“Top Republican lawmakers and the Obama administration’s budget director predicted Sunday that an agreement would be reached before the federal government defaults on its debt in early August, but both sides continued to squabble over the details of competing proposals, offering little evidence that a deal was at hand,” the New York Times writes. “‘I do not believe that responsible leaders in Washington will force this to default,’ Jacob J. Lew, the White House budget office chief said on the ABC News program ‘This Week.’ ‘All of the leaders of Congress and the president have acknowledged that we must raise the debt limit. And the question is how.’”

More from the Times: “Republicans made clear that they intended to vote this week on their “cap, cut and balance” plan, which would cut the deficit, cap federal spending as a share of the economy and amend the Constitution to require a balanced budget. The changes would be made along with a provision that would lift the debt limit. The proposal is expected to pass the House, but its fate is much less certain in the Senate, as Mr. Obama and Democratic lawmakers have made clear that they oppose the measure. That has not discouraged Republicans, who see the “cap, cut and balance” proposal as a popular rallying point.”

Bloomberg News: “President Barack Obama has chosen Richard Cordray, the former attorney general of Ohio, as his nominee to head the Consumer Financial Protection Bureau, according to a senior administration official. Cordray became the assistant director for enforcement at the consumer bureau after he lost his re-election bid as Ohio attorney general in November. Elizabeth Warren, special adviser to the treasury secretary and assistant to the president, recruited him shortly after the election.”

Reuters goes to West Liberty, IA, the state’s first majority Hispanic town according to the U.S. Census, and finds that Hispanic voters there, who worked to get out the Democratic vote in 2008, are disappointed with President Obama, especially on immigration, and are not as motivated to organize for him.

“Only about one in five of the elite GOP fundraisers who fueled John McCain's 2008 presidential bid have donated to the Republicans vying to oust President Obama, a USA TODAY analysis of new campaign-finance reports shows.”

Candidates’ expense reports “provide a revealing look at the contrasting priorities and styles of the White House hopefuls. Taken together, the candidates burned through $32 million for telemarketing calls, posh hotel rooms, makeup artists and myriad other expenses, even with the first ballots still half a year away,” the Washington Post says.

Democratic super PAC founder Bill Burton attacked Republican candidates’ support for the “Cut, Cap and Balance” pledge in a memo released on Friday, using some colorful language: “For perspective, this pledge were taken seriously, it would be like saying they are not going to raise the debt ceiling until the entire state of Texas is turned into a national park – or until Donald Trump stops talking – or until leprechauns give up on rainbows and suspenders. It is hyperbolic fantasy of the highest order.”

BACHMANN: After previously saying she wouldn’t sign the “Cut, Cap and Balance” pledge because she said it was too timid, Michele Bachmann announced over the weekend that she will sign it on Monday, CNN said.

CAIN: “Herman Cain said Sunday he is a more experienced candidate for president than Rep. Michele Bachmann of Minnesota in the battle for the 2012 GOP nomination,” CNN writes. “‘The choice is real simple,’ Cain said on ‘Fox News Sunday,’ when asked why voters should choose him over Bachmann. ‘My entire career has been problem-solving, not politics.’”

Cain also said yesterday that local communities have the right to ban mosques. “Yes, they have the right to do that,” he said, per NBC’s Lauren Selsky. “That's not discriminating based upon that particular religion. There is an aspect of them building that mosque that doesn't get talked about and the people in the community know what it is and they're talking about it.”

HUNTSMAN: In Utah over the weekend, Jon Huntsman met with Iowa Gov. Terry Branstad who was in the state for the National Governors’ Association meeting, the Deseret News reports. Branstad said his message was the same (he had previously said Huntsman’s decision not to focus on Iowa was “stupid”) but Huntsman said they had a “good conversation.” Huntsman said he also met with several other governors including New Jersey Gov. Chris Christie.

PAUL: Ron Paul will extend his TV ad, which criticizes Washington for its history of raising the debt ceiling, to Nevada, CNN reports.

PAWLENTY: “Tim Pawlenty's campaign manager Nick Ayers tried to reassure staff Friday about the Minnesota Republican's shaky presidential bid, saying there was plenty of time to make up ground. In an email, provided to CNN by a Republican source, Ayers pointed out that Pawlenty's second quarter fundraising total of $4.5 million outpaced every GOP candidate other than the frontrunner, former Massachusetts Gov. Mitt Romney… Ayers signed off with the faux Latin phrase ‘Illegitimi non carborundum,’ meaning: ‘Don't let the bastards grind you down.’”

