Thursday, January 3, 2013

Chart: The Fiscal Cliff Deal Is Small Ball

Looking at this chart -- thanks, Wonkblog at WaPo -- makes it clear how reductive the whole fiscal-cliff negotiations became: no Grand Bargain here.

(Click image to enlarge.)

Remember: To the Republicans and their tea-party core, this was a huge defeat, a mugging, with hoary octogenarians hovering over the corpses of the gallant Tax Fighters digging in to defeat Big Government.

Grover Norquist says a $billion tax increase really isn't. Right.
For liberals, its mugging took the form of flying monkeys swooping in for the kill of the New Deal and the Great Society -- the long knives were out to eviscerate entitlements. And with a couple of the tentative Grand Bargains, this was somewhat true on both sides. But the final deal, up against a decade's worth of GDP somewhat north of $150 trillion, is really pretty small ball. (Update. Paul Krugman points out that projected GDP over the next decade is closer to $200 trillion. I believe him.)

Liberals wanted more revenue, conservatives wanted real entitlement cuts, and in the end conservatives held the tax increases to a minimum, while liberals shielded entitlements from any cuts at all. And deficit reduction? Again, against GDP, almost nothing.

Dennis Hastert: forgettable Speaker, now even more forgotten.
But in ideological wars, it's often mostly optics. Republicans were proven in this process to not give a damn about deficits -- as if it weren't obvious years ago -- but only care about keeping taxes lower on their uberlords, the rich, while sticking it the the poor and elderly through entitlement cuts.

So, on a political basis, liberals won. The Norquist tax pledge is dead, and the Hastert Rule (bills in the House must pass with a majority of the majority party voting yes) is also dead, with entitlements intact. In the end, sound and fury, signifying nothing.

Of course, the coda is waiting to be played: Can the Republicans turn the debt ceiling into Armageddon? We'll see.

The coming debt ceiling debate.

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