D.C. debt deal: Who wins?

There were plenty of people on all points of the political spectrum who were entirely unhappy with the debt limit deal that was struck in Congress this week.

Democrats claimed it went too far in cutting spending, and they bemoaned that it didn’t include guaranteed tax hikes as a means to help bite into the federal deficit. Some called it a “Satan sandwich” and some liberal media pundits accused Democrats of unnecessarily giving in to the Republican Tea Party faction of the House.

Many on the right viewed it as yet another capitulation to the ways of Washington and to entrenched policies that relentlessly lead to larger, more costly government. Many conservative Republicans voted against it, saying it didn’t go nearly far enough in spending cuts.

Even President Barack Obama described the deal as a “first step” in  tackling what is now $14.3 trillion in national debt — and will soon be more.

Some conventional wisdom holds that with all the unhappiness about it, maybe everybody gave up something and therefore the final result must be a real compromise that can produce real results. But it’s not surprising that with a brinksmanship bill that was slapped together on a Sunday night and signed into law just two days later to meet a looming deadline, the up sides and down sides of this legislation may not be known for months.

Republicans should consider the weeks leading up to the bill, at the very least, to be a moral victory. Because of the GOP House, the debate has finally shifted from “tax and spend” to “what to cut — and how deep.” Firm GOP leadership succeeded in staving off repeated Democratic pushes for higher taxes.

And there are provisions in the legislation that appear to have some teeth to ensure that future spending cuts outlined in the bill will actually take place. It requires, for instance, a congressional super committee to be tasked with finding more than $1 trillion in additional spending cuts over the next few months, and there is a requirement that if the committee and Congress don’t deliver, there will be $1.2 trillion in automatic spending cuts. There is plenty of potential for continuing conflicts and deadlock, so we’ll just have to see how this super committee thing works out.

We’ll wait and see also how Democrats and Republicans come out of this fight in political terms. It may hurt or help either side in surprising ways. The contenders in Montana’s next Senate election, Sen. Jon Tester and Rep. Denny Rehberg, were quick to get out in front in the public relations arena with press releases explaining their votes on the deal.

Rehberg voted against it, calling it “more business as usual for Washington” and  saying that he had supported two previous debt-ceiling bills that had stronger provisions for long-term fiscal reform, such as a balanced-budget amendment.

Tester voted for the deal, describing it as imperfect, but still a bipartisan solution “with real spending cuts” that allowed the country to avoid economic default. We’ll have to see what Montanans think of their votes in the months to come.

The ultimate arbiter on the worthiness of the debt-ceiling deal will be the markets, the economy and how the rest of the lending world reacts to it. Will there be a perception that the U.S. government is finally making serious efforts to address its colossal debt, or will the perception be that our political class is incapable of taking meaningful corrective action.

It’s not encouraging that the Dow Jones Industrials plummeted 265 points the day after the legislation was signed, and there are still fears that the U.S. credit rating will be downgraded since the deal only supplies about half the $4 trillion in savings that rating agencies said would be necessary to confirm a stable rating outlook.

We’ll have to wait and see, but at least the view is better than it was a week ago.