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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
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And I'm Audie Cornish. And on this New Year's Eve, it's come down to Congress. Lawmakers have only a few hours left to agree on a deal preventing a jump in tax rates for all to levels last seen during the Clinton administration. Deep across-the-board spending cuts know as sequestration are also about to kick in unless Congress acts. Everyone agrees that negotiators are very close to a deal, but they also agree it's not done yet.
Joining us now from the Capitol to discuss where things stand as the clock ticks down is NPR congressional correspondent David Welna. Hi there, David.
DAVID WELNA, BYLINE: Hi, Audie.
CORNISH: We know that Vice President Joe Biden and Senate Republican Leader Mitch McConnell have been negotiating a deal to avert a fiscal shock. Can you tell us how much of it seems to have actually come together?
WELNA: Well, Audie, I think we have most of the pieces of the deal in place, but some key details have not been worked out yet. Earlier today, GOP leader McConnell emerged from negotiations being carried out mostly over the phone in his office and he went to the Senate floor to announce what sounded like some good news.
SENATOR MITCH MCCONNELL: I can report that we've reached an agreement on all of the tax, the tax issues. We are very, very close. As the president just said, the most important piece, the piece that has to be done now is preventing the tax hikes.
WELNA: People at the White House familiar with negotiation are also confirming there is a deal as far as taxes go and it amounts to a rather large concession by Democrats. Instead of extending Bush era tax cuts only for household income below a quarter million dollars, which is what President Obama has been urging, this deal would boost that threshold to $450,000, which means only the top 1 percent of taxpayers would have to start paying Clinton era tax rates of about 5 percentage points more than what they're paying now and only on very high levels of income.
Those same people would see tax rates for capital gains and dividends rise from 15 to 20 percent and the threshold for taxing large estates would stay where it is at $5 million while the rate would rise from 35 to 40 percent. And beyond that, emergency unemployment insurance would be extended for a year. The alternative minimum tax would go away for most tax payers. Medicare doctors would not be hit with a 27 percent cut in payments and a variety of other tax breaks would also be extended.
CORNISH: So what's become the main sticking point for closing a deal?
WELNA: Well, according to Republicans, it's President Obama's insistence that the $110 billion in automatic spending cuts known as the sequester be suspended for a year or two while a larger deficit reduction deal is worked out. Republicans accuse the president today of holding a deal hostage to getting those cuts waived and they say that even without such a waiver, the scale is already sorely lacking in anything that reduces the deficit.
And some Tea Party-backed Republicans are balking at any deal that lets taxes go up, but does not push down spending. Here's Kentucky Senator Rand Paul today.
SENATOR RAND PAUL: We, the Republican Party, the party of limited government and low taxation, should have no part in this. We should have no fingerprints on this and we should in no way support anything that raises taxes because it's bad economic policy. So I, for one, will not support any proposal that comes out that does not cut spending and raises taxes.
CORNISH: David, just a few seconds left, but how was President Obama's appearance received on Capitol Hill?
WELNA: Not very well by Republicans. Right after the president spoke, Arizona Senator John McCain said that he was antagonizing House Republicans with his words and in McCain's words, throwing kerosene on the fire for conservatives who'd vowed not to raise anyone's taxes.
CORNISH: That's NPR's congressional correspondent David Welna speaking to us from the Capitol. David, thank you.
WELNA: You're quite welcome, Audie.
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