Deals and Rumors of Deals

Having scrutinized the key fiscal cliff negotiations leaks that are making the rounds in Washington today, I’m reminded of the Gospel: “You will hear of wars and rumors of wars, but see to it that you are not alarmed. Such things must happen, but the end is still to come.”

Which is to say that even the bullet points flying through people’s inboxes have a fair number of blank spots in them. As I’ve been saying, when you look at chained CPI proposals it’s important to pay attention to what happens to the poor and the very old. The latest White House proposal apparently does something to shelter the “most vulnerable” from the bite of the cuts here, but what does it do and how are the most vulnerable defined? Similarly, the detailed timing structure and sequencing of the proposed tax changes is relevant. The headling idea is to stick with Bush-era rates on everyone with less than $400,000 in AGI, but return to Clinton-era rates for those richer than that. But that doesn’t get you nearly $1.2 trillion in revenue. The logic of the situation seems to be that the gap will be made up by capping itemized deductions at the 28 percent rate, but I haven’t seen that on paper. The bullet points on spending cuts outside of Social Security also leave a fair amount of room for interpretation.

Last but by no means least, the way these things work is that nothing is agreed to until everything is agreed to. That’s a big deal in a negotiation like this where there are a half dozen or more balls in the air simultaneously.

But briefly taking the temperature of activists it seems to me that progressives would rather avoid concessions on entitlements than secure gains in terms of new stimulus spending, and that conservatives would rather avoid concessions on tax rates than secure gains in terms of entitlement cuts. It’s clear from the fact that Boehner and Obama don’t simply agree on a smaller package that both men prefer a bigger package that doesn’t just avert the sequester in a de minimis way but involves all kinds of extra back-and-forth. But support for that approach is not especially deep outside the room, which means things could easily fall apart at any time.