Fiscal Framework Emerges: Tax Now, Cut Later

0 Posted by - November 29, 2012 - Career & Business, Conspiracies & Scandals, Economics, Money

 Fiscal Framework Emerges: Tax Now, Cut LaterListen to top Democrats and Republicans talk on camera, and it sounds like they could not be further apart on a year-end tax-and-spending deal – a down payment on a $4 trillion grand bargain.

But behind the scenes, top officials who have been involved in the talks for many months say the contours of a deal – including the size of tax hikes and spending cuts it will likely contain — are starting to take shape.

Cut through the fog, and here’s what to expect: Taxes will go up just shy of $1.2 trillion — the middle ground of what President Barack Obama wants and what Republicans say they could stomach. Entitlement programs, mainly Medicare, will be cut by no less than $400 billion – and perhaps a lot more, to get Republicans to swallow those tax hikes. There will be at least $1.2 trillion in spending cuts and “war savings.” And any final deal will come not by a group effort but in a private deal between two men: Obama and House Speaker John Boehner (R-Ohio). The two men had what one insider described as a short, curt conversation Wednesday night — but the private lines of communications remain very much open.

No doubt, there will be lots of huffing and puffing before any deal can be had. And, no doubt, Obama and Congress could easily botch any or all three of the white-knuckle moments soon to hit this town: the automatic spending cuts and expiration of the Bush tax cuts, both of which kick in at the end of this year, and the federal debt limit that hits early next.

But it’s clear to veterans of this budget fight a deal is there to be done. Here is the state of play that is sketched out by top officials in both parties:

CONTINUED at Politico.

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