WASHINGTON — The deal significantly raises taxes on the rich, with no expiration date. It extends tax credits for the poor and the middle class. It provides more jobless benefits. Largely overlooked, it extends an alternative-energy tax credit that has helped create a clean-energy boom.
And it includes almost no spending cuts.
For President Obama and his Democratic allies in Congress, the fiscal deal reached this week is full of small victories that further their largest policy aims. Above all, it takes another step toward Mr. Obama’s goal of orienting federal policy more toward the middle class and the poor, at the expense of the rich.
Yet the deal, which the Senate and the House have passed and Mr. Obama has signed, also represents a substantial risk for the president.
Throughout the negotiations of the last two months, Mr. Obama pushed for a larger agreement, one that would have canceled other looming budget deadlines, starting with one on the debt ceiling. He and his aides saw the so-called fiscal cliff, with its trillions of dollars in scheduled tax increases that Republicans abhorred, as leverage to start fresh in a second term and avoid more deadline-driven partisan fights.
“I want a big deal. I want a comprehensive deal,” Mr. Obama said almost two months ago, at his first post-election news conference. “I want to see if we can, you know, at least for the foreseeable future provide certainty to businesses and the American people.”
When House Republicans made it clear that they opposed a big deal, however, Mr. Obama decided to take the smaller deal, bank a series of victories and wait to fight another day. The alternative — debated inside the White House, but not ultimately a close call — would have been to go over the cliff in the hope of forcing Republicans into a larger deal.
Without that larger agreement, Mr. Obama will be left to find solutions to future budget deadlines without the leverage that came with the prospect of automatic tax increases.
“The best world would have been a bigger agreement,” an administration official acknowledged. “This is a big win in a second-best world.”
Perhaps the best prism through which to see the Democrats’ gains is inequality. In the 2008 campaign, Mr. Obama said that his top priority as president would be to “create bottom-up economic growth” and reduce inequality.
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