It didn’t — and now the rout is on.
The deal that Republicans ultimately agreed to — The Budget Control Act of 2011 — promised to reduce the growth in spending over the next ten years by $917 billion. In exchange, the president got to increase the debt ceiling by $900 billion. According to the House Republican leadership, the trade was a victory because the debt increase was smaller than the spending cuts. Of course, that’s nonsense. Not only were there no real spending cuts, the federal debt has proceeded to jump another $1.8 trillion since the president signed the bill less than a year and a half ago.
The other part of the deal hasn’t turned out any better. The BCA created a “Super Committee”, tasked with achieving $1.2 trillion in deficit reduction over ten years. When the committee inevitably failed, the agreement stipulated that the deficit reduction instead be achieved through a combination of automatic cuts to defense and non-defense spending (“sequestration”). Republicans and Democrats promptly made it clear that they would figure out a way to avoid the spending cuts.
That brings us to this week’s deal to end the latest game of fiscal brinksmanship — the so-called “fiscal cliff” — that would have seen the implementation of the sequestration cuts on January 1st along with a raft of tax increases. With the president having been reelected on a platform that included tax increases on wealthier households, it was inevitable that Republicans would cave on that aspect. It was expected, however, that the GOP would acquiesce to a tax hike in exchange for spending cuts (presumably of the bogus variety). But not only did the Republicans not get any spending cuts, the deal they agreed to increased spending.