I would like to move beyond cliffs, or anything cliff-like. Been there, done that. Thus it is with great sadness that I report that the two months of nonstop negotiations and finagling and shenanigans involving the fiscal cliff have culminated in a deal that now sets up two more months of negotiations and finagling and shenanigans.
We now face a debt ceiling. It is paired with what we’re told is brutal sequestration (a phrase from a prison movie). Hard on the heels of this end-of-February deadline is the expiration in late March of the continuing resolution that funds the government.
The point is, although a deal was reached and the lights have come up in the theater, we’re merely at the Intermission.
You want to know how small this deal was? Small enough that the people saying it should be approved ranged all the way from the Democratic rank-and-file to Grover Norquist. From Obama to Paul Ryan. In this day and age, to get that range of support you basically have to craft a bill that’s the equivalent of an endorsement of Motherhood.
I was surprised by this result, however. My prediction of Nov. 20 was fundamentally wrong. I correctly stated there would be no Grand Bargain. And the general cynicism of that post seems about right, given what happened. But I didn’t see so many Senate Republicans going for a compromise that would let marginal rates rise on the rich, and I guess I forgot that Boehner could pass a bill with the support of Democrats and only a minority of his own caucus (most Republicans in the House voted against the deal).
At some point the country has to decide what it wants to do on taxes and revenue. It can’t endlessly choose to undertax and overspend. Right? I don’t consider this an ideological position. Debt is what we have used as a substitute for political will. Just decide.
Yes, it’s hard to trim entitlement programs because no one wants to throw granny out into the snow (I actually just put her on United at Dulles). But the very hardest thing in Washington is to raise taxes. This is the first tax hike in, what, nearly 20 years? And it’s a tax hike put into effect by Republicans when they passed the Bush tax cuts way back when, and included a sunset provision so that it wouldn’t look infinitely humongous. I had assumed Obama would go over the cliff and negotiate from a new baseline. Some on the Left feel he blew it by cutting a pre-cliff deal that lets marginal rates rise on only a very small fraction of households, and gives estates a $10 million-per-couple exemption (indexed to inflation). (And by the way, the expiration of the payroll tax holiday isn’t really the same thing as a tax hike. That was always a temporary stimulus.) My guess is that Obama looked at all his options, keeping one eye on the national and the global economies, and made the calculation that he had to have some kind of deal to keep the markets from tanking.
The small deal has the striking feature of containing no spending cuts. Indeed there’s something in this compromise deal that the Left, Right, and perhaps most of all the Center (land of the deficit scolds — yes that’s my hand shooting up!) can be unhappy about. Thus the two sides must start negotiations all over again. Obama can and will say once again that any deal has to be a balance of spending cuts and revenue increases.
The TV crews can just replay old loops of dueling news conferences; no one will know whether it’s live or Memorex. [Dating myself.] The big question is whether the GOP would really rather go into default than raise the borrowing limit (as noted here recently, “debt ceiling” is misnamed, and misleading, because you have the same obligations and bills to pay regardless of the statutory limit on borrowing).
I’m just glad I don’t cover this stuff on a regular basis. Give those political reporters a break!!