On the Fiscal Cliff, Republicans Are Blowing a Great Deal

Senate Minority Leader Mitch McConnell speaks to reporters following a Senate policy luncheon on Capitol Hill on Dec. 11. Photograph by Luke Sharrett/The New York Times via Redux

(Updated to include liberal anguish)

On Sunday evening, after a long, fruitless day of haggling, talks between Harry Reid and Mitch McConnell to avert the fiscal cliff broke down and the Senate adjourned until Monday. Republicans had spent much of Sunday pushing to get Social Security cuts included in the deal, and when that effort fell apart, momentum toward a resolution disappeared.

If Republicans don’t have a change of heart fast, we’ll go over the cliff, and they’ll waste a huge opportunity—even without the Social Security cuts, Democrats are offering them an incredibly good deal.

With the caveat that no reporter is privy to the details of the offers being swapped, here is the deal that seemed to be emerging: Democrats would get an extension of unemployment benefits for 2.1 million people; they’d patch the alternative minimum tax for a year to protect the middle class from sharp tax hikes; and they’d implement a “doc fix” to ensure that Medicare reimbursement rates to doctors don’t fall precipitously and limit patients’ access to medical care. Republicans would get to preserve Bush-era income tax rates for households making up to $400,000 (rather than the $250,000 limit Democrats prefer). They’d also get a lower tax rate and a much higher threshold for inheritance taxes (set to revert to 55 percent on estates of more than $1 million on Tuesday). And significantly, Republicans would hold onto their greatest point of leverage in upcoming negotiations over entitlement cuts, because the deal wouldn’t raise the debt limit.

Here’s what’s important about everything Democrats would get: It’s temporary; everything expires (presumably) within a year. Here’s what’s important about what Republicans would get: it’s permanent. The tax rates won’t expire.

That means Democrats are offering a huge gift to Republicans and getting almost nothing in return because on Jan. 1, if no deal is struck, Democrats will get even more revenue than they’re asking for without conceding a thing. And if, as polls suggest, voters would blame Republicans for going over the cliff, Democrats are also offering to save Republicans from their worst impulses—which, at least for the time being, since they haven’t yet agreed, is to reject this deal.

I’m amazed liberals aren’t furious. (Update: Jonathan Chait of New York is furious. Update II: More anguish from Slate’s Matt Yglesias, Talking Points Memo’s Brian Beutler, and Democratic Sen. Tom Harkin of Iowa, who bemoans “a very bad deal.”)

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