On his way out of a House Republican Conference meeting, Rep. Spencer Bachus (R-AL) said the bipartisan “fiscal cliff” compromise will “go back to the Senate,” the National Review’s Robert Costa reports. If true, this would mean the House will not agree with the compromise negotiated Monday by Vice President Joe Biden and Senate Minority Leader Mitch McConnell (R-KY).

Breaking: Leaving mtg, Rep. Spencer Bachus says deal will “go back to the Senate.”

— Robert Costa (@robertcostaNRO) January 1, 2013

A just-released analysis by the Congressional Budget Office estimates that the bill would increase the nation’s budget deficit by nearly $4 trillion over the next ten years (as compared to allowing the tax cuts to expire and deep spending cuts to take effect).

Senate Minority Leader Mitch McConnell (R-KY) and Vice President Joe Biden have reportedly reached an agreement that would solve the tax side of the debate over the so-called “fiscal cliff,” the package of tax increases and spending cuts that will begin automatically at midnight tonight.

Senate Majority Leader Harry Reid (D-NV) and the Democratic caucus have not yet indicated support for the compromise, which extends most of the Bush tax cuts and other tax provisions, and while the Senate may vote tonight, no vote is expected in the House before tonight’s deadline. Here is a breakdown of the different provisions of the reported compromise:

Bush tax cuts: The deal would extend all of the Bush tax cuts for incomes below $400,000 for individuals and $450,000 for families, while reinstating the Clinton-era 39.6 percent tax rate for income above those thresholds. It will also push the capital gains rate on investment income back to 20 percent for income above $400,000 for individuals and $450,000 for families. President Obama had asked for an extension of rates only for incomes below $250,000.

Stimulus tax credits: Three tax credits expanded as part of the stimulus will be extended for one year as part of the compromise. The America’s Opportunity Tax Credit, Child Tax Credit, and Earned Income Tax Credit collectively benefit nearly 20 million Americans each year, and extending them was a priority for Obama and Democrats. Republicans allowed all three to expire in tax legislation earlier this year.

Payroll tax cut: The payroll tax cut would expire as part of this compromise. The payroll tax cut, which benefits all wage-earning workers, is the most damaging piece of the “fiscal cliff” according to the Congressional Budget Office. Republicans have opposed extending the payroll tax cut in the past; many Democrats opposed its extension over fears that it would undermine Social Security, which it helps fund.

Unemployment insurance: The federal unemployment insurance program would be extended for one year under this deal. Without an extension, more than 2 million would lose benefits at the beginning of 2013, while another million would lose them in the early part of the year.

Estate tax: The estate tax was set to revert to its Clinton-era levels, where it was taxed at 55 percent after a $1 million exemption. This deal would set the exemption at $5 million and tax at a 40 percent rate after that — at a cost of $375 billion over 10 years compared to the Clinton level.

Other provisions: The deal would also include a permanent fix to the Alternative Minimum Tax and a one-year “doc fix,” which would prevent cuts in provider payments through Medicare. It also extends certain corporate tax provisions for another year.

The reported McConnell-Biden compromise does not deal with the spending cuts side of the fiscal cliff, though CNN’s Dana Bash reported that the sequester may simply be delayed for two months. The spending cuts are the part of the fiscal cliff that the Congressional Budget Office says would be the most damaging to America’s economic growth. It also does not include an increase in the debt ceiling, setting up another fight over the coming months like the one that created the fiscal cliff in the first place.

When the nonpartisan Congressional Research Service issued a report that found high-income tax cuts have little impact on economic growth, Republicans attempted to spike it. The CRS ultimately pulled the report, but after revising some language, clarifying its methodology, and adding more citations, CRS re-issued the report Thursday.

The new report’s findings, unsurprisingly, are the exact same. Lowering income tax rates and the rate on capital gains investment income hasn’t helped economic growth, but it has resulted in more income inequality:

The results of the analysis in this report suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top statutory tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. But as a small proportion of taxpayers are affected by changes in the top statutory tax rates, this finding is not unexpected.

However, the top tax rate reductions appear to be correlated with the increasing concentration of income at the top of the income distribution.

Both the Congressional Budget Office and International Monetary Fund have issued reports that come to similar conclusions. And as these charts from Michael Linden, the director of tax and budget policy at the Center for American Progress show, neither the general supply-side policies favored by Republicans nor the tax cuts for the rich conservatives say are necessary actually lead to faster economic growth:

As the Bush tax cuts are scheduled to expire automatically in a few weeks, some Republicans are urging their leaders to accept President Obama’s deal to allow tax rates to rise for the top 2 percent of earners, while looking ahead to the next budget showdown. The US will hit its debt limit in early 2013, and the GOP sees an opportunity to once again use the threat of default to force Democrats to concede to devastating cuts to entitlement programs along with more tax cuts for the wealthy.

