A balanced deal

If both sides of a deal are equally happy, or equally unhappy, then it was probably a fair deal. By that measure, the compromise agreed to last night by the President and the leaders of both Houses of Congress is probably a pretty fair deal. The Tea Party conservatives are outraged that it doesn't cut anywhere near enough to stem the ballooning federal deficit (true), and liberals are outraged that "the rich" didn't get their taxes raised and that we are cutting spending. Both sides seem equally outraged, so it is probably a fairly evenly balanced resolution for the moment.

As David Brooks predicted in his Op Ed piece that I recommended a few days ago, the professionals in Congress, once they took over the negotiations from the (fairly inept) President, went about amicably crafting an acceptable compromise in private, even while they issued scripted pro-forma denunciations of each other in public. And it was pretty clear from the beginning that they would just meld together the House and the Senate bills, which they did.

The compromise once again avoids dealing at all with the massive entitlement problems of Social Security and Medicare/Medicaid. And the cuts probably exacerbate the fiscal problems of states by shifting some federal spending to the already-bankrupt state budgets. Still, it did at least shift the debate from ways to spend more money (like Obama's last budget) to ways to spend less, and that is at least a first step. Presumably this battle will continue the next time appropriation bills come before Congress.

It was, as all fights are, messy. Still, it probably needed to happen to begin to bring reality to Washington politics. It is clear that the battles from this point forward will be about what to cut, not about whether to cut. And that is good, because even with this agreement the USA is projected to grow it's federal debt to over $17 trillion in the next ten years, which is getting up into the Greek-style default territory. So lots more has to happen before we are out of the woods.

It also seems likely that this bill didn't cut the projected deficit enough to prevent rating agencies from downgrading the US Federal debt in the next few weeks. That perfectly reasonable downgrading will no doubt bring a new level of urgency to the debate.