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December 06, 2012

Fiscal Cliff Deal Is In Sight But How Big?

Despite the rhetoric on both sides, First Read insists "everything out there suggests" that we're not going off the fiscal cliff.

"But here's the big question: Can Washington get a large deal? One option to avoid the fiscal cliff is to simply extend the Bush-era tax cuts for income below $250,000 and punt the rest of the fight until next year, which would produce another political stalemate and a potential battle over raising the debt ceiling. The other option is to construct a big deal to take care of everything now (or at least create the framework for getting it done). The first option is the easy way out, but it only postpones the fight. The second option is harder, but it's also the opportunity for a legacy. Which option will President Obama and congressional Republicans ultimately pursue? That's what the next two weeks are about."

"One thing the next two weeks are NOT about is going over the cliff. If no big deal is achieved, then there will be a middle-class tax rate extension bill passed that allows rates on the top 2% to go up either to 37% or to 39%."

Wonk Wire: Democrats exude confidence amid slow fiscal cliff talks.


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