So the newest beltway scuttlebutt is that the top marginal rates will be raised to only 37%, as opposed to the 39.6% Clinton era rate they're mandated by law to return to.
Talk to smart folks in Washington, and here's what they think will happen: The final tax deal will raise rates a bit, giving Democrats a win, but not all the way back to 39.6 percent, giving Republicans a win. That won't raise enough revenue on its own, so it will be combined with some policy to cap tax deductions, perhaps at $25,000 or $50,000, with a substantial phase-in and an exemption for charitable contributionsSo this is the trial balloon compromise. Except that's a 2.6% cut for the rich, at a time when additional spending is needed. At a time when the alternative to tax hikes for the rich is to cut Medicare, Medicaid, and funding for other programs that benefit the nation. Tax cuts for the top 2% at the cost of a ridiculous two year Medicare eligibility age increase (!!!) at a time when Medicare-for-all should be the push.
The harder question is what Republicans will get on the spending side of the deal. But even that's not such a mystery. There will be a variety of nips and tucks to Medicare, including more cost-sharing and decreases in provider payments, and the headline Democratic concession is likely to be that the Medicare eligibility age rises from 65 to 67.
I hope Obama has the good sense to overcome the "grand bargainitude" inherent in such a tax cut for the rich, and will just note the GOP's weakness and move on. Clinton era rates are what was agreed upon -- when the tax cuts were first passed under President George W. Bush and then again when the deal was struck a couple years ago. It's not complicated. The tax cuts were legally mandated to sunset, and where those affected can afford it (the top 2%) they should do so.
The GOP needs to explain why they're against the fiscal cliff in the first place, since they're the big deficit hawks, they're the ones in love with Simpson-Bowles (which the fiscal cliff partially mirrors!). Will a single one of the deficit hawks note that the so-called "fiscal cliff" will accomplish their supposed aims better than any of the competing "plans", and thus make ridiculously hypocritical their objections or fearmongering? Any deficit hawk or deficit-uber-alles politician whining about the "fiscal cliff" needs to write a 500 word essay on why they hate something they claim to be existentially for -- massive deficit reduction via any means.
The GOP is scrambling, incoherent, and pegged for derision on this issue by Americans. Now's not the time for a 2.6% tax cut for the rich, President Obama.