E.J. Dionne Jr. / OK, so all the fiscal-cliff drama was ugly, but the final deal isn't too bad

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To be deemed a serious analyst at the moment seems to require a lot of hand-wringing and sneering over how awful Congress looked over the last few days as it rushed a fiscal cliff deal into law. So permit me to burn my membership card in the League of Pundits.

Of course, there was much wrong about how Congress dealt with the best-known deadline in recent political history. A better deal was available weeks ago. But in the end, some important and positive things happened.

Democracy, in its messy way, worked. An election had a real impact on public policy, moving it in a more progressive direction. Thus, for the first time since 1990, a significant number of Republicans voted to raise taxes -- and they raised them most on the very rich.

House Speaker John Boehner allowed a bill to become law on a vote in which far more Democrats (172) than Republicans (85) said "aye." The old rule that Republicans would allow floor action only on bills that could pass with GOP votes was swept away, at least this time.

The fiscal-cliff deal made our tax code more progressive. The top income tax rate is back up to 39.6 percent. Capital gains taxes, cut repeatedly since the 1970s, were raised. Consider: The provisions enacted Tuesday night combined with the tax hike in the Affordable Care Act mean that capital gains taxes will now be 18.8 percent for couples with annual incomes of more than $250,000 and 23.8 percent for couples earning over $450,000.

True, Democrats caved in by failing to tax dividends as ordinary income, as they used to be. Capital gains should also be taxed as ordinary income. But is this progress? Yes.

There is other good news in the bill, including an extension of unemployment benefits and of refundable tax credits especially helpful to lower-income people. The estate tax rises to 40 percent on fortunes of more than $5 million. Yes, it's still low. But at the end of George W. Bush's term, we were looking at a complete repeal of the estate tax.

It is a real shame that Congress didn't include more stimulus measures, especially an extension of the payroll tax holiday for another year, as President Barack Obama originally requested. This would have helped the economy and hard-pressed families. But it was blocked not only by conservatives but also by liberals worried about the financing of Social Security. This was a mistake.

Nonetheless, the broadly progressive thrust of the accord is the only way to explain why Mr. Boehner had to face down a rebellion from his right, and why a substantial majority of his GOP colleagues voted against it.

Many liberals are unhappy for the same reasons that Republicans who backed the bill are hopeful. Both groups assume that 1) Mr. Obama has now lost his leverage; 2) he will fold during negotiations as a vote on the debt ceiling approaches; 3) this was the last chance to win tax increases; and 4) the deal contains a lot less new revenue (roughly $620 billion over a decade) than it should have.

There's no question that significantly more revenue will be needed to avoid steep cuts in social insurance programs. And it's useful that many on the left have signaled their dissatisfaction because this will expand their influence (and Mr. Obama's negotiating room) in the coming months.

But we should at least consider the possibility that this week's Midnight Madness was actually a first step down a better road. This will be true if Mr. Obama hangs as tough as he now says he will; if he insists on more revenue in the next round of discussions; and if he immediately begins mobilizing business leaders to force Republicans off a strategy that would use threats to block a debt-ceiling increase to extract spending cuts. Real patriots do not risk wrecking the economy to win a political fight.

Mr. Obama has to prove wrong both his skeptical allies and foes inclined to underestimate him. He needs to move the discussion away from a green-eyeshade debate over budgets and foster a larger conversation over what it will take to restore broadly shared economic growth. His presidency depends on how he handles the next two months.

opinion_commentary

E.J. Dionne Jr. is a syndicated columnist for The Washington Post (ejdionne@washpost.com).


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