Deficit reduction panel releases debt proposal plan

rhadamanthus · Dec 2, 2010

Liberals: Obama Doesn't Compromise, He Caves

President Obama's team is deep in negotiations with Congress over how to find common ground on the fate of the Bush-era tax cuts. And liberals are afraid that the White House may be too quick to cede ground to Republicans without securing concessions in return.

That concern is not unique to the tax-cut debate. People on the left have been concerned about Obama's negotiating style for some time now.

In contrast, Senate Republicans sent Majority Leader Harry Reid a letter Wednesday with what amounts to an ultimatum: "We will not agree to invoke cloture on the motion to proceed to any legislative item until the Senate has agreed to fund the government and we have prevented the tax increase that is currently awaiting all American taxpayers."

In other words, vote on tax cuts and spending bills now, or forget about everything else you want to get done during the lame-duck session. It's the kind of strong, unified negotiating posture Republicans have become known for in the past two years.

But to the dismay of liberal activists such as Justin Ruben, executive director of the group MoveOn, Obama has developed a different reputation.

"Looking right now at the tax cuts — the White House [is] signaling willingness to pre-emptively cave on what is effectively a tax bailout to millionaires," Ruben says. "I think it's profoundly upsetting to people."
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And on cue, Obama caves:

Republican sees possibility of consensus on taxes

WASHINGTON – A leading Senate conservative said Thursday he believes President Barack Obama is ready to embrace the notion of keeping Bush era tax rates in place for everyone at least temporarily, including the wealthy, with no New Year's increases.

Republican Sen. Jim DeMint told CBS's "The Early Show" he wants to "keep tax rates the same." The South Carolinian said he believes Obama "has come around to the idea that taxes can't be raised in a recession."

DeMint favors a permanent extension of the existing rates but said he thinks Obama will oppose anything beyond a temporary extension for the wealthy. The senator said, "A business is not going to plan to add 50 people if they only know what their taxes are going to be for the next two years."
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More at both links.

Rocketman95 · Dec 2, 2010

that's ****ing disgusting.

Major · Dec 2, 2010

This is probably the best summary I've read on this subject. Dems screwed up by not forcing a vote before the elections.

http://www.talkingpointsmemo.com/archives/2010/12/why_the_gop_is_like_bear_bryant.php#more?ref=fpblg

David Leonhardt offers this assessment of the political perils supposedly facing Democrats on the Bush tax cuts:

---
If Democrats cannot come up with a plan that can win 60 votes in the Senate, which means at least two Republican votes, Republicans can filibuster any bill. All of the tax cuts would then expire on Dec. 31. When the new Republican House majority arrives in January, it will be able to make its first order of business a retroactive tax cut -- forcing President Obama and Senate Democrats to choose between a purely Republican plan and an across-the-board tax increase. ...

Much of the recent commentary about the tax cuts has skipped over this political reality. It's instead focused on how tough the Democrats should be and whether they should insist on the expiration of all the Bush tax cuts on income above $250,000 a year. But that's no longer one of their options. Unless they believe they will benefit more than Republicans from a standoff in which taxes go up, which is hard to believe with a Democrat in the White House, their only choice now is among various versions of retreat.
---

This has an internal logic to it, but it rests on a series of premises that I would argue still go back to the core issue of the Democrats not being tough enough -- and I don't mean tough in simply a hardheaded, muscular way but in a savvy, persistent, opportunistic sense.

Let me put it this way: If the roles we're reversed and Democrats were on the opposite side of the issue, wouldn't the analysis be that Democrats were running a huge political risk by blocking middle class tax cuts and getting blamed for raising everyone's taxes? Admit it. You know that would be the analysis.

It reminds me of the line attributed to the old football coach Bum Phillips, speaking about the legendary Alabama coach Paul "Bear" Bryant: "He can take his'n and beat your'n and take your'n and beat his'n." Translated: He could beat you with his players then turn around and beat you with your players.

Leonhardt's analysis is not really about the macropolitical choices for Democrats. It's about his perception, probably the right one, that Democrats won't be able to beat the Republicans at this game. It's not the game isn't winnable. It's that the Democrats aren't good enough to win it. All the proof you need of that is that the game would look very winnable if you swapped the teams.

rhadamanthus · Dec 2, 2010

Major said:

This is probably the best summary I've read on this subject. Dems screwed up by not forcing a vote before the elections.
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Absolutely. I have no idea why they did that. It's so ridiculous it almost seems like sabotage.

rockbox · Dec 2, 2010

Democrats are such p*****s. No wonder voters think they can't protect the country.

