At this point, the only thing we can say for certain is that the debt ceiling will be raised because Congress and the President do not want to be blamed for a calamitous economic meltdown.
That being said, the deal that emerged on the debt is a bad one for a number of reasons.
1. Economic conservatives have made the point that government should not raise taxes in a recession. What sense does it make, then, to cut spending for programs that people need? This is exactly the time when people need government to come to their aid, yet conservatives are ready to sacrifice those less fortunate or who have fallen on hard times with the utter nonsense that we must make cuts without worrying about the consequences. Look for big entitlement cuts in November.
2. At a time when the economy needs large doses of money to circulate in order for a recovery to take place, Congress and the President are focusing on a deal that will take money out of circulation by cutting government spending and refusing to raise revenues from the wealthiest 1% of Americans. This is a classic "not learning from the past" moment, on the part of the Democrats especially, for ignoring the budget cuts in 1936 that led to a recession in 1937.
3. The deal ignores what should be the government's number one priority: Creating jobs. If anything, the government should be spending even more in stimulus for construction, public works and infrastructure jobs. That spending will result in more employment, which will result in more people paying taxes and making purchases, which will allow reluctant companies to begin ramping up production and hiring more workers.
From 2009 through late this winter, the economy was improving, though at a slow rate. Why? Stimulus money. The latest figures on economic growth are anemic. Why? No more stimulus money. Add in the number of public workers who have either lost their jobs or have been forced to take wage and benefit cuts and you have a recipe for disaster. How do more layoffs and pain help the economy? They don't
4. The Balanced Budget Amendment is a sham and a complete waste of time.
Congress will vote on it, but it will never garner the two-thirds vote necessary for sending the amendment to the states, and that's a good thing, mainly because there are enough inept state legislators who will vote for it. So why is this amendment so bad? It will hamstring the economy and government and prevent it from responding to crises and emergencies (Katrina, Missouri River floods, environmental and/or pollution problems, economic downturns--like that will ever happen) in a timely way.
The analogy the amendment's supporters use is of a household that must live within its means. This is a ludicrous lie. If people had to live within their means, banks and credit card companies would not exist in their current form and only about nine people in the country could afford to own a house. When people need money for emergencies they can borrow it or, heaven forbid, get extra revenue by getting a second job or selling something. Will the free market tide people over when circumstance undermines their plans? Will the nice private insurance company pay your medical bills in an emergency? Of course not. Government needs the flexibility to respond.
5. The deal sets up a government committee to suggest further cuts and, perhaps, changes in the tax code. Tea Partiers are deathly afraid that this committee will suggest tax hikes and cuts to the military. That's all you need to know about how serious the conservatives are to really compromise. They want it their way or no way at all.
This deal, and the negotiations process that led to it, shows that the radical Republicans will forsake any offer, even President Obama's, which was more conservative than what the Tea Party wanted, because they cannot stand to see a Democratic president get any credit. They are against any government spending that might actually help the middle and working classes and are for proposals that will protect the wealthy.
President Obama has also damaged himself by adopting the Republican's agenda and not protecting the larger constituency that elected him.
Most polls show that the American people want a balanced approach to this problem. But that won't stop the Tea Party from dragging us down before things can get better.