Keynesian civil war.
That Bad Ceiling Feeling — Paul Krugman, NYT
More thoughts about the fiscal deal:
One good thing is that the deficit scolds are furious: they had their hearts set on exploiting this crisis to push through benefit cuts, and it didn’t happen — part of the larger good news that Obama didn’t gut Social Security or Medicare this time around.
And as I pointed out yesterday, the numbers are disappointing, but the disappointment isn’t that big a deal. Let me offer more detail on that.
Before the deal, it was widely expected that Obama could get $800 billion in revenue. You may wonder how this reconciles with the much bigger numbers in his original proposal; the answer is that part of this came from the estate tax, on which he couldn’t count on backing from Senate Dems, but most of it came from going beyond just getting rid of the Bush tax cuts — he was proposing that itemized deductions be turned into tax credits at a maximum of 28 percent, which would have collected a lot of additional revenue from people in the 39.6 bracket. And that wasn’t something he could get just by going over the cliff. [...]
The only thing that might save this situation is the fact that Obama has to be aware just how much is now riding on his willingness to finally stand up for his side; if he doesn’t, nobody will ever trust him again, and he will go down in history as the wimp who threw it all away.