Last fall, Obama compromised with Republicans to extend the Bush tax cuts for another two years. He was roundly criticized by the left for caving in to Republican demands. I actually thought Obama got a great deal when you consider how weak his negotiating position really was. An outcome of failed compromise was more tolerable to the GOP than it was to Obama, for various reasons, so he really couldn't force their hand on anything. Obama recognized his weak bargaining position, and took what he could get. It may not have been satisfying but it was the right move.
Fast forward to several weeks from now, when Republicans will apparently be "demanding fundamental changes in policy on health care, the environment, abortion rights and more, as the price of their support for raising the debt ceiling." This is code for Republican intent to defund planned parenthood and strip the EPA of regulatory authority. Contentious issues, no doubt, but they are also issues that don't really affect government spending. They are a partisan distraction.
In the coming battle over the debt ceiling, I don't think Republicans realize how weak their bargaining position actually will be. The fundamental problem for the GOP is that they control one house of congress, but not the other. Since they control the House, it is absolutely a foregone conclusion that the House GOP will, at some point, vote to raise the debt ceiling. Concessions by democrats or no, forcing the US government to default would be most intolerable to the GOP's powerful backers. Obama himself is shielded from the process because any bill will have to make it through the Democrat-controlled senate; a bill with lots of partisan riders won't pass. Even if the GOP managed to buy off some of the few remaining centrist democrats, there will be at least 41 liberal Democrats who would filibuster an intolerable GOP-sponsored bill.
In the context of failed negotiations, the end-game is this: the GOP-led house passes a bill with severe cuts and partisan riders while the Democrat-led senate passes a modest bill with a few token spending cuts. At that point it is a game of chicken to see who jumps first. Who fears a US government default more, the Republican Party or the 41 most liberal Democrats in the senate? Is it plausible that banks, corporations, and other business interests will tolerate a US government default over a petty battle about say planned parenthood? As the default deadline approached, the Republicans would be forced to pass the senate bill by overwhelming pressure from their powerful backers.
Conservatives, now more than ever, need to start looking for the pragmatic voices in the Republican Party to lead in these negotiations. I absolutely believe that if Republicans put partisan battles aside, Democrats would join them and real progress on spending could be made. There are tons of low-hanging fruits that could be plucked to get real reductions in government spending. I am not confident that the GOP can yet be led by pragmatists. I anticipate they will insist on continuing to fight distracting partisan battles. If Republicans charge into this looking to win a political fight, they may be dealt a defeat of staggering proportions when the Democrats call their bluff.