Per Politico, Pawlenty launches his “Road to Results” RV tour today, and will visit 13 counties and 18 cities by Friday.

PERRY: Rick Perry told the Des Moines Register that he’s feeling more comfortable that running for president is what he’s been “called to do.”

IDAHO: The state of Idaho will switch its primary to a caucus and move the event from May to March so it can be part of Super Tuesday, Boise Weekly writes.

IOWA: With key potential candidates like Rick Perry and Sarah Palin still talking about getting into the race, The Ames Straw Poll “won’t carry the same weight of inevitability, insiders said, because a candidate not even in the race yet could win the caucuses,” the Des Moines Register writes.

More from the Des Moines Register: “An announcement event for Democrat Christie Vilsack will begin at 8:30 a.m. Tuesday in Ames. Vilsack is expected to officially reveal her intention to challenge U.S. Rep. Steve King for a seat in Congress. The event will be at the Iowa State University Memorial Union, 2229 Lincoln Way in Ames, said Patrick Brown, campaign manager for Christie Vilsack for Iowa.”

NEW HAMPSHIRE: Secretary of State William Gardner said the New Hampshire primary will probably be held before the Feb. 14 deadline that national parties have proposed, the Boston Globe reports. 

The Obama re-election campaign has listed the big-money bundlers who helped the incumbent president raise the $86 million the campaign and the DNC raked in this past fundraising quarter.

The bundlers -- well-connected people who use their rolodexes to raise $50,000 or more for a candidate -- include A-list names like Vogue editor Anna Wintour, Hollywood producer Jeffrey Katzenberg, former New Jersey Gov. Jon Corzine, and Hollwyood agent Ari Emanuel (brother to Chicago Mayor Rahm Emanuel).

The full list is here.

NOTE: The Obama campaign has stressed that none of the GOP presidential campaigns has released the names of its own bundlers.

Can Congress get a deal done, The presidential camp out in Iowa, Rick Perry talks to donors – will he get in?

Edited by NBC's Andrew Gross.

CNN reports that Republican presidential candidate Michele Bachmann has quit her church.

Bachmann, a Minnesota congresswoman, and her husband, Marcus, withdrew their membership from Salem Lutheran Church in Stillwater, Minnesota, last month, according to church officials.

The Bachmanns had been members of the church for more than 10 years, according to Joel Hochmuth, director of communications for the Wisconsin Evangelical Lutheran Synod, the broader denominational body of which Bachmann’s former church is a member.

The Wisconsin Evangelical Lutheran Synod has drawn criticism for being anti-Catholic, CNN adds.

"We identify the Antichrist as the Papacy," the denomination's website says. "This is an historical judgment based on Scripture."

The Catholic League for Religious and Civil Rights issued a statement Thursday about Bachmann's denomination, saying it's "regrettable that there are still strains of anti-Catholicism in some Protestant circles."

"But we find no evidence of any bigotry on the part of Rep. Michele Bachmann," the statement continued. "Indeed, she has condemned anti-Catholicism. Just as President Barack Obama is not responsible for the views of Rev. Jeremiah Wright, Rep. Bachmann must be judged on the basis of her own record."

(Hat tip: Ben Smith.)

The entire debt debate has raised this question: What do you do to reduce the nation's deficit?

Republicans want to strictly cut government spending, while preserving all tax cuts and tax breaks. President Obama, by contrast, favors a balanced approach -- some spending cuts, plus revenue increases and tax hikes.

But what about the American public? Back in February, at the very outset of this deficit/debt debate, our NBC/WSJ poll measured 26 different ways to reduce the deficit or to cut spending. The list runs from most acceptable to least acceptable.

-- Placing a surtax on federal income taxes for people earning over $1 million a year: 81% acceptable
-- Eliminating spending on so-called earmarks for special projects and specific areas of the country: 78% acceptable
-- Eliminating funding for weapons systems the Defense Department says are not necessary: 76% acceptable
-- Eliminating tax credits for the oil and gas industries: 74% acceptable
-- Phasing out the Bush tax cuts for families earning $250,000 or more per year: 68% acceptable
-- Freezing annual domestic spending at its current level for the next five years: 67% acceptable
-- Reducing Medicare and Social Security benefits for wealthier retirees: 62% acceptable
-- Gradually raising the Social Security retirement age to 69 by 2075: 56% acceptable
-- Cutting funding for the new health-care law so that parts of it will not be put into effect or enforced: 51% acceptable
-- Reducing agriculture subsidies or support to farmers and ranchers: 45% acceptable
-- Eliminating funding to Planned Parenthood for family planning and preventive health services: 45% acceptable
-- Gradually turning Medicare from a system in which the government pays for most beneficiaries' medical bills into a program in which seniors would receive government-assisted vouchers to purchase private insurance: 44% acceptable

