We have a deal. But perhaps the better headline is the hostages have been released. In reaching the deal to raise the debt ceiling, Republicans got nearly everything they want. Sure, the debt ceiling will rise, but that’s pretty much the only thing President Obama and the Democrats got. The deal gives Republicans them virtually everything they want – drastic cuts, no revenue, a vote on a Constitutional amendment to balance the budget – and a lot of smart people this morning are saying that we didn’t avert disaster; instead, this deal is a disaster.
The deal will slow government spending by $2-3 trillions and avoid another debt ceiling fight until 2013. It creates a bipartisan commission to recommend more cuts. And oh yeah, to attract Tea Partiers, it calls for that vote on the Balanced Budget Amendment.
In its lead editorial this morning, The New York Times writes that the deal is a total capitulation to the most extreme factions of the Republican party, and will slow economic recovery and hurt the middle class.
The Politics: Minutes after the deal was announce, the White House was already trying to find the silver lining. Gene Sperling told msnbc that the president stood firm and never blinked.
Paul Krugman begs to differ: His column today calls the deal itself the real disaster, questions President Obama’s firmness, and asks this tough-to-swallow question: “What Republicans have just gotten away with calls our whole system of government into question. After all, how can American democracy work if whichever party is most prepared to be ruthless, to threaten the nation’s economic security, gets to dictate policy?”
The 2012 candidates are starting to react, and predictably Michele Bachmann opposes the deal and blames the president.
One bit of good news – the markets seem to be responding positively, with Asian markets jumping on news of the deal. The Nikkei was up nearly 2 percent in late-morning trading; the dollar rose against the Japanese yen.