Last night, the Senate voted on and approved a package to avert most components of the fiscal cliff, which we took a preliminary review of last night . Today, however, there are many more details to review now that the legislation is available and JCT has estimated  the revenue effects.
In short, the package would permanently extend most of the 2001/2003/2010 tax cuts for incomes below $400,000/$450,000 while letting the ordinary rate above that threshold rise to 39.6 percent and the capital gains and dividends rates to 20 percent; it would increase the estate tax rate from 35 to 40 percent; it would permanently patch the AMT; and it would extend various “tax extenders” for 2012 and 2013. On the spending side, the package would delay the sequester for two months, enact a doc fix for a year, extend unemployment benefits for a year, extend the farm bill for a year, and enact about $50 billion in spending and revenue offsets to pay for the sequester delay and doc fix.
Based on more recent estimates, CRFB estimates that the entire package would increase deficits by about $4.6 trillion over the next ten years compared to current law projections (assuming everything expires or activates as called for) but would decrease deficits and debt by about $650 billion compared to more realistic current policy projections. These revised estimates continue to show that debt would remain on a upward path over the next ten years -- reaching 79 percent of GDP by 2022 – if policymakers are unable to offset a repeal of the sequester and Sustainable Growth Rate. That would be a slight improvement over the CRFB Realistic Projections , which show debt rising to over 81 percent by 2022. Clearly, lawmakers will need to go further, however, to put in place much more savings.
Below is our effort to roughly estimate the parameters of the deal.
Savings and Costs in the Fiscal Cliff Package
So what’s to like and dislike about the deal? Below we explain:
CRFB hopes that lawmakers will return the table very quickly in the new year to enact savings sufficient in size and scope to solve the country's debt problems.