Congress is rushing to pass a compromise deal to raise the debt ceiling and slash the deficit, hoping to get the agreement approved in time to beat tomorrow's deadline. If the effort succeeds, the danger of a government default will disappear, the government will be able to cover its bills through the 2012 election with no further debate, and the federal deficit will be cut by more than $2 trillion over the next decade. (See "The debt deal: Winners and losers.") But will the nation's economy really be any better off?

The deal is disastrous for the economy: The only good thing about this agreement is that it will "avert a catastrophic government default," says The New York Times in an editorial. "The rest of it is a nearly complete capitulation to the hostage-taking demands of Republican extremists." We're gutting programs for the poor just when they need them most. And cutting government spending now will prevent Washington from fighting unemployment, and "hinder an economic recovery."
"To escape chaos, a terrible deal"

This is the first step to restoring our financial house: The victorious Tea Partiers are disappointed they couldn't solve all the nation's financial problems in one bold stroke, says The Wall Street Journal in an editorial. But, "if the cuts hold, this would go some way to erasing the fiscal damage from the Obama-Nancy Pelosi stimulus." These aren't phantom spending cuts — the deal calls for an initial $900 billion deficit reduction. And we'll accomplish it without the job-killing tax hikes the Democrats wanted.
"A Tea Party triumph"

The U.S. could still face a painful credit downgrade: The credit rating agencies were calling for $4 trillion in cuts, says The Economic Times, and this deal falls short. If Moody's, Standard & Poor's, or Fitch downgrades U.S. Treasury bonds from their sterling AAA rating, we could be in for a "painful spike in borrowing costs for both Washington and Americans overall." So hold your applause until you see how this deal affects mortgage and credit card interest rates.
"US debt deal helps dodge default but not downgrade: Analysts"