I can’t remember an issue on which I have been as conflicted as on the pending debt ceiling deal.

No sugar coating.  It’s not a good deal.  It does very little to solve the problem of our budget deficits and growing debt.  The law also leaves us at the mercy of the appointees to the super committee; if I knew who would be on the committee I might have more confidence because Republicans can reject anything Democrats on the committee want to do (and vice versa).  The other negatives include the automatic cuts to defense if the committee cannot reach agreement or if the agreed proposal is rejected (although the defense cuts would not be as bad as some assume).

But there are positives which cannot be ignored.  The debate leading to the deal, and the deal itself, has changed the entire dynamic of the political debate going into the presidential election year, with the sole issue being deficit reduction.  While there is a possibility that the committee could suggest revenue increases, it is not obligated to do so and such measures are subject to being blocked both on the committee and in the House.  Additionally, entitlements are part of the discussion and will be for the coming year.  Politically, the deal has fractured the already fractured Obama base.

Fears that this deal  is a prelude to a massive tax increase are overblown.  As to the Bush tax cuts expiring, I’m not concerned.   First the use of the current baseline year was done to make it more difficult (but not impossible) for the committee to recommend revenue increases:

The super-committee must use the “current law” baseline, which assumes that the 2001 and 2003 tax cuts expire at the end of 2012. But why are GOPers happy about this, considering they want those tax cuts extended? For the simple reason that Democrats on the super-committee therefore can’t use repeal of the “Bush tax cuts for the rich” as a revenue raiser.

Additionally, since the vast majority of the Bush tax cuts benefit the “not rich,” Obama and Democrats would be committing political suicide by arguing for allowing the Bush cuts to expire in an election year.  (Added, isn’t the fight we want to have?)  This is the reason Obama backed away last December.  (Btw, Rush is making an argument today that the extension of the Bush tax cuts requires a tax increase by the committee, but I’m not seeing it.)

Putting aside some of these conflicting possibilities, if one views this deal as the end of the road, the last and only chance to make changes, then the deal should be rejected because it does not come close to meeting the challenge.

My perspective, as I’ve stated before, is that we need to keep the ultimate goal in mind, which is defending the House, taking back the Senate with a margin which does not leave us dependent upon 2-3 Republican “moderates,” and defeating Obama.  Then, and only then, can we achieve the types of structual changes needed to stave off fiscal disaster.  Everything we do now is just around the fringes.

The debt ceiling provided us with an early and somewhat unexpected oppotortunity to address some of the issues and frame the debate.  And we have done that.

This is not, however, the end of the effort.  In addition to the coming fight over the Bush tax cuts, we will have to deal with a likely debt downgrade.  The issue of the trajectory of spending will be revisited in the coming year and most importantly in the presidential election.

But the debt ceiling was an imperfect device on which to mount the effort to change the direction of government.  Unlike a “mere” budget impasse resulting in a partial shutdown of government, the debt ceiling holds more risk.  I never bought into the August 2 drop-dead date, but I do accept that with $100 billion per month deficits we could not last long after August 2 before collateral effects were felt.  Those collateral effects go beyond a debt downgrade (which probably will happen anyway), and include economic dislocation would be hard to predict politically.

So we are, to some extent, like the proverbial dog chasing the car which doesn’t know what to do with it once it catches the car.   The car being a failure to raise the debt ceiling for a significant period of time.  What would be do with it once we got it?

We have played the debt ceiling hand and achieved some results.  We have framed the debate, put Obama on defensive, and have an opportunity to do the only thing that can make a difference, winning the elections in 2012.  Overplaying our hand carries risks I would not take.

As bad as it is, I would take this small victory and move on to the battle of 2012, which will decide the fate of the nation for generations.


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