With 10 days to go

For those who saw the basic outline of the “Grand Bargain” and hated it, I have good news. For those who are concerned of an economic catastrophe a week from Tuesday, the news isn’t good at all.

House Speaker John A. Boehner on Friday abandoned talks with the White House over a landmark deal to reduce the national debt, throwing into chaos efforts to raise the legal limit on government borrowing just 11 days before the U.S. Treasury is due to run out of cash.

Facing the specter of the government’s first default, President Obama summoned congressional leaders to the White House for an emergency meeting Saturday morning, and Senate leaders rushed to revive a fallback strategy for raising the debt limit before the Aug. 2 deadline.

“We have now run out of time,” a visibly angry Obama said during an impromptu White House news conference held after Boehner (R-Ohio) called to say he was walking out on the talks for the second time in two weeks — again citing differences over taxes. Now, Obama said, “one of the questions that the Republican Party is going to have to ask itself is: Can they say yes to anything?”

President Obama went into detail, for the first time publicly, about the offer he put on the table: over $1 trillion in discretionary spending cuts, including defense, and an additional $650 billion in entitlement cuts, in exchange for $1.2 trillion in additional revenue, which is far less than what even the Gang of Six and Simpson/Bowles envisioned.

The White House also said it would settle for $400 billion less in revenue if Boehner would accept fewer entitlement cuts.

But the Speaker walked away, leaving the deal on the table. He blamed Obama for the breakdown — the president “insisted on raising taxes,” he said — but the more accurate assessment is that the Speaker just doesn’t have the votes. The House Republican caucus is simply too right-wing, and too opposed to compromise, to approve any deal Boehner negotiates with the president.

And while last night was dramatic, it’s worth remembering that the breakdown basically brings us back to where we were eight days ago. The Grand Bargain was on the table, them off, then on again, and now off again, apparently never to return. This is where we found ourselves last Thursday.

The difference is, the clock is now ticking much louder, as the crisis has intensified by several degrees.

So, now what? The White House will host yet another meeting with congressional leaders in three hours. Boehner has said he intends to have no further negotiations with the administration, but will instead talk to Senate leaders. Speaking of Senate leaders, the McConnell/Reid compromise that was shelved yesterday will be taken off the shelf, dusted off, and gain considerably more attention. (House Republicans still don’t like it, but that was when it was one of several options. As of now, it may be the last option standing.)

One of the main sticking points to keep an eye on is the thresholds Obama and Boehner are hanging onto. For the president, the deal has to resolve the debt-ceiling issue until after 2012; for the Speaker, the total savings package has to be, dollar for dollar, at least as big as the amount of the debt ceiling increase ($2.5 trillion). One of these two benchmarks will not be met.

As for the big picture, Obama offered Republicans the sweetest deal they’ll ever see from a Democratic president. In the end, the GOP just wasn’t prepared to compromise, and the House Speaker just wasn’t able to lead.

And as for this morning, the president said yesterday he expects the Republican leaders “to explain to me how it is that we are going to avoid default.” I suspect they’re going to struggle to answer that question.