Among the budget cuts:

Subsidies to build new nuclear power plants: 57% acceptable
Federal assistance to state governments: 52% acceptable
The Environmental Protection Agency: 51%
Transportation and infrastructure projects: 51%
Scientific and medical research: 48%
National defense: 46%
Unemployment insurance: 43%
Head Start: 41%
College student loans: 39%
Heating assistance to low-income families: 34%
Medicaid: 32%
Medicare: 23%
K-12 education: 22%
Social Security: 22%

Republican presidential hopeful Rick Santorum raised $582,348 for the 2nd fundraising quarter, according to the campaign. That places him near the bottom of the GOP money race.

The Santorum campaign also reported having more than $229,000 in the bank at the end of the quarter.

If the debt standoff ends like it’s expected to, there will be no winners and no losers -- and the sides will have to fight another day… Obama: “It’s decision time,” as he wants congressional leaders to choose a path in the next 24 to 36 hours… President holds a news conference at 11:00 am ET… A deal gets reached in Minnesota… The 2^nd quarter money chase: Today’s the deadline for the campaigns to submit their reports to the FEC… Marcus Bachmann speaks… Ron Paul hits the airwaves… David Gregory chats with Grover Norquist… And Rob Portman and Erskine Bowles appear on “Daily Rundown.”

*** No winners and no losers: With President Obama set to make remarks at yet another news conference at 11:00 am ET, the bipartisan debt negotiations are now essentially over. And we pretty much know how this thing will play out, barring a last-minute collapse: It will be a combination of McConnell’s “Hail Mary punt,” Harry Reid’s entitlement and tax commissions, and some level of the agreed-upon spending cuts. (The one outstanding question: Can this get through the House?) If that’s the eventual outcome, then you could argue that nobody won this fight, but nobody lost, either. And both sides have essentially decided to fight another day, which is 2012. To use a historical analogy, it’s the Korean War or Cuban Missile Crisis -- no one won or lost, and the bigger war (the Cold War) is years away from being decided. In this case, the Cold War is the war over the role of government.

*** “It’s decision time”: In yesterday’s White House meeting, Obama said he wants all the congressional leaders to choose a path forward in the next 24 to 36 hours that can pass both the House and Senate, according to a GOP aide. “It’s decision time,” Obama said at the meeting. “We need concrete plans to move this forward.” Per Democrats, the president also said for the congressional leaders to be on call over the weekend. By the way, this is a continuation of the presidential policy of letting Congress do the writing. Throughout these negotiations, the president never really outlined his own plan or "owned" some other plan. He laid out his principles. It's just like how he handled health care and the stimulus, and now this --- which is let Congress hammer out the details. It's going to raise a common question that's dogged this president since he came into office: Does he outsource too much to Congress? Then again, if the process gets results, does it matter?

*** The 2^nd quarter money chase: Today is the deadline for the presidential campaigns to submit their 2^nd quarter fundraising reports to the Federal Election Commission. The Pawlenty campaign tells First Read it revised its figures, saying it raised $4.5 million for the quarter (up from its earlier $4.2 million estimate), and that it has $1.4 million in the bank for the primaries. Meanwhile, CBS reports that Bachmann, in her two-and-a-half weeks as a candidate in the second quarter, raised $4 million, but that includes a $2 million transfer from her congressional account. (The campaign, though, isn’t confirming the report.) Here are the estimates of the 2^nd quarter hauls: Obama $47 million, Romney $18.25 million, Paul $4.5 million, Pawlenty $4.5 million, Huntsman $4.1 million, Bachmann $4 million, Cain $2.5 million, and Gingrich about $2 million. If that Bachmann total is right, it's a lot lower than many of her rivals feared. They smelled a $6 to 8 million direct mail mini-bombshell.

