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The fiscal deal that raised taxes on the top one percent was a victory only for what it did not do. It did not cut Social Security, Medicare, Medicaid, or other public spending. Unfortunately, it merely put off the next round of jousting over fiscal issues to a time when Republicans will have more leverage.

In what we might call Cliff One (tax increases for the rich), the status quo played to President Obama's advantage. If Congress failed to act, taxes would go up on everyone. So the Republicans caved.

But in the coming battles over Cliff Two (the debt ceiling) and Cliff Three (the $120 billion in automatic cuts known as the Sequester) the status quo favors the Republicans. If Congress fails to act affirmatively, the United States defaults on its debt, and highly deflationary spending cuts kick in automatically.

President Obama might dispatch Cliff Two by invoking the Fourteenth Amendment, but in the bargaining over the Sequester, Republicans will demand other spending reductions as their condition for sparing the economy these automatic budget cuts.

So Obama will need to play real hardball to prevent this from occurring.

But if you think Democrats are anxious about what the future holds, check out the mood of the austerity lobby. The Peterson Foundation has spent upwards of half a billion dollars to convince the public that austerity is the road to recovery. The hastily assembled corporate "Fix the Debt" campaign is spending another $60 million to deliver essentially the same message. In 2010, this crowd persuaded Obama to appoint the Bowles-Simpson Commission to give the austerity ideology bipartisan credibility and to impress media commentators looking for politicians brave enough to tighten other people's belts.

The fiscal cliff and kindred mechanisms of automatic retribution for failure to cut deficits were supposed to be the enforcement mechanism.

But after Congress's action to head off Cliff One with tax increases and no spending cuts, the austerity lobby is crying in its beer. Leaders of Fix the Debt put out the following statement:

Tuesday night's rather inglorious end to the fiscal cliff fiasco simply re-enforces how difficult it is for the President and Congress to undertake substantive action to alleviate our nation's massive and reckless deficit and debt situation. The result of last night's action is that a self-imposed deadline – the purpose of which was to address our debt problem – was turned into action that essentially solved nothing and did little more than kick the can down the road. This Administration and Congress will now need to turn to the real issues that plague our nation's fiscal future, such as entitlement reform and tax reform, if we are to actually restore our long-term economic health and our children's right to have passed on to them a solvent nation.

You have to sympathize with these people. They represent America's richest plutocrats, they've spent a fortune selling austerity, and they can't quite bring elected leaders to heel. Yet.

It's not for lack of a sympathetic press. Peterson and Fix the Debt have the media eating out of their hands. Our friend Peter Dreier posted an exasperated critique after The New York Times ran a shameless puff piece on Maya MacGuineas, one of the engineers of the Fix the Debt campaign and a favorite Peterson grantee.

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The austerity mongers have had great success selling two propositions, one of which is backwards economics and the other of which is the political corollary.

Supposedly, a large national debt is standing between us and a robust recovery. But there is no evidence that businesses are basing their investment behavior on public debt projections. Interest rates are at record lows. The real problem is that consumers don't have enough money in their pockets-because the economy is deflated and because virtually all of its gains are going to the top one percent (who promote austerity for everyone else). If anything, we need more public spending to power a recovery, partly funded by deficits and partly by taxes on the rich.

Think about it: The "fiscal cliff" was a sharp cut in the budget. The Congressional Budget Office calculated that it added up to $607 billion in a single year-enough economic contraction to kick the economy back into a full blown recession. So the austerity lobby, to head off the fiscal cliff, is proposing that we cut $4 trillion over a decade. But if $607 is an alarming fiscal cliff, $4 trillion is a fiscal chasm.

The pundits who cheer on the deficit hawks somehow miss this elementary slight of hand.

But if it's true that the economy needs a good dose of austerity, then it logically follows that politicians who support austerity are heroes. Even the Times' Maureen Dowd, who normally has a BS-detector second to none, devoted a column to lionizing Colorado Democratic senator Michael Bennet, who voted against the budget deal because it didn't cut enough.

Half a trillion dollars of lobbying hasn't bought austerity yet, but it has succeeded in buying a lot of media credibility.

The austerity lobby will only redouble its efforts. Nominally bipartisan, they are now working hand in glove with Republicans to demand spending cuts that would only weaken a fragile recovery.

Obama, since his re-election, has moved away from the premise that the economy needs austerity in order to grow. He explicitly took Social Security and Medicare Cuts off the table. But the earlier credibility that he helped give the austerity lobby does continuing damage.

Obama showed this week that he could be a fighter. But winning Cliff One was the easy part. Tougher fights to defend sound economics and sensible public spending lie ahead.