Not only did the debt ceiling deal not address the nation's most critical economic and social issue—high and prolonged unemployment—one policy think tank estimates that it will cost 1.8 million jobs in 2012.
The spending cuts in 2012 and the failure to continue two key supports to the economy (the payroll tax holiday and emergency unemployment benefits for the long term unemployed) could lead to roughly 1.8 million fewer jobs in 2012, relative to current budget policy.
The agreement would reduce spending by at least $1 trillion over 10 years through budget caps on non-mandatory programs, with additional reductions under discussion in a second phase. While the bulk of the cuts are back-loaded—coming more in the future—the near-term cuts would still have an immediate impact. Applying conventional multipliers, the reduction of $30.5 billion in calendar year 2012 would reduce GDP by 0.3%, and result in roughly 323,000 fewer jobs (as depicted in the table below).
In addition to the immediate cuts to spending, the debt ceiling agreement fails to continue two major policies which had been part of broad agreements in the past. The payroll tax holiday and extended unemployment insurance were passed last December along with the two-year extension of the Bush-era tax cuts; but are set to expire at the end of 2011. While Congress could still extend these policies between now and the end of the year, that scenario is looking much less likely today. (Any economic support subsequent to this deal would have to be offset by other tax increases or spending cuts in 2012 or a further increase in the debt ceiling, neither of which seems politically viable.)
Here's the table referenced above:
The payroll tax holiday will likely be extended, since it has the two advantages Republicans can like—a tax cut and a way to undermine Social Security. An extension of unemployment benefits, however, is likely to be a tougher political haul. But this isn't counting any of the actions that the Super Congress will likely take to cut programs like Medicaid, resulting in further job losses. Consider that one quarter of that group (those selected by Sen. Mitch McConnell) will keep their focus on entitlements. And, of course, "revenues will be 'no more on the table' than they were in the recent negotiations."
Maybe if we're lucky, Super Congress will deadlock, or regular Congress will hate their recommendations, and we end up with just the $1.2 trillion in automatic cuts. Or not.