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First Thoughts: On the cusp

On the cusp of a deal… The substance that’s still unresolved: how you “trigger” entitlement and tax reform (or punish Congress for NOT doing it)… And what’s also unresolved: soothing the egos of the Democrats and Republicans who aren’t going to like the deal… Brooks vs. Krugman on the grand bargain… Senate to vote on “Cut, Cap, and Balance” at 10:00 am ET… Obama holds town hall at 11:00 am ET in College Park, MD to sell the grand bargain… Panetta and Joint Chiefs will certify that DADT is ready to be repealed… Staff changes at Huntsman HQ… Pawlenty’s new TV ad… And Rudy’s thinking about a presidential run and will decide by the end of summer.

*** On the cusp: The Obama White House and House Speaker John Boehner are now thisclose to reaching a “grand bargain” deal. That framework includes spending cuts, plus entitlement changes and increased tax revenues (as part of a tax overhaul) that would come later. But there are two big hurdles left: 1) on the substance, and 2) on soothing egos. On the substance, the most contentious matter is how you “trigger” the provisions to guarantee completing tax and entitlement reform. The Democrats have offered a trigger of letting the Bush tax cuts expire for those making $250,000 or more. Republicans, meanwhile, have countered that if those Bush tax cuts are hanging in the balance, they’d offer a trigger of their own to ensure Dem action: scaling back Obama’s health-care law and eliminating the mandate. Bottom line: If entitlement and tax reform is completed on time, then the Bush tax cuts and the health-care law don’t get touched. Also on the substance front, we’re hearing that there’s yet to be an agreement on the scope of the entitlement changes. And never mind the actual individual cuts on the discretionary side. Details, details. The K Street Army is gathering forces if this deal goes through because we haven't seen this much change in the way government spends and gathers money in a generation.  

*** On substance and egos: And that brings us to soothing egos. There would be two winners if this deal gets reached: President Obama and John Boehner. Obama gets his deal, avoids default, and advances his brand -- as the Washington Post's Fixers write -- of being able to bring people together when others have failed. Boehner gets his deal too, accomplishes something historic, and provides some stability for his House majority. But here’s the deal: No one else wins. Not Nancy Pelosi and the House Democrats who want to take back that chamber. Ditto Mitch McConnell and Senate Republicans. So the next couple of days are all about soothing egos and convincing folks that it’s either this deal or nothing. By the way, one way Republicans are selling this to their rank-and-file, unlike previous "grand bargains" (think 1982 or 1990 or 1995) is this one has cuts up front. The best Democratic sales pitch is the Bush tax cuts aspect.

*** Brooks vs. Krugman: As we sometimes see on Friday, David Brooks and Paul Krugman fundamentally disagree on the New York Times’ op-ed pages. Brooks sees the grand bargain as a winner. “Mostly you do it because you want to live in a country than can govern itself. Over the past few weeks, Washington has seemed dysfunctional… Yet through all this, serious people — Barack Obama, John Boehner, the members of the Gang of Six — have soldiered on. They’ve been responsible and brave.” Krugman, on the other hand, sees the cuts as austerity that will harm the global economy. “The disappearance of unemployment from elite policy discourse and its replacement by deficit panic has been truly remarkable. It’s not a response to public opinion.”

*** A Senate vote, a town hall, and a presidential op-ed: As Washington closes in a debt deal, there are a couple of moving parts today. First, the Senate votes on the “Cut, Cap, and Balance” measure around 10:00 am ET, and it isn’t expected to pass. At 11:00 am ET, Obama holds a town hall at the University of Maryland in College Park, MD, to sell the grand bargain to the American public. The president also pens an op-ed in USA Today: “Yes, we should make serious spending cuts. But we should also ask the wealthiest individuals and biggest corporations to pay their fair share through fundamental tax reform.” He goes on to write, “[R]ight now, we have the opportunity to do something big and meaningful. This debate shouldn't just be about avoiding the catastrophe of not paying our bills and defaulting on our debt. That's the least we should do. This debate offers the chance to put our economy on stronger footing, restore a sense of fairness in our country, and secure a better future for our children.”

