This Deal is Not a Done Deal

Listening to the news this morning, you’d think the deal reached by Democrat and Republican leaders over the weekend was a done deal. But it’s not, it still has to pass the House and the Senate.

Nancy Pelosi said that possibly none of her members could vote for it. Senator Dick Durbin whined that it’s the death of Keyenesian economics. (Don’t I wish!) And Speaker of the House John Boehner isn’t sure his members will vote for it. Here’s the pdf he circulated in an effort to drum up support.

Jimmie Bise summed it up for you, in case you’re in a hurry.

So, to summarize, this is what I see here. We get one simple phase of ten-year baseline reductions to the budget in exchange for one short-term debt ceiling increase. Then we get a second phrase that involves more substantial deficit reduction (which is quite a different thing from a baseline budget cut from where I am in the cheap seats) or passage of a Balanced Budget Amendment in exchange for another debt ceiling increase. If neither of those happen, then the Sword of Democles falls in the form of immediate budget cuts to some pretty cherished programs.

Now, you’ll notice I didn’t say anything about tax cuts. Speaker Boehner is pretty confident, in the PDF and his statement to his caucus, that there won’t be any tax increases. The reason why is in this post by Jim Pethokoukis and hinges on the Bush tax cuts, which the CBO must score as a tax increase since they are set to expire in 2013 and that tax increase is part of the official baseline the CBO must use to score the Joint Committee’s work.

That little gimmick strikes me as a dangerous gamble, as it assumes that the Joint Committee won’t tack new taxes on top of the expiring taxes to get even more deficit reduction. The President is very intent on getting new taxes out of this deal (note the frequent references to “shared sacrifice” in the White House’s Fact Sheet) and I still don’t see the certainty in this agreement that prevents that from happening. I hope that economic and legislative minds smarter than mine can give me a couple reasons that don’t amount to “because it just can’t.

Hmmm. Jimmie doesn’t have the warm fuzzies over this.

The editors of The Wall Street Journal seem to think it’s a victory.

The same supposedly conservative Republicans and their talk radio minders may denounce this deal as a sellout, but we’ll be charitable and assume they’ve climbed so far out on the political ledge they don’t know how to climb back without admitting they were wrong. They’re right that this deal doesn’t “solve” our fiscal crisis, but no such deal is possible as long as liberals run the Senate and White House.

The debt ceiling is a political hostage the GOP could never afford to shoot, and this deal is about the best Republicans could have hoped for given that the limit had to be raised. The Jim DeMint-Michele Bachmann-Sean Hannity alternative of refusing to raise the debt limit without a balanced-budget amendment and betting that Mr. Obama would get all the blame vanishes upon contact with any thought. Sooner or later the GOP had to give up the hostage.

The tea partiers pride themselves on adhering to the Constitution, which was intended to make political change difficult. Yet in this deal they’ve forced both parties to make the biggest spending cuts in 15 years, with more cuts likely next year. The U.S. is engaged in an epic debate over the size and scope of government that will play out over several years, and the most important battle comes in the election of 2012.

I suppose things could be worse. If the deal somehow passes and we avoid the Armageddon predicted by the president himself, at least that club will be taken out of the Democrats’ hands leading up to the elections in 2012. But don’t expect it to do much to help the economy. It’s looking like we’ll have to wait to 2012 for any improvement in that area.

Final thought: How will the Democrats scare Grandma now?

Update: Pete Da TechGuy puts it into perspective:

This bill is not an example of steaming in the right direction, it is an example of completing the turn of the ship so it is facing in the right direction but you have to turn the ship before you change directions, this is the turn.

Let’s hope that’s the case.

Update 2: Reaganite Republican linked – thanks!

Update 3: WyBlog linked – thanks!