Publicly, House Speaker John Boehner (R-OH) offered another deal to Obama on Tuesday night claiming to concede more than $800 billion in tax revenue — still without any tax increases. As more details of Boehner’s proposal emerge, the illusion of compromise has faded to reveal the same plan Republicans have pushed for all along. Here are 5 problems with the offer:

1) It will hurt the middle class. Refusing to raise taxes on the top 2 percent, the Republicans’ plan to raise more than $800 billion solely from closing loopholes would inevitably hurt middle class Americans. While they have not specified which loopholes they would close, Republicans would need to close off a huge range of deductions mainly employed by middle income earners, including, as Greg Sargent lists, “the write-offs for employee provided health insurance, interest from municipal bonds, and money invested in retirement plans, to itemized deductions for charitable contributions, state and local taxes, and mortgage interest payments.”

2) Skewed to help the rich. This new deal could also make the Bush tax cuts permanent for the top 2 percent of Americans, despite the pile of evidence that high-income tax cuts do nothing for the economy and exacerbate income inequality. The additional revenue Republicans are proposing would be consumed by maintaining these lowered tax rates.

3) Republicans will get everything they want. Boehner’s new offer is not actually a compromise; his plan to raise $800 billion in revenue without any tax increase is similar to former presidential candidate Mitt Romney’s proposal, right down to the impossible math. If the GOP holds the debt ceiling hostage, they can try to secure the spending cuts they’ve been after and lower tax rates through so-called tax reform.

4) Very painful cuts for Medicare beneficiaries. Boehner is hoping to pressure the president into conceding even more spending cuts than are already on the table. This includes “very painful cuts to Medicare,” as Sen. Bob Corker (R-TN) boasted. Medicaid and Social Security enrollees would also see their benefits gutted.

5) Gambling with America’s credit. Ratings agency Standard & Poor downgraded U.S. credit for the first time in history last year after Republicans brought the nation to the brink of default, even citing Republican intransigence on tax increases as a reason for the move. The fight to raise the debt limit also cost taxpayers $1.3 billion in 2011. With Republicans poised to pull the same shenanigans in the fiscal cliff talks, the US risks repeating history in 2013.

Earlier this week, House Minority Leader Nancy Pelosi (D-CA) sought to overcome the GOP’s resistance to voting on a Senate-passed measure that would extend Bush-era tax cuts to middle class Americans by introducing a discharge petition that, if signed by 218 members, could force the House to take-up the measure. Some Republicans, weary of the overwhelming public support for raising rates on the richest two percent of Americans, have urged the GOP leadership to allow the vote, but have yet to formally sign Pelosi’s discharge. Republican leadership continues to insist on extending tax cuts for all Americans, while President Obama said he would only sign legislation that would maintain reductions for individuals who earn $200,000 or less and couples who make $250,000 or less.

But in a recent photo-op with constituents, Rep. John Duncan (R-TN) explained why Republicans are refusing to give in. The Tennessee Republican admitted that he won’t vote to extend tax cuts to 98 percent of Americans because doing so would cede control to Democrats:

CONSTITUENT 1: Are you going to sign the discharge petition?

DUNCAN: Ummm…Oh no, I’m not. No Ma’am. I’m not about to sign the discharge petition.

CONSTITUENT 2: Well if you sign the discharge petition, you’ll immediately etend the tax cuts for the middle class.

CONSTITUENT 1: Yea, why would you not want to do that? [...]

DUNCAN: It would take too long to explain that. I’m not going to give control of the floor to the Democrats.

Watch it:

If Congress does not act before the end of the year, taxes will increase for all Americans. Polls show that “nearly half” of Americans believe tax cuts “for people earning more than $250,000 should expire while they should continue for those earning less, while 32 percent said the tax cuts should continue for everyone.”

(HT: BuzzFeed)

Sen. Rand Paul (R-KY) has joined the growing number of Republicans calling on House Speaker John Boehner (R-OH) and GOP leadership to allow the Bush tax cuts to expire on the richest Americans as part of a package to avoid the so-called fiscal cliff. In an interview with Politico, Paul said he is urging the GOP to vote “present” on such a package:

Sen. Rand Paul (R-Ky.) said he was urging House Republicans to accept passage of the Democratic tax bill by voting “present” on the measure. At that point, the bill would come to the Senate, where he expected it also would pass on partisan lines.

“And then the Democrats are the party of higher taxes and we’re still the party of lower taxes,” Paul said in an interview. “And we have elections over that and people decide which party they like best.”

Republican Rep. Tom Cole (OK) was the first to publicly to break ranks and ask leadership to immediately extend the middle-income Bush tax cuts and since then at least four other colleagues have come out in support of the idea. However, none have signed the discharge petition filed by House Minority Leader Nancy Pelosi (D-CA) that would force the House to vote on the middle-income tax cut extension.

Republican Rep. Tom Cole (OK) broke ranks within his party last week, urging GOP members to immediately extend the middle-income Bush tax cuts, those that primarily affect the middle class and give a tax cut to 98 percent of all Americans. “I think we ought to take the 98 percent deal right now,” Cole said.

