(photo: Earls37a)

Update: Looks like negotiations are deadlocked. Boehner says “I and my Republican colleagues in the House are prepared to move on our own.”

Update II: Reid working on his own counter-proposal to Boehner.

John Boehner has scheduled a 4:30 conference call with Republicans, presumably to announce a deal on the debt ceiling.  As Dday says, “it appears that Boehner’s gambit is to call President Obama’s bluff on a short-term debt limit increase.”

As far as “bigger picture goes,” this is my understanding of what is happening:

1)  Senate Democrats hoped Obama would join with them to wedge the House Republicans by supporting Gang of 6.  Instead he endorsed the plan but didn’t whip, as he was already in talks with Boehner to join with House Republicans to wedge Senate Democrats.  At least that’s how the Senate Democrats took it.  Their rage at being excluded/wedged forced Obama to go back to Boehner and ask for $400 billion more in revenue, which blew up the first deal.  Nancy Pelosi has up until now been superfluous to any deal, because they assumed she will bring enough Democrats to compensate for any Republicans that Boehner loses regardless of what they decide, and it flatters Boehner and Cantor to exclude her.  But she joined today’s talks.

2) The reason Obama wants bigger deficit cut ($4 trillion) is because they figure $2.5 trillion will be needed to get us through the 2012 election. He most emphatically does not want to have to take personal responsibility for raising the debt ceiling, but if he has to, he only wants to do it once.  But in order to get to $4 trillion, he needs new revenues.

3)  Boehner luckily has the “no new tax” mantra to hide behind in his otherwise incoherent insistence that the deficit reduction be smaller than Obama wants, and authorizing less than $2 trillion means they’ll have to revisit the issue again before the election — and as Mitch McConnell stated, the goal of Republicans in this debate is to politically damage Obama for 2012 (and insulate Republicans for their vote to cut Medicare). So Boehner wants to make sure that they have to revisit the issue before the election.

4) Standard and Poors jumped in on Obama’s side, saying they want a $4 trillion reduction or they shoot the baby downgrade the US debt rating.  Shrewd analysis or overtly policial market manipulation?  You decide.

5) Obama has Standard and Poors, but Boehner has the Asian markets to use as the bogeyman.

6) Ryan Grim lets us know that no matter what happens, we’re probably looking at a “Super Congress” – Catfood Commission II, whose recommendations on things like Social Security and Medicare would be fast-tracked to the floor of each chamber for an up-or-down vote, with no possibility of amendment.

7) Yves Smith has this rather chilling quote from John Rykamp regarding “enabling acts” like the one being contemplated for the Super Congress.  He used the German Greek bailout legislation, Paulson’s 2008 draft legislation, and Hitler’s 1933 enabling act as case studies:

The enabling act changes the nature of the political system which puts it into effect, which is why such political systems are said to have “committed suicide” by passing enabling acts. It is important to keep this in mind, because, on their face, enabling acts seem often only amend the previous political system; the political system remains, and indeed enabling acts make much of the supposed preservation of the existing political system. They also make much of dealing only with specific problems over a specified period. But various traps, sprung along the way to enforcement, lead to unitary power and the discarding of government. People wonder how a simple remedy led to such profound dislocation.

Yves concludes: “The Tea Partiers make a fetish of invoking the Constitution when it suits them but will happily run roughshod over it when it conflicts with their pet wishes. Not that they are singularly guilty in this conspiracy against the public-at-large, but their faux holier-than-thou/populist pretense while aligning themselves with an elite power grab is particularly nausea-inducing.”

Ditto that.