Obama Loses

Hurrah! We have a deal! Financial meltdown has been avoided! Well done Congress! As has to be the case in these circumstances it’s a case of making the best of a rotten and also ridiculous situation. Whether it lasts is a different matter, not least since this Congress cannot bind its successors.

In the larger scheme of matters it’s a smaller deal – $900bn in cuts now and, perhaps, $1.5trillion in the future – than most of what has been proposed in recent weeks. That’s not a surprise. Nor is it a great shock to discover that President Obama – and Congressional Democrats – have been forced to accept a compromise that offers them much less than it does the Republicans.

Obama began by insisting that tax increases account for a third of any deficit reduction deal (an approach not dissimilar from David Cameron government’s recipe); Republicans would have none of this.