Guess what? The sky didn't fall
5 truths about the ‘fiscal cliff’ deal
By James Downie , WashPost, Updated: January 2, 2013
On Tuesday, the House of Representatives, by a 257-167 vote, sent the latest ”fiscal cliff” deal to President Obama for his signature. After days of negotiation, Washington decided to basically defer action on many of the big issues until the coming battle over the debt ceiling. As leaders pause to breathe before that fight, here are five truths from this round:
• Deficit hawks’ warnings were once again wildly overblown. In the weeks and months leading up to the so-called fiscal cliff, many of the same people who have been warning for years about the dangers of our national debt argued that a credible deal had to be in place by the new year or the markets would take a dive. No such fall occurred. In the meantime, the Treasury is still getting historically low interest rates on its bonds, a clear sign that the markets remain confident that America is not in danger of default. (And no, it’s not because the Federal Reserve is buying up all the debt.) If anything, the markets are worried about economic growth, not the national debt. One would hope that these empirical setbacks will make people more skeptical about deficit hawks’ future warnings, especially when the economic recovery should be Washington’s top priority.
• It’s a bad deal for conservatives. “Republican Horror New Year” blared the Drudge Report. The deal was “a complete rout,” said The Post’s Charles Krauthammer. In some ways they’re right: The ratio of revenue to spending cuts in this deal is 41-to-1, just a year after would-be party nominees assured Republican voters they would never support a deal that had $10 in cuts to every $1 in revenue. After worries on the left that the president would agree to trimming Social Security and/or Medicare, no such cuts appeared. And a significant portion of Republicans, including 40 senators, House Speaker John Boehner and former vice-presidential nominee Rep. Paul Ryan, voted to raise taxes for the first time in 20 years. (Or, if you accept Grover Norquist’s argument that technically, because rates went up at 12:01 am, the bill was technically a tax cut, then the Bush tax cuts were replaced with the Obama tax cuts.)
(More here.)
On Tuesday, the House of Representatives, by a 257-167 vote, sent the latest ”fiscal cliff” deal to President Obama for his signature. After days of negotiation, Washington decided to basically defer action on many of the big issues until the coming battle over the debt ceiling. As leaders pause to breathe before that fight, here are five truths from this round:
• Deficit hawks’ warnings were once again wildly overblown. In the weeks and months leading up to the so-called fiscal cliff, many of the same people who have been warning for years about the dangers of our national debt argued that a credible deal had to be in place by the new year or the markets would take a dive. No such fall occurred. In the meantime, the Treasury is still getting historically low interest rates on its bonds, a clear sign that the markets remain confident that America is not in danger of default. (And no, it’s not because the Federal Reserve is buying up all the debt.) If anything, the markets are worried about economic growth, not the national debt. One would hope that these empirical setbacks will make people more skeptical about deficit hawks’ future warnings, especially when the economic recovery should be Washington’s top priority.
• It’s a bad deal for conservatives. “Republican Horror New Year” blared the Drudge Report. The deal was “a complete rout,” said The Post’s Charles Krauthammer. In some ways they’re right: The ratio of revenue to spending cuts in this deal is 41-to-1, just a year after would-be party nominees assured Republican voters they would never support a deal that had $10 in cuts to every $1 in revenue. After worries on the left that the president would agree to trimming Social Security and/or Medicare, no such cuts appeared. And a significant portion of Republicans, including 40 senators, House Speaker John Boehner and former vice-presidential nominee Rep. Paul Ryan, voted to raise taxes for the first time in 20 years. (Or, if you accept Grover Norquist’s argument that technically, because rates went up at 12:01 am, the bill was technically a tax cut, then the Bush tax cuts were replaced with the Obama tax cuts.)
(More here.)
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