This editorial in the New York Times explains the current state of the fiscal cliff talks pretty well, IMO. In a nutshell, the President offered to split the difference over tax rate increases, and called for raising tax rates on people making $400,000 instead of $250,000. He also proposed a lot of spending cuts, including a plan to change the way Social Security cost-of-living increases are calculated so that benefits won’t increase as much as in the past.
As I understand it, Social Security increases currently are increased according to the cost of goods and services paid by urban wage earners. If the price of steak goes up, the CPI goes up and Social Security goes up. But the proposed change assumes that people will stop buying as much steak and will opt for chicken instead, so that version of the CPI wouldn’t go up. I’m seeing a race to the bottom, from porterhouse to Purina.
BTW, the story that the President was going to agree to an increase in the age of Medicare eligibility turned out to be wrong, as I suspected. I think it’s unlikely there’s going to be a deal at all.