A "long term deficit deal with teeth" can not exist. The reason is one Congress can not bind future Congresses. Case in point - the US government ran fiscal surpluses of $236.2 billion from 1998 to 2000. Indeed, the CBO projected trillion dollar surpluses beyond that. Guess what happened next? The massive Bush Tax Cuts plus two trillion dollar wars. Goodbye surpluses.
The most important thing the President can do to reduce long term deficits is to do whatever he can to lift economic growth and job creation now. Indeed, that was the rationale for The Deal in December that extended the Bush Tax Cuts. Certainly no one could argue that The Deal improved our short term deficit situation.
I vehemently opposed The Deal because I believed that the President was trading tax cuts in December for spending cuts this year. Perhaps the President can find a way to resist that impulse now, but the evidence is strongly against such a result. Immediate cuts seem inevitable. And promises of future cuts will also be a part of the package.
None of this new deal will hold with regard to "long term" deficit reduction. It will in fact, negatively impact the deficit, in the medium and long term, as it will harm the economy. As Atrios points out:
One can't know for sure what is theater and what is speculation and what is just bullshit, but this really is frightening.
The White House, by contrast, is pushing hard for a compromise. And Democrats are worried that in his zeal to accomplish something historic, Obama will agree to a debt plan that omits, or complicates, a key Democratic demand: new, concrete sources of tax revenue.
I have not seen any proposal which would any way be "historic." Some would be horrible, some less horrible. All could be changed by a vote of the next Congress, or by the next vote of this Congress. No plans for 5 years from now can be expected to stick that long. Voters don't give a shit about the deficit.
I would only add that the "key Democratic demand" should not be increasing tax revenue now, but rather it should be not reducing spending now. I assume that the demand for new tax revenue is actually more an attempt to lessen spending cuts.
In any event, nothing that will be contained in the Debt Ceiling Deal will be historic. The only way anything historic emerges from this melodrama would be if the debt ceiling is not increased. Then the history would be default by the United States and a plunge into a historic depression.
Speaking for me only
