Ellington

Some say the debt deal announced this weekend helps Obama claim centrist cred and position him for re-election:

Obama, meanwhile, needs to appeal to independents and moderates who are interested in deficit reduction and compromise, and he is not opposed to tweaking entitlements even if it robs his party of an effective political tactic. "Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they're still around for future generations," the president said Sunday night.

Others say the President surrendered and gave the Republicans what they wanted -- cuts without revenues, and economy-killing austerity in a time when we still need Keynesian spending, ala Krugman:

It will damage an already depressed economy; it will probably make America's long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.

More interesting to me, though, is this look at what actually appears to be in the compromise, from the Washington Post. $1 trillion in cuts, but not much in effect that soon; the war draw-downs are not assumed in this deal, no entitlements cut, no revenues raised.

The special congressional committee is going to be an interesting animal -- will they bring up tax reform and revenue increases? Will they recommend cuts to defense spending?

And, in the end, it does seem that much of the austerity in the current package is set for 2013 or later, which is smart -- we still have a hole to dig out of, with an economy sputtered on the edge of double-dib. There won't be much more help from the government in the form of spending and propping up GDP, (although the Fed will likely continue to work on stimulus-by-another-name, or Quantitative Easing 3), but, in the short run, the spending cuts don't appear to be that dramatic, and don't affect entitlements. Those fights have been put off for another day... and, probably, a whole lot more rancor this fall. Stay tuned!

Bonus: Fun chart by the New York Times may not have any statistical significance, but at least it shows what a cross-section of New York Times commenters think.

Previous Comments

ID

164206

Comment

Great news in the midst of all this Debt Deal muck and mire: Giffords in Capitol For First Time Since Shooting. Rep. Gabrielle Giffords is on the House floor for the first time since her shooting earlier this year, attending a vote on the debt standoff compromise. Fellow lawmakers crowded around Giffords to shake her hand when she appeared Monday night on the House floor moments before House passage of the compromise bill. Video here: http://abcnews.go.com/Politics/video/rep-gabby-giffords-casts-vote-debt-plan-14208667

Author

Todd Stauffer

Date

2011-08-01T17:33:21-06:00

ID

164207

Comment

Another winner is declared, this time on CNBC: Obama Actually Won the Debt Ceiling Fight. Many political observers are treating the deal to raise the debt ceiling as a great victory for Republicans. But the truth is this is potentially a big win for President Barack Obama, if you assume that his objective is advancing his re-election chances rather than enacting a progressive political agenda.

Author

Todd Stauffer

Date

2011-08-01T17:48:27-06:00