"Chained-CPI" is code for "let's really impoverish some women in their 90s!" It's a bad policy. It should be off the table. Failing to extend the payroll tax cut is bad policy. It should be off the table. Failing to boost infrastructure spending is bad policy. It should be off the table.
This deal would still be on the table in January. And odds are Obama could get a much better deal than this come January:
Boehner offered to let tax rates rise for income over $1 million. The White House wanted to let tax rates rise for income over $250,000. The compromise will likely be somewhere in between. More revenue will come from limiting deductions, likely using some variant of the White House’s oft-proposed, oft-rejected idea for limiting itemized deductions to 28 percent. The total revenue raised by the two policies will likely be a bit north of $1 trillion…. On the spending side, the Democrats’ headline concession will be accepting chained-CPI, which is to say, accepting a cut to Social Security benefits. Beyond that, the negotiators will agree to targets for spending cuts. Expect the final number here, too, to be in the neighborhood of $1 trillion… contentious issues in the talks will be left up to Congress.
The deal will lift the spending sequester, but it will be backed up by, yes, another sequester-like policy. I’m told that the details on this next sequester haven’t been worked out yet, but the governing theory is that it should be more reasonable than the current sequester. That is to say, if the two parties can’t agree on something better, then this should be a policy they’re willing to live with.
On stimulus, unemployment insurance will be extended, as will the refundable tax credits. Some amount of infrastructure spending is likely. Perversely, the payroll tax cut, one of the most stimulative policies in the fiscal cliff, will likely be allowed to lapse, which will deal a big blow to the economy….
[R]ight now, the participants sound upbeat, surprised at how quickly the process has moved from evident disaster to near-agreement, and fairly comfortable with where they think they’ll end up.