The fiscal cliff "Deal" in my opinion will prove to be a huge strategic blunder in the long term for progressives, because we fell victim to a shell game the GOP was playing. If we don't understand what really happened in this Deal, we will continue to lose major battles against them and ultimately the New Deal will be in jeopardy.
I just wrote a diary here that explains that in order to evaluate the fiscal Deal, you have to understand the long term strategy of the GOP is to lower revenue to force cuts to entitlement programs.
During the negotiation of this Deal, all of the focus was on the threshold for the cuts, i.e., whether the tax rates would go up at $250k or $400k or $1 million. As well as other short term measures like unemployment extensions, etc. In reality, thre tax increase threshold was actually the least important item in the negotiation. I think many (not all) Republicans realized this and were just making a lot of noise about the threshold for show.
What was the most important item in the negotation that nobody ever discussed? Whether the reduced tax rates for people below the threshold (whatever it was) would ever expire. I could be wrong, but I never heard any discussion of that issue.
By raising the threshold from $250k to $450k, the Republicans reduced the amount of tax revenue from $800 billion (if the threshold were $250k) to $600 billion (with the $450k threshold). Many progressives have pointed to this as a sign that Obama was victorious because the actual amount of revenue he conceded to the GOP was very small.
However, once you compare this to the approximately $3 trillion in reduced revenue for the tax cuts for everyone below the threshold, you see where the real money is.
By making the tax cuts on everyone below $450k permanent, the GOP just scored a major victory in the fight to reduce revenue and thereby force a reduction in entitlement benefits. This is because in order to get that revenue back, we can't just let the tax rates expire (like we could before today). Instead, we have to pass a bill through the House and Senate to increase the tax rates. That will require control of the House and filibuster reform to have any prayer. Without both control of the House and filibuster reform, we have no chance of increasing tax rates in the foreseeable future.