A Fiscal Cliff Deal

House Speaker John Boehner has made a decision that will make some wealthy Americans squeal, while making most Americans smile.

Boehner, after weeks of rhetoric that Republicans and Democrats were miles apart on fiscal cliff talks, relented on a stance that high earners shouldn’t see higher taxes. Now, Boehner has agreed to raise taxes on Americans making more than $1 million, reversing an earlier position that all Bush Era tax cuts should stand.

Move up http://i.forbesimg.com t Move down

The move by Boehner is particularly significant for several reasons. First, it’s a gesture toward compromise— Democrats wanted taxes raised on Americans making more than $250,000, while Republicans, at first, would have none of it—and suggests the two sides may finally become serious about averting the fiscal cliff.

 Next, the tax hikes would increase federal coffers by some $1 trillion over 10 years; President Obama has demanded $1.4 trillion in new revenue, but at least the pols’ figures are growing closer. And Boehener’s decision is a refreshing signal that, when confronted with dire forecasts—like the one that predicts a recession to start 2013 if the fiscal cliff happens—Washington, D.C can put aside partisinism and past promises. Though, I imagine that Grover Norsquist takes little glee from Boehner’s shift.

Republicans are the first to sacrifice a sacred cow. Now, Democrats must too. What mostly impedes progress? Some $200 billion. That’s the difference between the spending cuts in federal health care programs that Republicans want ($600 billion) and Democrats want ($400 billion).

Investors will probably take this move by the pols as evidence that a deal will eventually come. We haven’t piled out of stocks quite like you might think. Indeed, the major benchmarks this month have gained about 4%. There hasn’t been that complete flight to safety—into the cash-generative arms of Procter & Gamble, Coca-Cola and Walt Disney—and away from risk—fleeing the speculation around a Research In Motion comeback or better times for Alpha Natural.

Indeed, stocks this morning ticked higher. Dow Jones industrial average futures rose 0.7% to 13,096.00. S&P 500 futures gained 0.1% to 1,407.41.
Still, the cliff today looks less like a chasm than it did just a few days earlier