Concessions have made from the White House on the amount of tax revenue and income thresholds.
President Obama lowered his demand for revenue by $200 billion and increased the income threshold to $400,000 for increased tax rates.
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He wants a large enough debt ceiling to cover two years and would agree to use a different yardstick to measure cost-of-living raises for Social Security benefits.
House Speaker John Boehner rejected the proposal yesterday but he and Majority Leader Eric Cantor will update House Republicans today on further discussions.
It’s possible that a deal somewhere between the $1 trillion in new revenues and spending cuts could be made with an agreement to raise taxes on top wage earners in 2013. The President might then accept more upfront spending cuts and cancel others.
It’s also possible that negotiations could still collapse. Each side seems to know the realm of possibilities and it’s a question of whether either will take the final step to seal a deal.
Both sides are discussing policy changes on which they refused to budge two weeks ago.
The President’s proposal did not meet Boehner’s demand that each dollar of tax revenues raised be matched by a dollar of spending cuts.
The proposal would also raise the capital gains tax rate to 20% and the estate tax to 45% with a $3.5 million individual exclusion.
The President and Boehner met on Monday for the third time in nine days and were joined by Treasury Secretary Timothy Geithner. So there is now greater hope that a bipartisan deal
can be reached.