According to Politico, the Biden-McConnell talks are making "major progress." In this case, "major progress" is defined as a deal in which the threshold for tax hikes goes from $250,000 for families (which the president campaigned on) to somewhere between $450,000 (Biden's current offer) and $550,000 (McConnell's current offer). In addition, unemployment benefits would be extended and sequester spending cuts would be delayed. A deal would presumably also address the alternative minimum tax as well as things like estate, capital gains, and dividends taxes.
If a deal is reached, it would pass the Senate, but while House Speaker John Boehner has said his chamber would take action on any legislation coming from the Senate, he hasn't guaranteed passage—nor has he guaranteed an up-or-down vote. His definition of taking action includes amending the deal as well as rejecting or accepting it. That means even if Biden and McConnell reach a deal that passes the senate, there's no guarantee it will ultimately be adopted.
If Biden and McConnell fail to reach an agreement, Senate Majority Leader Harry Reid will request a vote on a Democratic plan to extend tax cuts on all income below $250,000 and to extend unemployment benefits. With that fallback, why would Democrats continue negotiating with McConnell for a higher threshold, given that McConnell can't guarantee House passage? I haven't really seen a thorough explanation of that, but my assumption is that Democrats would say that a Biden-McConnell deal would include things like the sequester and would be more likely to pass.
That said, it seems as though with every day that Republicans refuse to take action, their options just keep on getting worse—and Democrats need to keep that in mind. For example, while it's possible that McConnell would allow a Republican filibuster of the Democratic fallback plan, if he does that, it would not only be a public relations disaster, it would put the filibuster-reform crowd in a terrific position to put new filibuster rules in place on Thursday when the new Congress begins. And even if McConnell didn't filibuster it, House Republicans would have a really tough time blocking a vote to avoid tax cuts that every Democrat says they would support.
As Laura Clawson wrote yesterday, Republicans had backed down on their demand to included chained CPI in any last minute fiscal cliff deal, saying that they didn't want to appear to be holding tax cuts hostage in order to get Social Security cuts. Two weeks ago, this was something President Obama was offering—but Republicans summarily dismissed it as insufficient. Now, they are saying it they don't even want to see it happen at all. Apparently, this is what happens when Democrats call Republican bluffs. Hopefully, it's a lesson they are taking to heart.
7:34 AM PT: Hmmm:
Remember, the president already can push back the impacts of the spending cuts, so a very short term extension basically is meaningless. An extension that takes us into the middle of 2014, when Republicans will (a) be past their primaries and (b) be less likely to fuck around because of the mid-terms would make a lot more sense. But anything very short-term should be a nonstarter. Democrats would be crazy to consider it, let alone accept it.8:22 AM PT:
7:03 AM PT: Jonathan Chait points out that lifting the $250,000 to $400,000 would give up one-quarter of the revenue from the tax increase, so if the number goes up to $500,000, it will have an even bigger impact. He also makes the case that in being willing to negotiate on the threshold, Obama is giving away far too much in exchange for far too little given the weakness of the Republican position. If there is a deal, and the threshold does go up, the key question will be: what did Republicans give up in return? And simply being willing to end the tax cut hostage crisis isn't enough given the likelihood that the GOP is bluffing.