Remember this while taking in any commentary about the fiscal cliff deal:
We had a chance at a $4 trillion deficit reduction "Grand Bargain" in the summer of 2011, which would have included significant changes to Medicare. Why was it scuttled? Primarily because the Tea Party wing of the Republican House did not want it because it raised a modest amount of new revenue, and they don't want one new penny going to Washington, and because Speaker Boehner refused to allow a bill to pass with mostly Democratic votes - which is what he was forced to do on a scaled-down bill last night any way.
And we had a chance at a fairly large deal this time around, which would have included cuts to Social Security benefits, something else that needs to happen. And why didn't we get it? For the same reason we didn't get the Grand Bargain. No one should miss the irony that the folks who say they are most concerned about spending and our long-term debt are the primary reasons we were not able to finalize either of 2 deals that would have done so.
From the piece:
The best economic case for the agreement, from each of those standpoints, appears to be that things could have been worse.
The deal will prevent scheduled increases on marginal income tax rates for American familiesearning less than $450,000 a year, delay planned domestic and defense spending cuts (known as “sequestration”) for two months, maintain a variety of business tax breaks (such as one for wind-
energy production), and extend unemployment benefits by a year for one-sixth of the 12 million people still looking for work.
Those measures amount to improvements over the fiscal contraction that was set to begin going into effect if Congress had failed to approve an agreement. That comparison, and that comparison alone, is what allowed the White House to proclaim in a fact sheeton Tuesday that the agreement “grows the economy.”
Outside economists don’t share that assessment, largely because they’re focusing on what the agreement doesn’t do.