It appears little progress has been made within the Joint Committee toward a deficit reduction deal. It has been reported that Democrats have indicated their acceptance of some of the targets of the GOP’s plan (in terms of spending cuts and revenue increases) but without an adjustment to the Medicare retirement age, any extension of the 2010 Tax Act and changes to inflation adjustments and with elements of the President’s jobs proposal included, the combination of which were unacceptable to Republicans. Meanwhile, Republicans and Democrats exchanged sharp rhetoric and debated whether Democrats have offered any proposals. House Speaker John Boehner (R-OH) said the legislators would have to “pull a rabbit out of a hat” in order to succeed, but five days can be a long time in Washington and anything is possible.
Outside the Joint Committee, Congressman Jim McDermott (D-WA) introduced legislation (HR 3467) to significantly increase the burden of the estate tax by returning to pre-2001 levels (55% rate and $1 million exemption with restored state estate tax credit). The so-called “Sensible Estate Tax Act” also would eliminate valuation discounts for family-owned interests, restrict the use of grantor-retained annuity trusts (GRATs), increase reporting requirements for smaller estates and limit the duration of generation-skipping transfer (GST) tax exemptions. The bill is not expected to advance in the Republican-controlled House, but it is an important indicator of the policy preferences of progressives within the Democratic Caucus (although the position of the President and party leadership remains a 45% rate and $3.5 million exemption).