*** Certifying that the military is ready to repeal DADT: At 2:45 pm ET, Obama meets with Defense Secretary Panetta and Joint Chiefs Chairman Mullen. As NBC’s Jim Miklaszewski and Courtney Kube reported, the Pentagon will announce today that Panetta and all of the Joint Chiefs have certified that the military is ready to repeal "Don't Ask Don't Tell." Each member of the Joint Chiefs had to submit a recommendation to Secretary Panetta, indicating that they are far enough in their training to repeal DADT, and that it will not have an impact on military readiness. The next step is for Obama to certify the repeal, which then begins a 60-day waiting period to implement the repeal -- before "Don't Ask Don't Tell" is officially a thing of the past.

*** Staff changes at Huntsman HQ: Turning to the 2012 race, probably the biggest news yesterday was that Huntsman’s campaign manager, Susie Wiles, quit and is being replaced by communications director Matt David. So why did Wiles leave? According to her interview with the Miami Herald, “It was just time.” More Wiles: "It was in my plans to resign at some point. I have a great life and a great situation. We launched this thing and it’s up and running. Our team is so good that we hired from within. I continue to have a role here. I intend to be friend and confidante of Huntsman." With David at the helm, the campaign is expecting a more aggressive message from Huntsman. As senior adviser John Weaver said in a statement about the staff changes: "Now the campaign is moving into Phase 2, which will be more aggressive from a messaging and tactical standpoint and Matt is prepared to take that on." Because Huntsman hasn't vaulted into the top tier, some of the internal machinations that have been whispered about for weeks haven't really leaked out into the open. But there have been no clear lines of authority for some time, apparently.

*** T-Paw’s new TV ad: In the run-up to the Ames Straw poll, Pawlenty is up with a new TV ad. “I’m the only candidate with a specific plan to fix [unemployment and the debt], not just talk about it,” Pawlenty says to the camera. “I’ll eliminate ObamaCare, fix the tax code … and actually cut spending.” Many candidates talk about tackling tough problems; I’ve actually done it.” Just asking: But what happens to this message if the Obama-Boehner plan is enacted? The ad is airing in Des Moines.

*** Rudy’s thinking and deciding (by the end of summer): On FOX last night, per NBC’s Morgan Parmet, Rudy Giuliani said he’s “thinking” about a presidential run, and that he’ll make a decision by the end of the summer (as he’s said before). “I’m not leaning, I'm thinking. I listen to a lot of people. I listen to their advice. Some think it's a good idea to run; some think it isn't… I don’t want to do this just to, you know, just to run. I want to do it only because I think I have the best chance of winning. If I think someone else has a better chance, I don’t want to spoil their chances. It's too important that we replace Obama.” On timing, Giuliani said, “You've got to decide by the end of summer. By the end of August, end of September. August, September. Something like that.”

*** Trump’s threat: Also on FOX yesterday, Donald Trump threatened to run as an independent. “I'm going to see who is going to be the Republican nominee, and I'm going to be looking at the economy… If the economy continues to do badly, and if the Republicans pick somebody that I think is the wrong person and isn't going to win, I would very seriously consider running as an independent. And the reason I have to do it that way is because as you know what I'm doing doesn't allow me to run sooner than May.”

*** On the 2012 trail: Pawlenty remains in Iowa, visiting Des Moines and Urbandale.

*** Friday's "The Daily Rundown" line-up: Sens. Claire McCaskill (D-MO) and Kay Bailey Hutchison (R-TX) on debt deal deliberations... Cook Report's Dave Wasserman and Rothenberg Report's Nathan Gonzales with a 2012 redistricting primer... And one of us (!!!) joins the Washington Post's Chris Cillizza and Democratic strategist Karen Finney to chew on the latest campaign trail news.

*** Gregory sits down on Lee: On his weekly “Press Pass,” NBC’s David Gregory sat down with Utah Senator Mike Lee (R) to talk about the latest on the debt ceiling fight and 2012

Countdown to Wisconsin recall general for GOP senators: 18 days
Countdown to Iowa GOP straw poll: 22 days
Countdown to Wisconsin recall general for Dem senators: 25 days
Countdown to NV-2 and NY-9 special elections: 53 days
Countdown to Election Day 2011: 109 days
Countdown to the Iowa caucuses: 199 days
* Note: When the IA caucuses take place depends on whether other states move up

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