It was always likely that a deal would emerge at the last minute.  It’s also no big surprise that the deal includes no tax increases.  The interesting thing is always what the GOP will give up in order to keep its tax cuts.  The answer this time was rather surprising: defense.  Something like a trillion bucks in defense spending would be cut under the plan. 

There’s been a lot of criticism of Obama, especially for negotiating at all over a bogus issue.  Why not just follow the 14th amendment and declare the debt ceiling unconstitutional?  What this misses is that the House still passes the national budget.  If the Tea Party didn’t fight on the debt ceiling, the fight would have been on the budget.

Many liberals would have liked to see stronger positions from Obama.  He sure isn’t working hard to reassure us.  But it’s evident that his target is the centrists– and he comes out of this looking pretty good with them.  The GOP looks crazy and extreme, he looks like a reasonable person willing to negotiate. 

Going into the election, he’s got two pretty good cards up his sleeve.

  • The Bush tax hikes expire at the end of 2012.
  • The trigger mechanism in this week’s deal kick in with about $1.2 trillion in cuts, half of them in defense.

Think about that: if Obama does nothing, then we get significant increased revenues and cuts abouts as skewed toward Democratic leanings as any cuts can be.  That’s going to scare the hell out of the Republicans, who will want a much better deal than that.  But why give it to them? 

If this sounds like I’m getting the comfort I can out of a pretty bad deal, of course I am.  But this is what people voted for in 2010; losing the House, Obama was going to have to make ugly compromises with the Republicans. 

The important thing is not to lose in 2012.  The budget cuts are backloaded so few of them apply before the election, but that’s scant comfort when what’s needed to restore the economy is a big sharp stimulus.  But again, I think the masterful Republican electoral plan of 2010 ended in a major tactical error, namely winning the elections.  Showing their power this summer may have been an error too: now it’s clear that they are setting the agenda, and can be blamed when it fails.

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