Senate Democrats are pushing back hard on a deal that Vice President Joseph R. Biden Jr. and Senator Mitch McConnell are closing in on, objecting vociferously to any compromise that suspends automatic across-the-board spending cuts for any time frame short of a year.Remember, the delay in sequester spending cuts is the primary reason Democrats would be wiling to discuss moving off of the $250,000 threshold on tax cuts, so the three-month timeframe Republicans are talking about is a joke. Even one year seems like it's giving away too much: a temporary spending reprieve in exchange for permanent tax concessions. That's especially true when you consider that Republicans claim to oppose at least half of the sequester's spending cuts. (Remember when Paul Ryan denied voting for them during the campaign?)
A senior Senate Democratic aide said a one-year “pause” in those cuts — known as sequestration — is nonnegotiable. Mr. McConnell of Kentucky, the Senate Republican leader, has suggested a three-month suspension, according to officials knowledgeable about the negotiations.
But even though one year probably is giving away too much, debating whether it is or it isn't will turn out to be a pointless exercise if Biden and McConnell reach a deal only to have House Republicans reject it. From my outsider's perspective, I suspect that House Republicans would be extremely reluctant to agree to any delay in the sequester. The way they justify giving up on the tax cut hostage crisis is to say that they'd rather have a fight over spending over the next couple of months, culminating with the debt limit. But if the sequester is delayed past that point, the only thing they'll be able to fight about is the debt limit, and if President Obama refuses to negotiate with them on the debt limit, they won't have a very interesting fight.
To be clear, I'm not saying that I think House Republicans would win a spending cut battle if the sequester cuts aren't delayed, but I am saying that I think they believe they would win such a battle. Therefore, they won't want to give it up. The implication of that is that House Republicans might actually be more likely to accept a $250,000 threshold for tax increases without a sequester delay than they would be to accept a $500,000 threshold with a sequester delay. (And they'd accept unemployment benefits in both.)
At least from my perspective, if there's a deal, the thing I'll be most interested in evaluating is how much Democrats gave up on the tax cut front and how much they got in return on the spending side. But the fact that they are already at the one-year mark is not a good sign, unless they've also cut back on what they are offering to give up on the tax side.
Hopefully, Democrats remember that their best alternative to a negotiated agreement—their BATNA—is pretty strong: putting a simple bill on the Senate floor to extend tax cuts on all income below $250,000 and simultaneously extend unemployment benefits.
9:49 AM PT: President Obama will be speaking at 1:30 PM ET. According to the White House, "THE PRESIDENT delivers remarks about the fiscal cliff at a White House event with middle class Americans." That doesn't sound like the sort of event at which a deal is announced—rather it sounds like one designed to put pressure on Congress to get something done. We'll cover it live.
9:54 AM PT: And at about the same time as the Obama speech was announced, Senate Republicans say a majority of their caucus will likely support a deal. Unclear whether that means "if there's a deal, a majority will support it" or if it means that "There is a deal, and a majority will support it." I guess the answer to that will determine who President Obama is trying to pressure, unless he's trotting out a bevy of middle class Americans to celebrate a deal, which seems a bit unlikely.
10:00 AM PT: Ezra Klein tweets what he is hearing the deal consists of here, here, here, here, here, here, here, and here. Note that according to him, the sequester delay remains "unclear" which is another sign that the sequester is one of the big hangups at this moment. That's reasonable as Democrats basically don't get much of anything out of the deal other than a delay in sequester spending cuts. The fact that it's not clear what that delay would consist of isn't exactly heartwarming news.
10:11 AM PT: More stuff coming out making it seem like a deal is coming together: