By Alex Brill, Special to CNN
Editor’s note: Alex Brill is a research fellow at the American Enterprise Institute and former policy director and chief economist of the House Ways and Means Committee. The views expressed are his own.
The fiscal cliff has been averted, but no one should be patting themselves on the back. Congress managed at the last second to largely avoid tax hikes and to defer automatic across-the-board spending cuts of over $100 billion a year. But overall, the machinations before the legislation and the legislation itself are disastrous for five reasons.
First, the deal Senate Minority Leader Mitch McConnell and Vice President Joe Biden helped concoct does more to keep our fiscal trajectory on its current course than it does to establish a path toward manageable deficits and a sustainable debt burden over the long run. The “American Taxpayer Relief Act” is a tax deal that raises taxes relative to the policies in effect in 2012 but does virtually nothing to curb expenditures, even though federal spending on health care alone is scheduled to nearly double as a share of the economy over the next twenty years.
Second, the deal provides only a temporary reprieve from fiscal mayhem. The postponed sequestration is just around the corner in March, and the federal government is set to again reach, in the next few months, the limits of its borrowing capacity, known as the debt limit.
More from CNN: Fiscal cliff winners and losers
This next cliff in theory offers the opportunity for much-needed entitlement reform. Some of the necessary structural reforms to Medicare and Social Security are already clearly identified, and Republican Members of Congress certainly hope they will be part of the next fiscal package. But that thinking is likely to prove naïve, given the third reason the recent fiscal cliff deal was a disaster: the machinations surrounding the deal have created a more polarized atmosphere than ever. Both the Left and the Right are determined to compromise even less next time. Republicans have given all the ground they will on taxes. And Democrats didn’t cut spending this time around and will have no greater incentive to do so in a couple of months.
The fourth sign of disaster is that this deal represents yet one more failure of Congress to achieve any of the politically difficult changes that are absolutely necessary to our country’s fiscal future. The fact that the deal only took the edge off of our growing fiscal problems suggests that in 2013 Congress will again find it too difficult to achieve meaningful reform.
More from CNN: Cliff deal filled with pork
But the fault does not lie entirely with the legislative branch. Major structural entitlement and tax reform will require tremendous presidential leadership, which brings us to the fifth reason this deal is bad: President Obama proved unable to effectively negotiate with Republicans. After the November election, Congressional Republicans expressed a clear willingness to compromise on taxes in exchange for spending reforms. The president will need to show a similar willingness for compromise if real fiscal reform is going to materialize in the near term. Any grand bargain aimed at stabilizing the long-run debt outlook will necessarily be a disappointment to progressives seeking an ever-increasing social safety net and may also require tax changes that adversely affect more than just the richest 1 percent among us.
It is time for our federal government to begin transitioning toward sustainable budgets, a reality that demands difficult choices about taxes and entitlements. Undoubtedly such a deal will have implications for future elections, but the decision to act must be cast not in political terms, but rather as a generational issue. Failure to curb our deficits and reform unsustainable entitlement spending means passing greater debt burdens on to future generations. Democrats and Republicans have the opportunity to reverse this trend and claim credit. Short-term political discomfort could yield long-run political benefits. Sadly, the deal struck this week in Congress maintains the trend of $1 trillion deficits for at least another year while continuing to ensure that federal health care spending a generation from now will be untenable.
Special report to Alex Drilled
Fiscal cliff deal is great for you, who make some $$$ to survive and for future generations as well.
The current policy is well accepted by Majorities, unlike your former policy, that left you to remained with few $$$ to be a mouthpiece.
You must live under the Law.
I have a text minisitry and I want to share todays text with you today. Please get this out to everyone including the top people at CNN to get the message out to our leaders. See my text of the day below:
(ATM!)Our Leaders want 2 know how 2 avoid the Fiscal Cliff after disobeying God's laws? The answer is at the ATM ("A"t "T"he "M"ercy) of God. Ps 123:3
Yeah....."Tax breaks for the Rich!!!!!!!" (The only plan the GOP have) would have been waaaaaaaay better! NOT! Hahahahahahahahahaah
Most of the "problems" seem to be benefits, imho.
At this stage of our economical troubles (which have mostly really affected the "middle class" adversely), we should be taxing those people less, and spending more. So, this temporary bill is just right for this next year, before cutting spending after demand has been restored to the economy.
Those top percenters have not suffered as have the lower percenters, so it is right to raise their contribution to the society that supports them. Demand is the job creator, not the top percenters.
This article to me sounds partisan to me, as it hammers away at the tea-party mantra of fear of deficits. I remember having this fear the first time deficits reached $1 trillion: under Reagan. I learned over the successive years that it is a growing economy that solved this problem, and nothing else can do it.
A healthy, sustainable economy is required for all.
Those companies that are overseas need to be slammed with high taxes and stop them from cheating Americans! It is obvious what they do...and we continúe to allow it to flourish! NUTS!
I worship my 2% tax hike that Dear Leader Barack promised he would not give me on the day before we re elected him. Thanks be to Maximum Citizen Obama.
The top 1% of this country have few trillion dollars between them,and most of it remains in there bank doing nothing,on the other side the middle class are pay cheque to pay cheque and working more than ever,I don't understand the Republican Party fighting for this 1% who have more money then anytime in the history of this country,and the middle class republican who support them,when there party is actually working for the rich people who are becoming rich everyday.
Obama is a lame duck President. He can now do exactly what is required including changes to medicare and social security without worrying about the next election cycle. Too bad he's a lawyer because he could do a lot with tort reform. Military is going to shrink, as is the DofA. The 113 will be much more productive, including gun control and immigration. It'll be fun to watch.
It's difficult to convince the majority that it's irresponsible to maximise benefits in one's lifetime and pass greater debt burdens on to future generations. But then Thomas Jefferson believed it was self evident, "that the earth belongs in usufruct to the living": that the dead have neither powers nor rights over it.
how many times do i need to repate this russia needs to nuke ireland dublin cork and ghana kumasi and accra then drop a nuke on basque country of spain cut down the filth.
You need to repate (purposely misspelled) until you can spell correctly and use correct grammar!!!!!!! Hahahahahahah. Stupid towel head.
your mother is a irish whoore.
What's a whoore??? Learn to spell. Stupid towel head. Hahahahahahahaha
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