End of the Beginning

Well, with a deal on the table, the economic brinksmanship is presumably over for now. It would be craziness to allow the US to go into default with a deal on the table that, at least, makes a stab at some spending cuts and includes no tax increases.

But don't get too relaxed. This isn't the beginning of the end when it comes to putting the country on a sane economic path; it's just the end of the beginning. The planned commission will give Democrats their second bite at the "raising taxes" apple, for it charges a 12-person Joint Committee with "reducing the deficit" by $1.5 trillion over ten years. Tax increases will be on the table -- and if the Republicans on this Joint Committee don't hold firm, tax increases will be part of the legislation that must receive an up or down vote.

Under the current debt ceiling proposal, if the Joint Committee's proposal isn't passed, or the Joint Committee otherwise fails to get to $1.2 trillion in spending cuts, automatic across-the-board spending cuts will occur. That, my friends, includes defense -- one of the few incontestably essential responsibilities of any federal government.

So, unless the Republicans on this Joint Committee can somehow convince the Democrats to produce a package that includes no tax increases, it is entirely possible that Republicans could face a Hobson's choice: Either support the Joint Committee proposal including tax increases, or face devastating cuts to defense (and the demagoguing charge by Democrats -- who are all too happy to raise taxes -- that they let sweeping cuts to "cherished" social programs occur).

On the whole, given the absence of tax increases in the current package, the GOP has done okay. But looking at the overall tenor of the debt ceiling package that's just been negotiated -- and that they need to support in order to avert substantial economic risk -- their uphill battle is just beginning.

Chris Cilizza describes the Tea Party as one of the winners in the stand-off. We'll see what happens this autumn/winter after the Joint Committee report comes back -- and hope that it's crafted in a way designed to attract Tea Party support, rather than writing off the House freshman and heaping on the tax increases to attract liberals, while expecting the scale of the threatened cuts (if the legislation fails) to frighten more moderate Republicans into voting for it.