Possible Fiscal Cliff deal includes smaller rate increase for the wealthy

Rick Moran
If Speaker Boehner believes caving only partially to the president on tax rates will make a deal more palapable to his caucus, I think he will be in for a big surprise.

Ezra Klein thinks he's discerned the outlines of a deal that includes a top rate of 37% instead of 39% and raising the age for Medicare eligibility.

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 contributions. 

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.

The Medicare eligibility age rise won't pass the Senate unless Obama demonstrates lobbying skills he has not shown for 4 years. As for the rest, it's hardly "entitlement reform" as any rational person understands it.

Smoke, mirrors, and Lucy holding the football ready to yank it back when the GOP falls for the tax raise. Some deal.


If Speaker Boehner believes caving only partially to the president on tax rates will make a deal more palapable to his caucus, I think he will be in for a big surprise.

Ezra Klein thinks he's discerned the outlines of a deal that includes a top rate of 37% instead of 39% and raising the age for Medicare eligibility.

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 contributions. 

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.

The Medicare eligibility age rise won't pass the Senate unless Obama demonstrates lobbying skills he has not shown for 4 years. As for the rest, it's hardly "entitlement reform" as any rational person understands it.

Smoke, mirrors, and Lucy holding the football ready to yank it back when the GOP falls for the tax raise. Some deal.