The Economist isn’t impressed with the deal …

By avoiding that hit and finally nailing down numerous unanchored features of the tax code, the deal lifts a cloud over the economy and investor confidence. But on almost every other criteria, the deal falls short of already low expectations.

The main elements of the fiscal cliff were

  • the expiring Bush tax cuts;
  • expiring extended unemployment insurance benefits;
  • an expiring payroll tax cut;
  • automatic spending cuts worth $110 billion per year, spread equally across defence and domestic programmes (called a sequester);
  • and the debt ceiling, the statutory limit on how much the Treasury must borrow, which was reached Monday.
    The current deal only covers the Bush tax cuts and enhanced unemployment-insurance benefits, which will continue for one more year.
  • The payroll tax cut will expire as scheduled, sapping workers’ purchasing power by roughly $1,000 each. Together with the higher taxes on the rich, that will pose a significant fiscal drag on the still-fragile recovery early in 2013.