If you listened to many of the fiscal agreement's critics yesterday, especially on the right, one of the more common complaints was that the McConnell/Biden deal missed the entire point of the exercise. The entire effort was supposed to be about debt reduction, and the deal, they argued, makes matters worse, not better.
The Senate deal to avoid the "fiscal cliff" will add roughly $4 trillion to the deficit when compared to current law, according to new numbers from the Congressional Budget Office (CBO).
The CBO determined Tuesday that the package, hammered out late Monday evening by Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) would -- over the next decade -- come with a $3.9 trillion price tag.
To be sure, I can appreciate why this looks discouraging for the "Fix the Debt" crowd, but the truth is a little more complicated than the raw CBO score suggests.
First, the Congressional Budget Office was working from the baseline that assumed literally all of the Bush-era tax breaks would expire -- in other words, that Congress simply ignored all of the 2012 fiscal deadlines -- and by that metric, the agreement has a multi-trillion price tag. On the other hand, if we compare the new law against the baseline that existed as recently as Monday, the deal won't increase the deficit at all. On the contrary, it will bring in between $600 billion and $650 billion, depending on the extent to which you want to count interest on the debt.
The deficit has already shrunk by about $300 billion over the course of President Obama's first term, and thanks to this new revenue, it's on track to shrink even more.
Second, and this is the politically salient part, it doesn't make sense for conservatives to complain about this since they were the ones who demanded less deficit reduction, not more.
Indeed, let's remember why the CBO came up with a $3.9 trillion price tag: the fiscal deal is loaded with all kinds of tax cuts. The cost would have been far less if Democrats had their way on marginal top rates and the estate tax, but as part of the negotiations with Republicans, Dems accepted concessions that meant less revenue and less deficit reduction.
If conservatives find that disappointing, they have no one but themselves to blame.
And finally, let's also not forget that deficit reduction probably shouldn't be policymakers' top goal right now anyway, making the price tag largely irrelevant. As Matt Yglesias explained this morning, "[R]elative to the goals that are important -- minimizing economic damage in 2013, minimizing cuts in useful spending -- the deal that ultimately got made was a pretty good one."