In the news

Withholding Tax Update
The Senate voted Monday to take up the "3 percent withholding" bill that would repeal the tax provision that mandates federal, state and local governments to withhold 3 percent of nearly all of their contract payments beginning in 2013. The bill is similar to a House measure approved last month. The legislation’s $11 billion cost in lost tax revenue would be paid for by closing a loophole in the health care law that Republicans argue allow some middle-class Americans to qualify for Medicaid. The measure could get a vote on final passage as soon as Thursday if an agreement is reached to do so. More on this story.

Republicans' "revenue" deal
Republicans want to “raise” revenue by limiting tax deductions, capping write-offs on charities, state, and local taxes, and mortgage interest payments as a percentage of each tax filer’s gross income. In exchange, they want to keep Bush tax cuts – set to expire Dec. 2012 – permanent. These include:

• Keep income tax rates at 35% or lowered to 25 to 28%. 
• Keep capital gain and dividend income tax rates at 15% instead of 23.8% or higher after 2013. 

They also want to raise retirement age.

More on this story here and here.

Both Parties Looking Ahead 
Both parties are beyond the outcome from the Deficit Committee and laying groundwork for the next battle. Concerned GOP Sens. John McCain (Ariz.) and Lindsey Graham(S.C.) sent a letter to the Pentagon on Thursday night requesting a detailed report of the impacts the cuts might have on national security, and they are working on fallback legislation to repeal and perhaps replace the defense cuts. More on this story here.

Democrats are preparing for an end-of-year fight over extending emergency unemployment insurance benefits.The current one-year extension expires Dec. 31, and Democrats on the House Ways and Means Committee on Thursday introduced a bill that would extend benefits through the end of 2012. Fact sheet of the bill here. More on this story here.