Depressio · Dec 2, 2010

http://www.cnn.com/2010/POLITICS/12/02/tax.vote/index.html?hpt=T1&iref=BN1

They rammed the extension for everyone under $250,000 through the House... now it's up to the Republicans to reject the permanent tax cut to 98% Americans. Go for it, guys!

rhadamanthus · Dec 3, 2010

The more I read about it, the more the deficit reduction panels' recommendations seem absolutely grotesque - hammering the poor and the middle class while rewarding the rich and the corporate. Of course, this is the very definition of the American "capitalist" methodology.

Anyhow, here is a sampling:

1) It Would Cut Social Security Benefits For Current And Future Retirees

The chairmen’s plan would increase the Social Security retirement age and limit yearly cost-of-living increases to the rate of inflation rather than of wage growth. The cut in annual increases would affect current retirees -- which was supposed to be off the table. Their benefits would go down by about 3 percent after they’ve been retired for 10 years, and about 6 percent after they’ve been retired for 20 years.

And the retirement age increase is just a particularly cruel way of cutting benefits. The age at which the elderly can retire on full Social Security benefits is already increasing to 67 by 2027. The chairmen’s plan would “index” the retirement age to increase in longevity, meaning it would hit 68 in about 2050 and 69 in about 2075.

Sen. Bernie Sanders (I-Vt.) had this to say about it: “It is reprehensible to ask working people, including many who do physically-demanding labor, to work until they are 69 years of age. It also is totally impractical. As they compete for jobs with 25-year-olds, many older workers will go unemployed and have virtually no income. Frankly, there will not be too much demand within the construction industry for 69-year-old bricklayers.”

New York Times opinion columnist Paul Krugman also pointed out that “the people who really depend on Social Security, those in the bottom half of the distribution, aren’t living much longer. So you’re going to tell janitors to work until they’re 70 because lawyers are living longer than ever.”
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2) It Would Cut Tax Rates For The Rich

What in the world is a proposal to cut income tax rates doing in a deficit-reduction plan in the first place? And what’s the need for it? Under the chairmen’s “Option 1” for taxes, individual income tax rates would decrease across the board -- but mostly for the highest bracket, where the rate would drop from 35 to 23 percent. The corporate tax rate, now 35 percent, would also be reduced, to 26 percent.

As New York Times opinion columnist Paul Krugman writes: “Even if those cuts are offset by supposed elimination of tax breaks elsewhere, balancing the budget is hard enough without giving out a lot of goodies -- goodies that fairly obviously, even without having the details, would go largely to the very affluent.”
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^^^WHAT THE HECK IS THIS ****?

3) It Would Screw The Middle Class

The single biggest cut in Social Security benefits in the chairmen’s plan comes from moving to a "more progressive benefit formula,” starting at the 50th percentile. That sounds all well and good until you realize that the median household income right now is about $50,000. So even as Congress debates whether a $250,000 annual income counts as middle class for tax cut purposes, the true middle class would see it Social Security benefits dramatically reduced through means testing under the chairmen’s plan.

Similarly, the plan calls for the elimination of the home mortgage exemption. Poor people don’t get it; rich people don’t need it; the people who’d get hurt are the middle class.
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4) It Uses ‘Caps’ To Disguise Major Cuts To Medicare (And Elsewhere)

The plan’s proposals for Medicare in the short run are heavy on euphemism. “Expand cost-sharing in Medicare to promote informed consumer health choices and spending,” of course, means increase fees. “[A]sking doctors and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth,” means pay cuts to health providers -- and plaintiffs’ rights.

But the long-term plan is basically to set a cap on the rate of growth of federal health expenditures. The rate would be capped at no more than 1 percent more than the increase in gross domestic product. Economist Brad DeLong’s reaction: " Oh my God! Ration city, here we come! What clowns vetted this thing?”

Should that target not be met, well, then, the president would be required to submit -- and Congress would be required to consider -- “reforms to lower spending.” The ones listed include such things as increasing fees or, interestingly enough, adding a robust government-run “public option” for health insurance. But much more draconian measures presumably would also have to be considered. There’s just no mention of them here.

