Final Thoughts on the Debt Deal

Based on reader statistics, the recent debt crisis was one of the biggest stories of the year. Though we predicted that a deal would be done, we didn't have the foresight necessary to know exactly what it would look like. For example, though it is not entirely surprising in retrospect, we didn't predict that almost all of the tough decisions would be put into the hands of a committee to be settled at a future date, or that 'budget cuts' would largely be lip service to the concept, rather than the reality, of austerity.

Because of features like this, the deal was criticized by many notable commentators from all over the political spectrum, including Paul Krugman, Richard Posner and Gregg Easterbrook. Blawgconomics can agree with these august personalities that, in a perfect world, the deal is only about as useful as the paper it was written on.

However, in our opinion, once one takes under consideration the political and economic realities of the world we live in, the deal itself was more important that any (maybe even all) of its features. Indeed, we would go so far as to say that, in the aftermath of the crisis, only one headline really matters.


  1. Anonymous4/8/11 15:27

    One also can't help but wonder why a "deal" was even necessary. Both parties have passed the debt ceiling raises in the past, whether or not it was their party that ran up the bills. There were votes available to pass such an extension here without attaching strings, but Republicans and Obama both used the moment to engage in a dangerous and unnecessary game of brinksmanship with one another. The behavior is particularly reprehensible since both leaders agreed early on that passing the debt ceiling was necessary and failure to do so would be catastrophic.

  2. Josh Sturtevant4/8/11 16:14

    Thanks for the comment.

    I think that everyone's behavior is all the more reprehensible considering what was accomplished in the process of bringing the economy so close to the edge. The risk reward just doesn't measure up.

    For anyone interested in a behind the scenes look at this very dangerous game, Reuters has a great retrospective available at: