Possible Fiscal Cliff deal includes smaller rate increase for the wealthy

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,...(Read Full Post)