Mandatory, theoretically enforceable caps are also a key to the chairmen’s plan for decreases in discretionary spending.
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5) It Makes A Start On Cutting Defense

As Spencer Ackerman writes for Wired, the chairmen are telling the military that it’s “going to have to lose some of its favorite gear.” Indeed, the plan calls for a reduction of more than $100 billion in annual defense spending. That’s real money even for the Pentagon; a bit less than 20 percent of its non-war-related budget. It would, for instance, reduce weapons purchases by 15 percent, freeze military and civilian pay, and reduce overseas bases by one-third.

That’s a very radical proposal by congressional standards. And it’s even in the ballpark of some of the most dramatic recommendations made by outside groups recently.

Rep. Barney Frank’s bipartisan Sustainable Defense Task Force recommended nearly $1 trillion in defense budget cuts over the next 10 years, and even as Bowles and Simpson were coming out with their plan on Wednesday, the Cato Institute was putting forth a list of 19 proposals that would reduce military spending by $1.2 trillion over the next 10 years.

One particularly ripe area for cutting mentioned by both groups, but not, apparently on the chairmen’s list, is cutting the nation’s bloated nuclear weapons arsenal.
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6) It’s Just What The Housing Market Needs

The version of the chairmen’s tax plan that brings the top individual income tax bracket down to 23 percent calls for the total elimination of all “tax expenditures” – including targeted deductions that have hitherto been considered in the best interests of the nation. The two biggest ones by far are the health insurance deduction for employers, and the mortgage interest deduction for homeowners.

There are many legitimate equity-related arguments to be made about the mortgage-interest deduction. But in the middle of a mortgage and foreclosure crisis, eliminating one of the most effective inducements for people to buy homes could well drive the housing market into an even deeper depression.
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7) It Would Declare War On Federal Workers

If the chairmen’s plan has a whipping boy, it’s the federal worker. Top of its list of “illustrative domestic cuts” are freezing federal salaries, bonuses, and other compensation for three years, cutting the federal workforce by 10 percent (by hiring two workers for every three who leave the government), and eliminating 250,000 non-defense service and staff contractors. That’ll certainly make government work better.
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8) It Would Hurt Veterans And Servicemembers

Firedoglake’s David Dayen sums up the plan’s effects on servicemembers and veterans: “They want to add co-pays to the Veterans’ Administration and TRICARE, as well as pushing individuals covered by TRICARE into an employer policy. They also want to freeze noncombat military pay for three years. And, they want to end schools for families on military bases, instead reintegrating soldier’s kids into the public school system (because that’s so easy for a military family that moves every other year).”
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9) It Would Kill An Incredibly Effective Anti-Poverty Tool

Among the “tax expenditures” that would be eliminated in order for the chairmen’s tax plan to bring the top individual income tax bracket down to 23 percent are the EITC, or Earned Income Tax Credit, and the child tax credit.

The EITC is one of the government’s single most effective antipoverty instruments, providing needed cash to poor and low-income workers. Congress originally approved it in 1975 in part to offset the burden of payroll taxes and as an incentive to work. And it has worked very well indeed.
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10) There Are A Lot Of Things Missing

When contemplating a plan like this one, it’s always worth thinking about what is not in it. And when it comes to increasing federal revenues in particular, there is a lot missing. There’s no increase in the relatively low tax rates paid by the richest households. (In fact, there’s a sharp decrease.) There’s no Wall Street financial speculation tax (or financial transaction tax). There’s no carbon tax. The plan proposes raising the contribution ceiling for Social Security to 90 percent (that would somewhat increase the current ceiling of $106,800). But why not 100 percent? There’s no Value Added Tax. And in terms of possible solutions, there’s no proposal to have the Federal Reserve simply continuing to buy the debt and hold it indefinitely.

You could even argue, as Sen. Bernie Sanders (I-Vt.) does, that the chairmen’s plan completely misses what should be its central targets, the real villains of the deficit. “The huge increase in the national debt in recent years,” Sanders points out, “was caused by two unpaid wars, tax breaks for the wealthy, a Medicare prescription drug bill written by the pharmaceutical industry, and the Wall Street bailout.”

Not by Social Security. Not by Medicare. Not by the middle class, or the poor, or the federal workers.

And for good measure, Dean Baker, co-director of the Center for Economic and Policy Research, points out that the whole project is misdirected: "The country is suffering from 9.6 percent unemployment with more than 25 million people unemployed, underemployed or who have given up looking for work altogether. Tens of millions of people are underwater in their mortgage and millions face the prospect of losing their home to foreclosure.

