At last Washington has reached a deal that raises the debt limit and averts a default that would have been a national embarrassment and an economic and geopolitical catastrophe. The forces shaping the deal are multifaceted and so are reactions. Mine has a number of elements.

Relief. There will be no default; no economy-damaging short-run austerity; no attack on the nation’s core social protection programs or universal health care; and no repeat, for at least 15 months, of the recent shabby spectacle. All of this was in doubt just a few days ago. It is no small thing for the administration to have reached an agreement that does no immediate harm. And it may well be that no better agreement was achievable given the political dynamics in Congress.

Cynicism. Objective observers would forecast larger U.S. budget deficits in the out-years than would have been predicted a few months ago. The economic forecast has deteriorated, and it is reasonable to estimate that even a half-a-percent reduction in growth averaged over 10 years adds more than a trillion dollars to the national debt in 2021.

Despite claims of spending reductions in the range of $1 trillion, the agreements reached so far are likely to have little impact on actual spending over the next decade. The deal confirms the very low levels of spending already negotiated for 2011 and 2012 and caps 2013 spending about where most would have expected this Congress to end up. Beyond that, outcomes are anyone’s guess — Congress votes on discretionary spending annually, and the current Congress cannot effectively constrain future actions. True, there are caps and sequester threats in the debt deal, but these are virtually certain to be reformulated in 2013; in other words, the fact remains that discretionary spending going forward will largely reflect the will of future Congresses.

Remarkably for a matter so consequential, the deal calls for a “super-committee” that will seek to reduce the deficit by $1.2 trillion but lacks agreement on the baseline from which the $1.2 trillion is to be subtracted. Is it a baseline that includes or excludes the Bush tax cuts? Includes or excludes tax extenders and the annual fix for the alternative minimum tax?

Baseline arguments are mind-numbing but highly consequential. If a baseline assuming phaseout of the Bush tax cuts is adopted, there will be no motivation to ensure repeal of the high-income tax cuts because it will not count toward the goal. Or, to make deficit reduction easier, a baseline following current policy could be adopted. This would treat the non-extension of the Bush high-income tax cuts as a $1 trillion tax increase — but this is an unlikely outcome given the likely composition of the 12-member super-committee.

Economic anxiety. The issues pressing the United States today are much more about jobs and a growth deficit than an excessive budget deficit. Consider that a single bad economic statistic — the manufacturing purchasing managers survey — more than wiped out all the stock market gains from the avoidance of default and that bond yields reached new lows at the moment of maximum apparent danger on the debt limit.

On the current policy path, it would be surprising if growth were rapid enough to reduce unemployment even to 8.5 percent by the end of 2012. A substantial withdrawal of fiscal stimulus will occur when the payroll tax cuts expire at the end of the year. With growth at less than 1 percent in the first half of this year, the economy is effectively at a stall and facing the prospects of shocks from a European financial crisis that is decidedly not under control, spikes in oil prices and declines in business and household confidence. The indicators suggest that the economy has at least a 1-in-3 chance of falling back into recession if nothing new is done to raise demand and spur growth.

Soon, relief will give way to alarm about the United States’ economic future. Among all the machinations ahead, two issues stand out: First, the single largest and easiest method of deficit reduction available is the non-extension of the Bush tax cuts for upper incomes. President Obama should make clear that he will not accept their extension on any terms. Clarity on that trillion-dollar point, along with very modest entitlement reform, will be sufficient to hit current targets for deficit reduction. Second, it is essential that the payroll tax cut be extended and that further measures, such as infrastructure maintenance and extension of unemployment insurance, be taken to spur demand. There is still time to confirm Churchill’s maxim that the United States always does the right thing after exhausting all the alternatives.

The writer, a professor and past president at Harvard, was Treasury secretary in the Clinton administration and economic adviser to President Obama from 2009 through 2010.