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Posted by on Dec 7, 2012 in Economy, Politics | 4 comments

Fiscal Cliff Deal Quietly in the Works?

Forget the public posturing. Forget (I hate to say it) blog posts. What matters in the fiscal cliff negotiations is what’s going on behind the scenes — and sometimes informed analysts (i.e. that lets Dick Morris out) can stand back, take a deep breath and discover the inklings of a deal. And so it is with The Washinton Post’s Ezra Klein, who sees a possible deal emerging that won’t entirely please Democratic progressives or Republican Party Tea Partiers or talk show hosts.

The crux of it:

Right now, the fiscal cliff negotiations are proceeding on two tracks.

One track includes the press releases, public statements and legislative tactics the two parties are deploying to prove the purity of their faith and their commitment to beating the other side to a bloody pulp. Watch these closely and it’s easy to get depressed. The parties are, by turns, angry, disappointed, petty, inane and vengeful. “There isn’t a progress report,” Republican House Speaker John Boehner sighed Friday, “because there’s no progress to report.”

The other track includes the offers, counteroffers and red lines proposed by Boehner and President Obama. If you look at these closely, a deal is taking shape.

And so:

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.

That’s not a policy I like much, but New York magazine’s Jonathan Chait accurately conveys the White House thinking here: They see it as having “weirdly disproportionate symbolic power,” as it’s not a huge (or smart) cut to Medicare benefits, and most of the pain will be blunted by the Affordable Care Act. But Republicans and self-styled deficit hawks see it as a big win. And Democratic House Minority Leader Nancy Pelosi, who staunchly opposes raising the retirement age, has stopped well short of ruling it out.

If this is the deal, look for many in the bases of the two parties to say their leaders “caved” — a word used for the once respected concept of political compromise, where leaders attempted to aggregate interests by indulging in give and take.

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