On the optimistic side of things, Brian Beutler thinks that Republican leaders might be realizing they are trapped. However, they’re still hoping to draw the President into some kind of negotiation, which means they aren’t really facing reality yet.

I think Paul Krugman’s assessment is about right —

Just last week we had Paul Ryan blithely assuring National Review that “nobody believes” that Obama will refuse to make concessions over the debt ceiling, and citing examples from the past that anyone who has actually been following the issue knows have no relevance to what’s happening now.

In other words, GOP leaders fundamentally misjudged the situation (and Obama’s incentives). And now they have backed themselves into a position where they don’t know how to back down — they have to extract concessions or they’ll have been “disrespected,” in a situation where Obama simply can’t make any concessions without destroying his own credibility and betraying the fundamental norms of governance.

Krugman says that as the debt limit date draws near, markets and going to freak out. And it is widely assumed this will cause House Republicans to blink.

But given their behavior so far, why would you believe this? I can easily see Ted Cruz making a speech declaring that the freakout is all Obama’s fault, and that what the markets really fear is socialism or something — and the base believing it.

My bet now is that we actually do go over the line for a day or two. And what ends the immediate crisis is not Republican action but a decision by Obama to declare himself not bound by the debt ceiling. He can’t even hint at this possibility until the thing actually happens, because he has to keep the focus on the Republicans, and he has to make them demonstrate their utter irresponsibility before he can take any extraordinary action.

I think the only way we can avoid passing the default date is if the House Republicans capitulate, and I don’t see them doing that.

Ezra Klein:

To the White House, the shutdown/debt ceiling fight is quite simple, and quite radical: Republicans are trying to create a new, deeply undemocratic pathway through which a minority party that lost the last election can enact an agenda that would never pass the normal legislative process. It’s nothing less than an effort to use the threat of a financial crisis to nullify the results of the last election. And the White House isn’t going to let it happen.