Will the debt ceiling deal solve our debt problems? No, it won’t, and it doesn’t even address the driver of the increasing debt, which is government spending on health care.
That being acknowledged, it’s useful to put the deal in the right perspective. This graph from Alex Tabarrok, showing federal spending over the next 10 years with and without the deal, is not the right perspective:
The graph makes it seem as though the cuts are negligible. If it compared the cuts to the 10-year deficit, as opposed to spending, though, it would make them seem much more significant.
Erskine Bowles and Alan Simpson and Paul Ryan have this right: the deal won’t fix our problems, but it does mark a change in the overall direction of government, from irresponsibility to an awareness that something needs to be done at some point.
Furthermore, it’s important to realize what would have happened without the influence of the Tea Party: there would have been a clean debt ceiling hike. In the big picture, the spending cuts in the deal are an important development and a big win for the Tea Party.