"This situation is not the result of government deficits," Baker argues. In fact, "[t]he large government deficits are the only factor sustaining demand following the loss of this bubble wealth. If today’s deficit were smaller, we would not be helping our children; we would just be putting their parents out of work."
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FranchiseBlade · Dec 3, 2010

rhadamanthus said:

The more I read about it, the more the deficit reduction panels' recommendations seem absolutely grotesque - hammering the poor and the middle class while rewarding the rich and the corporate. Of course, this is the very definition of the American "capitalist" methodology.

Anyhow, here is a sampling:

1) It Would Cut Social Security Benefits For Current And Future Retirees

2) It Would Cut Tax Rates For The Rich

^^^WHAT THE HECK IS THIS ****?

3) It Would Screw The Middle Class

4) It Uses ‘Caps’ To Disguise Major Cuts To Medicare (And Elsewhere)

5) It Makes A Start On Cutting Defense

6) It’s Just What The Housing Market Needs

7) It Would Declare War On Federal Workers

8) It Would Hurt Veterans And Servicemembers

9) It Would Kill An Incredibly Effective Anti-Poverty Tool

10) There Are A Lot Of Things Missing
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Great analysis. It won't let me rep you again, or I would have.

There are some good things in the recommendations, but there is a lot wrong with the approach.

I wouldn't mind doing means testing for social security, or things like that. BEcause of something I saw(I can't remember where) I do have a problem with raising the age. Because while lawyers and the like are living 12 years more, sanitation workers are only living one year longer.

So it's like saying because lawyers live longer garbage workers can't get social security until they are older.

Major · Dec 3, 2010

rhadamanthus said:

2) It Would Cut Tax Rates For The Rich

^^^WHAT THE HECK IS THIS ****?

3) It Would Screw The Middle Class
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I haven't read all the report in detail, but these two are highly misleading. These two things are supported in concept by economists on both sides of the aisle. The idea is to reduce the rates (both individual and corporate) while broadening the base of income that is taxed - taking out a lot of the exemptions. The exemptions benefit the rich the most, so this doesn't actually screw the middle/lower classes while lowering what the rich pay. And it provides for a larger basic exemption for all the millions of middle/lower class people that don't itemize right now.

There are lots of winners and losers, but it's not aligned by rich vs. poor. Domestic corporations benefit at the expense of international ones. Renters benefit, while wealthy home owners pay more, etc.

In my opinion, this is one of the absolute BEST parts of the proposal and one of the ones that probably gets the most bipartisan support from analysts.

rhadamanthus · Dec 3, 2010

Major said:

The exemptions benefit the rich the most, so this doesn't actually screw the middle/lower classes while lowering what the rich pay.
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I find it hard to believe that the mortgage exemption benefits the rich more than the middle class.

And it provides for a larger basic exemption for all the millions of middle/lower class people that don't itemize right now.
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This might change things, assuming "larger" means "significant".

I am still completely opposed to further tax breaks for the rich.

Major · Dec 3, 2010

rhadamanthus said:

I find it hard to believe that the mortgage exemption benefits the rich more than the middle class.
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Because of standard deductions, it does. The standard deduction for a married couple is something like $11,000. You have to have more than that in all your deductions to benefit at all. So if you have $10,000 in interest - that's about a $200,000 outstanding mortgage - you don't benefit at all unless you have plenty of other deductions. And even then, you only benefit by the amount that you are over the $11k you already got. Combine all of that with raising the $11k standard deduction to something higher and you'd really have to be paying a lot of interest to make it worth it.

The ones who benefit the most are the people with million dollar homes who go well above the standard deduction amounts - not only do they get the biggest deduction, but it comes off of a larger tax bracket. If a person making $50,000 and someone making $2 million have an equal amount of interest, the one that makes $50,000 only saves maybe 20% while the person making $2 million saves 35%. So we're actually subsidizing the same mortgage MORE for rich people than middle class people.

Besides all that, I believe the final plan actually only took away the deduction on homes over $500,000 anyway - though I'm not positive about that.

rhadamanthus said:

I am still completely opposed to further tax breaks for the rich.
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This is idea isn't a tax break for the rich. The idea is that the rich get so many deductions right now that they don't pay as much. If you get rid of the deductions but make them pay it on all their income, you'll raise more money.

thadeus · Dec 3, 2010

After 3 good decades of socializing the costs of doing business while privatizing the profits, I feel wholly justified in saying "**** the rich."

The system has been too strongly slanted in their favor for far too long - and look where that's got us.