Since then, at least four other Republican House members have come out in support of such an idea:

Rep. Robert Dold (R-IL): “Tom Cole is talking about passing the ones that are out there so there could be more certainty, and I think that would be a positive step,” Dold told National Journal. “Let’s make sure we aren’t raising the taxes on the vast majority first.”

Rep. Mary Bono Mack (R-CA): “I have to say that if you’re going to sign me up with a camp, I like what Tom Cole has to say,” Bono Mack told CNN. “I know you had him on the show earlier at length. And I think Tom presented a very thoughtful, articulate position.”

Rep. Kay Granger (R-TX): Granger told Bloomberg that Cole’s plan is “just the right thing to do.”

Rep. Walter Jones (R-NC): According to the Huffington Post, Jones could be “willing to pass the Senate bill to ensure 98 percent of taxpayers don’t get hit with a hike” if no deal can get done.

Despite these indications of support, none of the five Republicans has signed the discharge petition filed by House Minority Leader Nancy Pelosi (D-CA) that would force the House to vote on the middle-income tax cut extension. Only Jones has indicated that he may sign the petition at a later date. The petition needs 25 Republican signatures to get the majority it would need to mandate a vote, but if these Republicans are serious about extending tax cuts for 98 percent of Americans, instead of holding out for tax cuts for the rich, the petition they haven’t signed gives them that opportunity.

The sticking point of the negotiations over the so-called “fiscal cliff” has been the Bush tax cuts for the wealthy, which Republicans insist must be extended and President Obama and the Democrats insist must end. (Both sides agree on maintaining tax cuts for 98 percent of Americans.)

Of course, the reason the fiscal cliff is looming in the first place is because of concerns over deficit spending, and the cliff represents a sudden and massive reduction in the size of the country’s budget hole. Not all the fiscal cliff’s policy changes arrive at once, but should all of them be enacted, the Congressional Budget Office predicts a new recession over the course of 2013.

The GOP’s fiscal cliff offer says nothing about retaining the payroll tax cut or emergency unemployment benefits (EUC), both of which end come January 1. But as the Economic Policy Institute found, extending EUC creates five times as many jobs per dollar of budget deficit as the Bush income tax cuts for the wealthy:

Extending just the upper-income Bush tax cuts would boost GDP growth by 0.1 percentage point, increasing nonfarm payroll employment in 2013 by only 102,000 jobs—far less than one-tenth the impact of continuing the temporary ad hoc stimulus measures. Continuing EUC would do three times as much in terms of GDP growth and support 300,000 to 400,000 jobs. In terms of jobs created per dollar of budget deficit, EUC is more than five times as effective as the Bush income tax cuts for the wealthy. Combine them with the Bush estate tax cuts and they are one-seventh as effective as EUC.

That’s consistent with earlier work from EPI which determined that the expiration of the stimulus measures and the scheduled cuts to government spending were by far the most economically damaging aspects of the fiscal cliff. Meanwhile, the end of the Bush tax cuts for the wealthy was far less severe — in fact, in dollar terms their expiration did more to repair the budget than to hurt job growth. CBO came to a very similar conclusion.

Allowing the payroll tax cut to expire would result in $1,000 less take home pay for the average family.

Republicans and Democrats both agree that the middle-income portion of the Bush tax cuts should be extended before they expire at the end of the year, a move that would maintain current tax rates on all income under $250,000 and avoid painful tax hikes on middle-class families at the start of 2013. The Senate has already passed legislation to extend those tax cuts, but House Republicans have refused to do the same until Democrats agree to maintain the tax cuts on high-incomes.

With expiration of the tax cuts just 26 days away and Democrats promising not to extend the Bush tax cuts on high-incomes, Sen. Olympia Snowe (R-ME) and “a handful of other Republicans” want the House GOP to pass the middle-income tax cuts right now, the New York Times reports:

Senator Olympia J. Snowe of Maine, who is retiring, joined a handful of other Republicans on Tuesday suggesting that Congress should pass the middle-class tax cut extensions now, then leave the fight over taxes and spending until later. Americans, she said, “should not even be questioning that we will ultimately raise taxes on low- to middle-income people.” Congress could take that off the table “while you’re grappling with tax cuts for the wealthy,” she said.

Snowe joined Reps. Tom Cole (R-OK) and Walter Jones (R-NC) among Republicans who have suggested that the GOP should immediately pass the middle-income extension. Democrats filed a petition yesterday to force a House vote on the middle-income tax cuts, but it has so far garnered no Republican signatures.

While Republican leaders have said they want to extend the entirety of the Bush tax cuts to avoid tax hikes on any Americans, legislation proposed by both House and Senate Republicans this fall allows the expiration of three important tax credits that would result in tax increases on 10 times as many Americans — most of them lower- and middle-class — than the Democratic proposal.