1) Raising the top rates of the income tax on the wealthy although the cutoff for raising rates will be raised from $250000 to some higher number and the marginal rates agreed upon will be less than those which were present during the Clinton years.
2) Deductions for the wealthy will be reduced or eliminated so that the total additional taxation from these two steps will approximate 1.2 trillion dollars over ten years.
3) Entitlements will be cut by somewhere the $350 billion mentioned by Obama and the $800 billion mentioned by Boehner.
4) Sufficient spending cuts will be found to prevent the imposition of sequestration.
Many have pointed out that there is not enough time left this year to agree on the details of any of this except for the raise in the tax rates. Indeed, many suggest that once the rates have been raised and sequestration postponed, there will be no further agreements. The Republicans will give in to the main Obama demand and get nothing in return.
I suggest a remedy for that problem. Whatever deal is structured should include the following provision: tax rates can be raised, however, in the event that within six months there is not agreement reached on a fixed amount of entitlement reform, spending cuts and tax code overhaul, then those tax increases will be repealed. that will give the Democrats the incentive to continue to negotiate in order to preserve the gains that they desire.
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