Let me try to explain what this means. The "Alternative Minimum Tax" is kind of a parallel tax rate, created in 1969, designed to ensure that very rich taxpayers didn't amass so many deductions that they could avoid paying any taxes. If your tax rate falls below your "alternative minimum tax rate," then you have to pay the AMT rate instead. It's sort of a failsafe tax rate.
The AMT has, over the decades, inadvertently grown to a point where it hits non-rich taxpayers, especially ones in high-tax states. Congress has responded by continually passing "patches" that keep the AMT from growing. Since these patches are passed generally a year or two at a time, the law assumes that the AMT will continue to grow in size and raise taxes at lower and lower income levels. The AMT is one of the differences between the budget baseline that assumes current law, and which shows the deficit falling to a modest level -- and the budget projections that assume current policy.
So according to Newton-Small, one possible deal will raise a lot of taxes, but offset the revenue by permanently fixing the AMT. That way, conservatives can say that they didn't vote for a net tax hike -- they just voted to close some loopholes and plow the revenue back into other tax reductions. This allows them to avoid contradicting their sacred pledge to Grover Norquist never to support a revenue increase.
But wait, you ask! How does this help the deficit problem?
The answer is that if you assume that Congress will continue to patch the AMT year after year anyway, then the revenue loss from that "tax cut" isn't real. You're just accounting for revenue that would be lost anyway, but paying for it rather than financing it with debt. In other words, you're turning a future assumed debt-financed tax cut into a future paid-for tax cut. That's genuine budget savings.