The best economic policies for reducing the deficit should follow the great "**** the rich" plan.

rhadamanthus · Dec 3, 2010

Major said:

Because of standard deductions, it does. The standard deduction for a married couple is something like $11,000. You have to have more than that in all your deductions to benefit at all. So if you have $10,000 in interest - that's about a $200,000 outstanding mortgage - you don't benefit at all unless you have plenty of other deductions. And even then, you only benefit by the amount that you are over the $11k you already got. Combine all of that with raising the $11k standard deduction to something higher and you'd really have to be paying a lot of interest to make it worth it.

The ones who benefit the most are the people with million dollar homes who go well above the standard deduction amounts - not only do they get the biggest deduction, but it comes off of a larger tax bracket. If a person making $50,000 and someone making $2 million have an equal amount of interest, the one that makes $50,000 only saves maybe 20% while the person making $2 million saves 35%. So we're actually subsidizing the same mortgage MORE for rich people than middle class people.

Besides all that, I believe the final plan actually only took away the deduction on homes over $500,000 anyway - though I'm not positive about that.
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Good points, particularly about the standard deduction. However, I think you left out one facet worth investigation:

The person making 50k is far more concerned with saving on taxes than the person making 2MM. Even though the effect may be more pronounced percentage-wise for the rich, the actual impact of that tax break is far more beneficial for the middle-class income bracket. Put another way, while it may make great sense from the standpoint of government tax returns, it still leaves the middle-class family more squeezed than the rich. (Subjective terminology, I know - let's ignore that for the time being, we're talking generically)

So, yes - I see your point and it is very clearly demonstrated in this article, but let me quote a key passage to further my (minor) counterpoint:

If we get rid of the mortgage-interest deduction, about 22 percent of people in the 40th through 60th income percentiles will pay higher taxes —on average $215 a year, or about half a percent of current after-tax income. For those in the 60th through 80th percentiles, only 45 percent would see their taxes go up—by an average $689, about 1 percent of after-tax income. While there are tax hikes, they’re fairly small in relative terms, and what’s more, less than half of people in these income groups would have to pay them. And below the 40th percentile, almost no one would be affected by repealing the mortgage-interest deduction.

The impact is more substantial farther up the earnings ladder. In the 90th through 95th percentiles, for example, 74 percent of people would see their taxes rise, costing them an additional $2,643 per year on average, about 1.75 percent of their after-tax income. It’s true that repealing the deduction would (in relative terms) have only a small impact on the top 1 percent of earners, but that’s largely because, as AaronW noted in the comments thread, “for the truly wealthy, mortgage debt is a much smaller proportion of their income than for middle income earners.”
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I should note that I think the "small impact" statement would apply to the top 5 or even 10 percent, not just the top 1%. I think the statement above is far too lenient.

This is idea isn't a tax break for the rich. The idea is that the rich get so many deductions right now that they don't pay as much. If you get rid of the deductions but make them pay it on all their income, you'll raise more money.
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Why not keep their tax rates at 35% and get rid of the deductions? This is essentially Krugman's argument above - if we're trying to lower the deficit it sure seems like we're making it harder than we have to.

bigtexxx · Dec 3, 2010

thadeus said:

After 3 good decades of socializing the costs of doing business while privatizing the profits, I feel wholly justified in saying "**** the rich."

The system has been too strongly slanted in their favor for far too long - and look where that's got us.

The best economic policies for reducing the deficit should follow the great "**** the rich" plan.
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looks like you've been a good sheep and taken the liberals' class warfare line

Pushkin · Dec 3, 2010

The plan is obviously far from perfect, but it is a good starting point. Unfortunately, it will also probably be the end. I just do not see a good result for our kids if we do not accept some changes to our current situation.

In order to straighten out our mess of a growing deficit everyone will have to suffer. There will have to be deep and painful spending cuts. There will also need to be tax increases. The leaders of this panel decided to use disguised tax increases (like Reagan used) by lowering the tax rate, but increasing the tax base through reduced or eliminated deductions.

I do not see the problem with the increase in the age for full retirement benefits under social security. It is being fazed in over a very long time, which will allow modification if needed. Additionally, I believe the plan has proposals that make it easier on manual laborers (to obtain payment at a younger age) if they can no longer work. I believe the original retirement age in in the 1930s was 65. I would be surprised if the statistics show that the life expectancy of manual laborers has not increased by at least 4 years since the 1930s.

