Calm Down, Liberals: The White House Lost—Worry About Next Time

A blog about business and economics.
Jan. 2 2013 5:26 PM

Calm Down, Liberals: The White House Lost—Worry About Next Time

I agree with his analysis of the substance, but I think Ezra Klein's headline "Calm down, liberals. The White House won" is about 180 degrees off.

The White House didn't win in the deal. And that's exactly why liberals should be calm about it. What the White House wanted—a much larger tax increase, paired with substantial net new spending cuts—was not a worthwhile objective. Such an arrangement would have done a better job of addressing the long-term budget deficit, but that wouldn't have achieved anything. It wouldn't have boosted economic growth or reduced unemployment. It wouldn't have helped the needy. It wouldn't have done anything useful other than created a signature achievement for the White House accomplishment list.

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What they settled for—a small tax increase and a minor delay of the sequester—is totally fine. Everyone involved should hold their heads high. An awful lot of fiscal austerity is going to happen in 2013 overwhelmingly as a result of bills that had already passed, but that's under the bridge. The specific outcome of this specific deal was very reasonable.

The risks going forward are all about the debt ceiling. Republicans are demanding over a trillion in new spending cuts. Klein thinks people are underrating the chances that Obama may be able to get the GOP to agree to revenue-increasing tax reform as his price for agreeing to it. But that's a kind of chilling possibility. What in your life is going to go easier if we get a trillion in higher taxes and a trillion in spending cuts? And even more chilling is the possibility that we don't get the deal and we slam into the debt ceiling.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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