Hence they still have incentive to extort.

      If they can make a deal on the debt ceiling now that would be the best outcome, since Obama has more leverage now than he will on the debt ceiling fight. Public opinion is with the GOP on that, because most people think we're spending too much even though they oppose most actual spending cuts. In this fight he has public opinion on his side, and he has the looming deadline as leverage. Better to make a deal now if he can do so without painful cuts to entitlements and other programs.

  •  Guardedly Optimistic (1+ / 0-)
    Recommended by:

    While I reserve the right to hold my judgement until I see the whole package, I have the following observations:

    1.  Obama Win - Boehner Cave - Raising the debt ceiling for a year with apparently no strings attached.

    2. Obama Win - Boehner Cave - Allowing rates for millionaires and above to return to the Clinton 39.6% rate.

    I await more good news!

    "Some men see things as they are and ask, 'Why?' I dream of things that never were and ask, 'Why not?"

    by Doctor Who on Sun Dec 16, 2012 at 04:50:33 PM PST

  •  And so they do it again next year. (6+ / 0-)

    Don't fall for this, Obama. Let them go off the cliff.

    The thing about quotes on the internet is you cannot confirm their validity. ~Abraham Lincoln

    by raboof on Sun Dec 16, 2012 at 05:04:36 PM PST

  •  Don't You Believe It! n/t (0+ / 0-)

    Float like a manhole cover, sting like a sash weight! Clean Coal Is A Clinker!

    by JeffW on Sun Dec 16, 2012 at 05:10:30 PM PST

  •  What do the Republicans want in exchange? (1+ / 0-)
    Recommended by:

    The tax rate thing can fall over the 'cliff' for all I care cause it can be readdressed in the next Congress.

  •  1 million? and only 1yr delay on their (0+ / 0-)

    debt ceiling sh*t?

  •  well, isn't that nice of him? (0+ / 0-)

    it should never have been part of the deal to begin with. get your tea party nutters in line, boehner!

  •  What's he getting for it. (1+ / 0-)
    Recommended by:

    I don't want a deal.
    there's nothing that Obama can offer Boehner except cuts to earned benefits. Everything else has been cut to the bone. Unless we start abolishing food stamps, unemployment insurance, etc. altogether, abolishing whole depts of government like Dept. of Ed and Dept. of labor, real crazy destroy-the-public-sector style stuff.  I don't think Obama's going to do that really really extreme stuff, so there's nothing for him to give up except Medicare, SS, etc.

    Which brings up the question of why we have to give up anything at all when we won and the American people are in agreement with Democratic principles and the Democratic programs of Social Security and Medicare.

    A thousand Sharkeys are invading a thousand Shires every day across our country.--James Wells

    by SouthernLiberalinMD on Sun Dec 16, 2012 at 06:50:17 PM PST

  •  Doesn't he want the debt limit permanently off the (0+ / 0-)

    table? that's been one of his main points.

  •  I expect the President to cave. ntx (0+ / 0-)

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