I think the one thing that shows this plan is a good starting point is that both the far left and the far right hate the plan.

glynch · Dec 3, 2010

Pushkin said:

The plan is obviously far from perfect, but it is a good starting point. Unfortunately, it will also probably be the end. I just do not see a good result for our kids if we do not accept some changes to our current situation.
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We can agree on the kids suffering, but the plan is deeply flawed and designed mainly to cut social security by some old wealthy office workers who don't neee it and feel like working till at least 70 so why shouln't the typical construction worker. Those lazy bums! In addition Obama's token Dem co-chair is a Wall Street guy and the wall Streeters deeply hate folks having retirment money that they don't get a cut on to manage. If we jack up the percentage of income the top 1% make from the 9% before Reagan to above the 25% now with Obama it will be bad for our kids. Trickle down is not working.

Also if we don't start investing in worthwhile projects like new infrastructure or to try to maintain our leadership in education and research we will be screwed. Our country has grown its way out of much bigger debt to GDP ratios in the past. Don't be a pessimist or buy into another version of trickle up for the rich by lowering the pensions of working class folks to pay off debt to bankers.

Even with a large debt the proper spending can be worthwhile. E.g from home finance. You have a heavy credit card burden. You have been accepted to a sure thing type program like a RN program. The thing to do is not to refuse to takeout more debt -- a student loan but keep working at your current low wage job for years till you can pay perhaps off your credit cards.

In order to straighten out our mess of a growing deficit everyone will have to suffer.
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The lower 98% have suffered. It is time for the welathy to do so. After the worst of the current recession it might be time to return the tax rate of the rest to what it was during more prosperous times in the 1950's thorugh the 1970's.

There will have to be deep and painful spending cuts.
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Yep we will have to skip a war or two. Some of the subisidies for wealthy and corporations and agri business will have to go.

There will also need to be tax increases. The leaders of this panel decided to use disguised tax increases (like Reagan used) by lowering the tax rate, but increasing the tax base through reduced or eliminated deductions.
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The tax increases will have to be primarily on the rich because they can afford and trickle down has been shown to be false spin.

I do not see the problem with the increase in the age for full retirement benefits under social security. It is being fazed in over a very long time, which will allow modification if needed. Additionally, I believe the plan has proposals that make it easier on manual laborers (to obtain payment at a younger age) if they can no longer work. I believe the original retirement age in in the 1930s was 65. I would be surprised if the statistics show that the life expectancy of manual laborers has not increased by at least 4 years since the 1930s.
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This is where the plan just becomes more trickle up for the rich. Statistics show that merely getting rid of the Bush tax breaks for the upper 2% would take care of any social security short fall for 75 years the length of any worthwhile projection.

I think the one thing that shows this plan is a good starting point is that both the far left and the far right hate the plan
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This a truism often voiced with no logic, but has some sort of emotional appeal I guess. When Copernicus said the earth revolved around the sun and the Pope said the Sun resolved around the earth, the true answer did not turn out to be sometime one did and sometimes the other. There is simply no logical reason why the best answer to even a socialpubic policy questions is in the middle.
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GladiatoRowdy · Dec 3, 2010

bigtexxx said:

looks like you've been a good sheep and taken the liberals' class warfare line
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Excuse me, but the rich have been waging successful class warfare for millennia.

rhadamanthus · Dec 6, 2010

Gratuitous and stupid cave nearly complete. Obama dooms himself further.

GOP, Dems nearing deal on taxes, jobless benefits

By JIM KUHNHENN, Associated Press Jim Kuhnhenn, Associated Press – 50 mins ago

WASHINGTON – An outline of a bipartisan economic package is emerging that would temporarily extend the Bush-era tax rates for all taxpayers, while extending jobless benefits for millions of Americans.

Differences remained over details, including White House demands for middle- and low-income tax credits. But Republicans and Democrats appeared to come together Sunday, raising the possibility of a deal in Congress by the end of the week.

Some Democrats continued to object to extending current tax rates for high earners.

But without action, lawmakers face the prospect of delivering a tax hike to all taxpayers at the end of the year, when the current rates expire and revert to higher pre-2001 and 2003 levels.

Negotiations between the Obama administration and a bipartisan group of lawmakers centered on a two-year extension of current rates.

At the same time, a jump in the unemployment rate to 9.8 percent is putting pressure on Republicans to accede to President Barack Obama's demand that Congress extend unemployment insurance for a year. GOP congressional leaders had opposed an extension of benefits without cuts elsewhere in the federal budget.
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More at the link.

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