Apocalypse averted?

At last, signs that Washington’s lawmakers may have scrabbled together a debt deal after all. According to the overnight wires, the White House and Congressional leaders have alighted on a package that would raise the ceiling by $2.4 trillion, so long as the deficit is reduced by at least the same amount over the next ten years. There are more details here, but the key claim is that around $1.2 trillion of immediate spending cuts have already been agreed upon, with a Congressional committee to recommend further deficit reduction measures by the end of November. And although these proposals will still have to pass through the corridors of Congress, leaders from both sides sound increasingly optimistic that it will do just that. The Senate Majority leader Harry Reid — who earlier yesterday was lambasting the Republicans for “still refus[ing] to negotiate in good faith” — is now talking about a “move toward cooperation and compromise”.

If a deal does go through, then we might turn our attention to the economic and political fallout — and fallout, of both sorts, there will be. As I have emphasised, there’s still a pungent possiblity that America’s credit rating will be downgraded even after a deal. And then the question will follow of who’s to blame, and who’s to thank, for the situation. So far, this is being sold as an economic victory for Tea Party conservatives, and Obama appears to be losing out from it. But that might fluctuate with the ongoing debate about spending cuts and deficits, and the wisdom of them.