Depending on who you ask, the fiscal cliff confrontation in Washington is either a massive standoff, or a massive mirage. "It is not going to happen soon," John Barrasso, the Senate's fourth-ranking Republican said yesterday. But top officials tell Politico that behind the scenes John Boehner and President Obama, who had what one insider called a "short, curt conversation" last night, have a pretty good idea what the deal will look like, even if there's a whole lot of posturing to be done before it's struck. Here's what we know:
- Politico's insiders expect about $1.2 trillion in tax hikes, at least $400 billion in entitlement cuts—mostly from Medicare—and $1.2 trillion in other spending cuts and "war savings."
- Even Republicans privately admit taxes will go up on people making more than $250,000, because there just aren't enough deductions to cut to bring in $1.2 trillion in revenue.
- But rates might not go all the way up to Clinton-era levels. After meeting with Obama, Erskine Bowles tells the Wall Street Journal that the president is flexible about the exact size of the increase, and several Democrats have confirmed as much.
- And when it comes to deductions, anything is on the table, including a fairly sacred cow: the mortgage interest deduction. The Washington Post reports that the popular $100 billion-a-year giveaway is getting a hard look since it mostly benefits wealthier Americans.
- The CEOs of 14 major corporations met with President Obama yesterday, and emerged sounding supportive of tax hikes, Reuters reports. Marriott CEO Arne Sorenson called him "resoundingly reasonable," while Goldman Sachs boss Lloyd Blankfein said that "if we had to lift up the marginal rate, I would do that."