Krugman's Perspective on the Deal

[alcibiades_mystery]

12. This deal is only bad based on speculation about the next fight

I said it last night, and it is confirmed again by analyses like Krugman's. There is very little to be upset about in the deal itself. Unless one had the fairly rosy opinion that the House GOP would simply buckle and give us everything we wanted after the cliff hit (and this is what a good number of the deal's most ardent critics very oddly believe!), the provisions are what we would have gotten, and perhaps better on some of the long term tax breaks and stimulus for middle class and businesses (the GOP House voted just last week to kill all of those). So that leaves the looming specter of the debt ceiling and the (separate) issue of the sequester to deal with.

Progressive opponents of the deal insist that we've given up all our leverage on those two points. I don't think we have. There will be spending cuts, and they won't all be military. That's a fact, and is actually in keeping with Obama's "balanced approach" argument. The goal is to make them as rational and progressive as possible. Am I against such austerity measures? You bet your ass I am. They suck, and are probably not even necessary, and might even be counterproductive. I am not a deficit hawk (unlike some of the progressive critics of this deal who insist that a) taxes should go back to old rates for everybody, and b) the deal does not draw enough revenue...). But there's plenty of room to work. The progressive critics of this or any deal (except the magical deal we would have gotten after the cliff, when the House GOP suddenly would have acceded to every single progressive demand!) think that tax rates are the only leverage. We'll see how it goes. I think Obama and the Dem Senate will refuse to link the debt ceiling to the sequester, and refuse to talk sequester on spending cuts alone. Criticizing this deal based on speculation over the next deal is a neat trick, since it allows one to say anything without needing to point to actual events or provisions. But it's a parlor trick, at best. The provisions of this actual agreement are strongly in our favor.