Considering the gains made in stocks, I doubt you'll see a huge sell off because of a 5% rate increase. You might see stocks tumble a bit because it takes away from wealth generation, possibly hurting companies that could benefit from said wealth. You could also see investors recalculate their positions based on their risk/return needs given the new tax. They might even reallocate their assets. But, investors won't be so nervous as to dump all of their equity positions in favor of bonds, cash equivalents, or more speculative investments.

As for the rest of your post, I don't know. Perhaps Reid is still searching to see if he has the support to get it done? Didn't the Barney Frank post say something about it happening in the next couple of days?

Barney said he thought it would pass, but he's not voting for it. As the article I referenced says, several Democrats are trying to block the bills path to the House floor. I would think that if Nancy wanted to go all the way to block it, she could have it thrown back to some sub-committee, which of course would kick into next year. It wouldn't take much to block it in the Senate either, note the DADT issue of this article for details.

Taking a 5% hit on their stocks is something big investment firms really don't like to do. That would cover most, if not all, of their profits this year. The Democrats are really playing with fire on this one.

Taking a 5% hit on their stocks is something big investment firms really don't like to do. That would cover most, if any, of their profits this year. The Democrats are really playing with fire on this one.

Capital gains taxes only exist if one sells their stock after a year. Stocks held over a year are listed as "available-for-sale" and, if not sold, their gains are not recognized in income. It is considered other comprehensive income. Trading securities sold are taxed at current rates. We're talking about a 5% increase to equities sold, not to shorts, derivatives, futures, or short-term equity investments. 68% of Goldman Sachs's profits come from profits made in short-term bid-ask spreads. Considering all of their other functions, I would be shocked to see them take a 5% hit to profits based on a 5% increase to taxes on their long positions.

Besides, where else will people park their money? As I said, stocks as a whole might decline in value due to worries over whether the tax increase will affect companies' bottom lines, but the tax to capital gains itself won't pull money out of stocks.

What I don't understand is why doesn't Reid bring it to the Senate floor. If Reid agrees with President, then bring forth the compromise bill agreed to. If Reid agrees with the House on passing an extension of the tax cuts only for those making less than $250K, then bring it to the floor as a reconciliation item requiring a majority for passage. I see no reason for foot dragging here.

Not if Bernie Sanders filibusters with help from three others.