12/09/2013 07:32 pm ET Updated Feb 08, 2014

Today in Fiscal Policy: Is There a Little Deal in the Offing?

So, there's apparently a little fiscal deal in the air. What's one to make of it?

The Washington Post has not much good to say about it -- too timid, doesn't whack the debt enough, etc. The Wall Street Journal is a bit more positive.

The deal under discussion, as far as I can tell, is to offset about $60 billion of the sequestration cuts in 2014 and 15, with most of the offset next year. The increased discretionary spending would be paid for by increased fees -- the papers mention airport fees, increased worker contributions to federal pensions, and auctioning off some of the publicly owned radio spectrum. These payfors would be incrementally back-loaded, meaning reduced fiscal drag over the next two years.

Now don't get me wrong: they're partially defusing a fiscal time-bomb they set themselves, so no one should mistake this for a great advance in bi-partisan fiscal policy. And the sequester keeps going for a bunch more years after 2015, so again, this is a doubly partial fix (it buys down some of the sequester for some of the time it's in effect). Also, and this is a big mistake, at this point the deal does not appear to include extending UI benefits.

Plus, it should be underscored: there ain't no deal yet!

But that said, and grading on the steepest of curves, and with a big caveat regarding the extension of UI benefits, I'm a little impressed:

--Less fiscal drag: There was already going to be less fiscal drag next year, and this figure does not include reduced drag from the deal under discussion. I've hammered the point that there should be fiscal tailwinds, not headwinds. But in the spirit of baby steps, I'll acknowledge the benefit of diminished headwinds.

--Budget better than another CR: The deal raises the discretionary spending caps above the sequester levels that would be imposed through yet another CR. The usual suspects are predictably bemoaning the absence of a "grand bargain," but should this deal get closed, it would represent the first compromise in years, squirrelly though it is ("fees" as some opaque type of revenues, one-time spectrum sales, another whack at public pensions). And the road back from dysfunction is paved with compromise.

--No shutdown: Republicans seem intent on avoiding another shutdown; their leadership seems to have cordoned off the Cruz faction, at least for now.

--Defense cuts provided leverage: One of the main reasons we ended up with sequestration was because the lowering of the spending levels on defense that was supposed to be the sword of Damocles turned out to be a very dull blade. Yet in this budget round, the specter of another $20 billion off of the defense caps appears to have motivated R's to deal.

Even if they close the deal, whether they can maintain the higher discretionary caps post 2015 is to be seen. And no one should stop fighting for extended UI. How many times must we relearn the mistake of taking away countercyclical support too soon?

But as politics is the art of the possible, and almost nothing useful has been possible in fiscal policy, perhaps a bit of realpolitik analysis would judge this potential deal to be a sliver of not-so-bad news. Today in Fiscal Policy: Is There a Little Deal in the Offing?

This post originally appeared at Jared Bernstein's On The Economy blog.