It appears the fiscal deal between the White House and Senate Republicans will stick. But since the House is not scheduling a vote for tonight no matter what the Senate does, making it certain those “fiscal cliff” countdown clocks hit zero, making a tax increase a tax cut, there’s no particular reason to expect the Senate to vote today, either.
And more significantly, the payroll tax cut that prevailed the last two years will expire for real, probably never to be seen again, and the “sequester” will apparently go into effect without even a temporary extension since the negotiators couldn’t agree on whether to offset the costs of a two-month delay.
The payroll tax inaction, BTW, means that it really won’t be possible for anyone to claim Washington avoided a middle-class tax increase by reaching a “tax deal.”
Beyond all that, as everyone is noting, the dynamics of the current deal, and its ultimate consequences, depend almost entirely on whether the White House and congressional Democrats hang very tough on the debt limit negotiations, and particularly Obama’s clear line today that additional revenues will have to accompany spending cuts in that deal. If Obama has in effect given away his leverage on taxes to secure relatively small GOP concessions on “stimulus” (the unemployment extension and the EITC, child care credit, tuition credit, and alternative energy credit extenders), it’s not a great deal. If he’s willing to go to the mats for a debt limit increase without big spending concessions, it might be acceptable to progressives.
The issue that’s still hanging out there right now is the immediate fate of the sequestrations, and their political significance is complex. On the one hand, if the sequestrations take effect, they could have a negative effect on the economy. On the other, taking them off the table even for a while could eliminate another leverage point for Obama, given how frantic most Republicans are to insulate the Pentagon and defense contractors from harm.