What's wrong with the debt ceiling deal

Fiscal experts lament that all the energy expended to cut a debt ceiling deal didn't yield far more and far smarter debt reduction.

NEW YORK (CNNMoney) -- The debt ceiling deal President Obama enacted Tuesday cuts deficits and lets the country avert default. But it is getting very muted applause from serious fiscal experts -- the ones who actually understand the federal budget.

"No one should pretend that they have solved anything other than an artificial political crisis," said Bob Bixby, executive director of the Concord Coalition, a nonpartisan deficit watchdog group.

Bixby said he was watching the brokering of the final deal with "fixed horror."

Here's what's been most maddening for hawks: For all the energy spent and bad blood created on the road to resolving that artificial crisis there's not nearly enough to show for it.

Yes, the final deal may reduce deficits by at least $2.1 trillion over 10 years.

But how those savings will be achieved is somewhat misguided, hawks say.

The bill relies too heavily on cuts to discretionary spending, which is not the major driver of the country's long-term deficits. And it all but ignores the need to reform entitlements and raise more revenue -- both of which are key ingredients to improving the country's long-term solvency.

Debt ceiling: What the deal will do

Credit rating agency Fitch underscored that point Tuesday.

"While the agreement is clearly a step in the right direction, the United States ... must also confront tough choices on tax and spending against a weak economic backdrop if ... government debt is to be cut to safer levels."

In theory, the special bipartisan congressional committee that the legislation creates could take up both entitlement and tax reform. But given the partisan bitterness on both those issues, the jury's out on whether the committee -- made up of 12 members from the House and Senate -- can move past that.

"I'd be surprised if the leadership on either side would appoint anyone who would compromise," said Pete Davis, a longtime Hill staffer who now runs Davis Capital Investment Ideas. "Deadlock is much more likely."

But even if the committee surprises the pessimists and delivers a comprehensive debt reduction framework, there's no guarantee Congress will enact it.

Lastly, the size of the deal is less than what hawks were pushing for. A $4 trillion "grand bargain" is what budget experts say is the minimum needed to start hitting the brakes on growth in the country's debt.

The fact that negotiators were working toward such an agreement only to step back from it makes the final deal all the more frustrating.

"We have not reached the promised land," Erskine Bowles and Senator Alan Simpson, the co-chairs of President Obama's bipartisan debt commission, said in a statement. "The plan doesn't do enough to stabilize our debt, nor does it make any meaningful structural reforms to address our nation's long-term fiscal problems."

That means Congress gets to have this whole rancorous debate all over again -- and again -- until they get it right.