So Steve Benen poses a serious question, and I’d like to give an answer. Maybe it’s a moot point with the deal going down in flames, but nevertheless.

What’s Plan B?

I don’t mean this to sound snarky and this isn’t a rhetorical question; I’m genuinely interested in understanding the back-up strategy. When I posed this question yesterday to some Capitol Hill aides I know, they said they’d recommit to fighting even harder for the original Obama tax plan — permanent breaks for those under $250k, Clinton-era top rates for those above $250k. If/when this week’s compromise goes down, Republicans, they said, would likely cave and accept the Democratic approach. They’d be out of options — it’d be a choice between the Dem plan and higher taxes for everyone. Dems would regain the leverage they lost before the midterms.

And that could work. The plan came seven votes shy of 60 the other day, but when push comes to shove, maybe those seven additional votes would come together, and Dems would win this fight over taxes.

But what then? How would extended unemployment benefits pass for the millions of jobless Americans who need them? What happens to the economic stimulus? What’s the strategy for getting quick approval for an expanded earned-income tax credit and the continuation of a college-tuition tax credit? With almost no time left on the clock, after winning the fight on tax policy, is the plan to simply punt on New START ratification, DADT repeal, the DREAM Act, food safety, and health care for Ground Zero workers, hoping for the best in the next Congress?

Certainly, there are those on the Hill who think “fight harder” is the Plan B. Raul Grijalva wants the GOP to deal with the unemployment and tax-increasing effects and see how they handle it.

That is not my position. Or rather, I come at it in a different way.

I don’t think you can look at this thing in a bubble. A $900 billion dollar increase to the deficit over two years is not going to be allowed to sit there without an equal and opposite reaction from the incoming Congress. Sure, they might just want “exploding debt” as a 2012 issue, but my sense is that’s not how this Tea Party rolls. The biggest reason the Club for Growth and Jim DeMint oppose the deal is because of the hole it blows in the deficit, and they are the two most consequential forces in GOP primaries. There will be enormous pressure on the right to institute major spending cuts to counteract this. You’re already seeing that.

INGRAHAM: What do we know, as we speak now, about this so-called compromise on extending the Bush tax code, the Bush tax cuts?

COBURN: Well, what we know, from what I understand, is we’re going to borrow another $110 billion from our kids for Make Work Pay and for unemployment benefits. Which, we ought to cut the government. The problem is spending. And what it seems like the agreement is is extension of two year extension of the tax cuts, one year for the Make Work Pay, and one year for the unemployment benefits, all of it borrowed against our kids.

I’ll bet Coburn’s a no on the bill, but I also bet he’ll be essentially the mainstream Republican voice in the coming months saying that we have to counteract this spending. And rhetorically, the bipartisan fetishist Village is on his side.

The tax deal between the White House and Congressional Republicans, if approved, will put a little extra money in your pocket for the next two years. But you’re going to pay for it eventually.

Without sizeable cuts in federal spending, Americans can expect higher taxes down the road to cover the cost of the package.

Except that you cannot physically enact higher taxes in this day and age, and so more likely you’ll see savage spending cuts. Read Steven Pearlstein today, he thinks the bill is a “step backward” on getting deficits under control. Deficit hysteria will not go away.

We also know that there are events coming up where Republicans will have as much leverage as the President’s veto pen. In particular you have the debt limit, and you also have the funding of the government. Just because Republicans lost the government shutdown fight in 1995 doesn’t mean they won’t try it again. After all, they simply need to take a hostage, and the President told him they’ll do the responsible thing. Or that which he pretty much wants to do anyway, following the lead of deficit hawk Peter Orszag. It was only a week ago when the President called for an immediate public worker pay freeze, after all.

Therefore, I think you have to look at the totality of this. There’s not going to be the kind of impact from this bill sufficient to call it a second stimulus. The stimulus itself is poor to begin with – little bang-for-the-buck outside of the unemployment insurance extension, and mostly just extending current law (anti-contractionary, not stimulative). When you offset that with big spending cuts, which Senate Budget Committee Chair Kent Conrad voted for in Bowles-Simpson, and which House Budget Committee Chair Paul Ryan didn’t vote for because he didn’t think they were savage ENOUGH, the stimulative impact is zero.

So the choices are: a deal that extends Bush tax cuts and a lower estate tax than even Bush envisioned, basically forever, with a canceled-out stimulus in the exchange; or no Bush tax cuts, and no stimulus. In the alternative scenario, do Republicans still call for spending cuts? Probably. But the public finances look better in that scenario, and their energy would probably be dedicated to getting those tax cuts back instead. Republicans have signaled enough weakness on unemployment benefits that a short-term extension can probably get wriggled out. And crucially, you’d have a future tax base which can actually sustain a robust functioning government.

So you have to ask yourself is this the best possible deal for the future? Because there’s no question this is a deal for 2012. But endless low tax rates, on income and estates, basically ends progressive governance in America. As Kevin Drum said yesterday:

Looking at American politics from a 100,000-foot level, conservatives have won. Programmatic liberalism is essentially dead for a good long time, and small bore stuff is probably the best we can hope for over the next 10-20 years — though social liberalism will continue to make steady advances. I reserve judgment on whose fault that is.

It’s certainly dead in a situation where tax rates are permanently at 2001 levels. To me, that’s the choice. If the debt ceiling rise was included in this deal, ensuring that one bargaining chip for spending cuts came off the table, I’d have a much easier time agreeing to this, mindful of the near-term need for stimulus. As it isn’t, I have problems with mortgaging the future for a short-term gain I find ephemeral.