It is true, unfortunately, that the proposed deal now being hammered out to lift the debt ceiling does not include any new revenue, as the President and Congressional Dems had long advocated. The Rs won a concession on that point, as they have on so many in this abysmal process, by threatening to destroy one of this country's most valuable national assets, the full faith and credit of the U.S. treasury. They took the hostage and threatened to shoot and a significant chunk of their members are just crazy enough to make that threat serious.
That sucks -- no way around it. We need new revenues to balance this deficit eventually and we didn't get them in this negotiation.
But we may get them yet. The Bush tax cuts will expire at the end of next year, and the Rs badly want them extended.
Next time around, it will be the President and the Dems holding the strong cards.
In exchange for spending cuts, this proposed deal will extend the debt ceiling through the end of next year, long enough to get us past the 2012 election without having to repeat this agonizing and profoundly idiotic process. This will allow the government to continue to borrow as needed to function into 2013. The deal will also set up a committee of Congress members to come up with recommendations for further ways to cut the deficit: additional spending cuts and/or increased tax revenues. The committee is to make their recommendations by December 23 of this year, 2011. If the committee can't reach agreement then the deal now being finalized will require deep cuts in both domestic and defense spending. Neither side will want that, although many Rs will probably like the idea of entitlement cuts while not wanting the defense cuts. Therefore, this deal doesn't seem like it gives the Rs enough of an incentive to agree to anything in the committee -- if those were the only considerations, the traditional Republicans will be nervous about cutting defense and social programs going into an election year, but the tea party types would probably say "yeah, baby, bring on the deep cuts!"
But remember those tax cuts. They expire at the end of 2013. By the end of this year the Bush tax cuts will have just one more year to go. Those aren't just revenue increases from closing loopholes and ending deductions. They are increases in tax rates for all rich and many upper-middle-class taxpayers. Those folks are the GOP base. The Rs will have a powerful incentive to reach an agreement to try to save as much of that tax cut as they can. Don't forget how devoted the Rs are to tax cuts at all costs, always. It's the only principle that still defines and holds the Republican Party together. They may hope that they can defeat President Obama (and hold onto the House of Representatives) in 2012, but they have to know they will be taking a real risk if they don't cut a deal and instead roll the dice on the outcome of that election. If they lose that gamble and the President is re-elected they will be facing a newly-re-elected Democratic President right at the start of his second term, free of any re-election considerations whatsoever. And they've seen the polls -- they know how popular the idea of tax increases on the wealthiest Americans are.
We haven't heard much about the Bush tax cuts lately, and I suspect that is not unintentional on the part of Obama administration officials. But those cuts are ending in less than a year and a half -- and that flips the leverage completely around between Republicans and Democrats.
Keep that in mind in evaluating this current debt ceiling deal.
I'm sure that the administration is.