Inside the Debt Deal: Who Won, Who Lost

President Obama and congressional Republicans both got something they wanted in Sunday's agreement -- but they still want more

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It started clean and ended messy.

When the debt-ceiling crisis began to capture the public's and Wall Street's bemused imagination in June, President Obama's Gallup approval rating was 50 percent, the highest of the year.

(PDF: GOP House's Summary of Debt Deal)

It's now at 40 percent, the lowest of his presidency, and a disturbing sign that dismay with America's "dysfunctional" government is taking a toll on more than Congress - mired since early spring with approval ratings in the mid-teens.

Obama won a long-term extension of the nation's $14.3 trillion debt ceiling. The deal extends borrowing authority by at least $2.1 trillion with no threat of congressional obstruction.

But Obama lost on his push for higher revenue. Tax increases - even for favorite targets like corporate jet subsidies and oil companies (heavy on symbolism but relatively light on revenue) - were left to a special committee. That means Obama traded spending cuts upfront without a dime of guaranteed new revenue - already a flashpoint on the left.

Obama did protect Social Security, Medicaid, children's health insurance and veterans from any cuts - governed by the new spending caps or the so-called super committee charged with finding at least $1.5 trillion in additional spending cuts. The deal specifically shields Social Security, veterans benefits, unemployment benefits, military pensions, and children's insurance from cuts under the special committee jurisdiction.

Also, Obama won a 50-50 split in all domestic cuts between non-defense spending and allocations for defense, homeland security, and the State Department. This amounts to $350 billion over 10 years and gives Obama an opportunity to press for more economical spending in the security sphere. Republicans say they will fight another day to ensure military readiness, training, and availability of necessary weapons systems.

But the president opened the door to Medicare cuts. Even though they are limited to providers, Obama has put Medicare cost savings on the table at just the moment congressional Democrats cherished a clean shot at Republicans for backing a 10-year plan to transform the health care program for the elderly from fee-for-service to a voucher system to finance insurance purchases on the open market.

On the tax side, Republicans are certain the rules will nullify higher taxes. Democrats are equally convinced the magnitude of future spending cuts through caps or across-the-board sequestration will prove so politically unpopular that Republicans will relent and raise taxes. That's what happened in 1990, when sequestration-ordered cuts led President George H.W. Bush to raise taxes in a budget deal reviled to this day by conservatives.

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Major Garrett is a congressional correspondent for National Journal.

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