Aug. 27, 2014 SIGN IN | REGISTER

Clock Runs Out on Fiscal Cliff, Despite Agreement in Senate

But talks continued well into the evening. Republican senators and aides said the two sides had agreed to almost every provision in a deal when Democrats pushed Monday morning for a short-term delay in the sequester that would be offset with new tax revenue or unspecified spending cuts in 2015.

Negotiators agreed to renew extended unemployment compensation benefits for a year without offsetting the cost. Offsets were being discussed for the cost of calling off scheduled cuts in Medicare payments to health care providers.

Bob Corker, R-Tenn., said McConnell called for passage of a more limited deal “because of the position they [Democrats] have been taking all day — it’s the issue of deciding that, instead of substituting other [spending] reductions for the sequester, you’re going to substitute revenues for it. That is like a 180-degree reversal from where we’ve been on that issue.”

A GOP aide said Republicans offered $100 billion in spending cuts that could be used to offset the sequester delay, saying those were similar to cuts that have been used as offsets in the past. “So far they’ve rejected all of those,” he said. “Given that this was a late ask, after we already had a deal, there’s some significant doubt about whether Democrats want a deal.”

Tentative Deal on Taxes

Sources familiar with the negotiations said the agreement on taxes would split the difference between recent proposals by the two parties, extending current tax rates for individuals’ income up to $400,000 and couples’ income up to $450,000.

Tax rates on capital gains and dividends would increase from 15 percent to 20 percent for those above those income thresholds, while personal exemption and itemized deduction phase-outs would be reinstated for families earning more than $250,000.

Although negotiators have had trouble reaching an accord on the estate tax, they appeared to compromise at taxing estates worth more than $5.12 million at a top rate of 40 percent. Democrats wanted to set the estate tax rate at 45 percent, while Republicans sought continuation of the current 35 percent top rate.

As news of the framework for an agreement spread on Monday, there appeared to be anxiety among liberals that the White House had conceded too much in setting the new rate thresholds.

Tom Harkin, D-Iowa, described the emerging framework as “grossly unfair” because, he said, it would include permanent tax policies but only a temporary extension of unemployment benefits and overall not do enough to assist low and middle-income earners. “If we’re going to have some kind of a deal, the deal must be one that really does favor the middle class, the real middle class, those that are making $50,000, $60,000, $70,000 a year,” he said.

However, Barbara Boxer, D-Calif., called an apparent decision to renew extended unemployment benefits, “very, very important.”

Sam Goldfarb and Paul M. Krawzak contributed to this report.

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