*** Marcus Bachmann speaks: Speaking of Bachmann, her husband Marcus “said in an interview with the Star Tribune that his treatment business is not focused on converting gays to heterosexuality. He also denied that he has ever called gay people barbarians.” More: “He didn't deny that he or other counselors at Bachmann & Associates have attempted to convert gay patients, but he said it is not a special interest of the business and would only be attempted at the client's request. ‘Will I address it? Certainly we'll talk about it,’ Bachmann said. ‘Is it a remedy form that I typically would use? ... It is at the client's discretion.’”

*** Ron Paul hits the airwaves: “Republican presidential hopeful Ron Paul is using his first campaign television ad to promote his long-time opposition to raising the federal debt limit,” the AP writes. Of Republican leaders Mitch McConnell and John Boehner on spending, an announcer in the ad says, “Will they choose compromise or conviction?” (Here’s the ad.) The New York Times: “The 65-second spot promoting his candidacy for president will start running Friday in Iowa and New Hampshire, according to the campaign’s chairman.”

*** Gregory chats with Norquist: In his weekly “Press Pass” conversation, NBC’s David Gregory chats with anti-tax activist Grover Norquist, who makes clear that the deficit is NOT the driving issue for him -- it's simply spending and taxes. “Raising taxes is not part of a compromise, raising taxes is moving in the wrong direction. Somebody is drinking too much, you tell them to drink less. You don’t buy them another bottle of scotch.”

*** Friday's "Daily Rundown" lineup: Sen. Rob Portman (R-OH) and Erskine Bowles, co-chairman of President Obama's fiscal commission, preview the president's press conference... NBC's Mike Viqueira, Jennifer Rubin of the Washington Post, and Jennifer Palmieri of the Center for American Progress join the roundtable... And finally: "Last Word" host Lawrence O'Donnell, who marks 15 years (almost to the minute) since MSNBC’s birth.

Countdown to Wisconsin recall general/primaries for Dem senators: 4 days
Countdown to Wisconsin recall general for GOP senators: 25 days
Countdown to Iowa GOP straw poll: 29 days
Countdown to Wisconsin recall general for Dem senators: 32 days
Countdown to NV-2 and NY-9 special elections: 60 days
Countdown to Election Day 2011: 116 days
Countdown to the Iowa caucuses: 206 days
* Note: When the IA caucuses take place depends on whether other states move up

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The New York Times: “President Obama threw the deadlocked budget negotiations back to Congress on Thursday, telling Republicans and Democrats to try to work out an agreement to avert a government default, and suggesting that more ambitious efforts to cut the deficit had hit a wall. After a polite but inconclusive session that covered familiar ground and made no headway, Mr. Obama told the Congressional leaders to confer with their rank-and-file members over the next 24 to 36 hours to ‘figure out what can get done,’ said a Democratic official briefed on the negotiations.”

The Washington Post adds, “‘It’s decision time,’ Obama told congressional leaders after meeting at the White House for a fifth straight day. Obama gave Republicans until early Saturday to tell him whether any of three options for trimming the federal budget would win GOP support. ‘We need concrete plans to move this forward,’ he said.”

“A backup plan to cut the federal deficit and keep the U.S. government from default gained momentum Thursday even as President Barack Obama and congressional leaders paused their negotiations to determine if they can reach a deal,” the Wall Street Journal says. “The so-called Plan B is taking shape in quiet discussions between Senate Majority Leader Harry Reid (D., Nev.) and Republican leader Mitch McConnell (R., Ky.), away from unhappy House Republicans who don't favor the approach."

"It would link a package of spending cuts to a plan Mr. McConnell proposed earlier this week that would give the president the power to raise the debt limit through 2012 in three installments, unless two-thirds of Congress voted to block it. It likely wouldn't include any tax increases, a senior Democratic aide familiar with the discussions said. Messrs. McConnell and Reid are also exploring the idea of creating a committee to identify further deficit-reduction measures and force a congressional vote on the package. The mechanism would be similar to the commission once established by Congress to make politically difficult choices to close military bases."

Jonathan Alter writing in Bloomberg: “I get the feeling that it’s all over but the shouting. We may look back and say that Senate Minority Leader Mitch McConnell’s convoluted parliamentary ‘backup plan’ marked the effective end of the 2011 debt-ceiling crisis. The winner? President Barack Obama.” More: “If you went into the congressional kitchen to cook up the perfect Washington fudge, this is what you’d get. Instead of “doing something big” about the deficit, McConnell is proposing to do nothing -- then blame the other side.”

Channeling what we wrote earlier this week, the debt fight isn’t a fight over the deficit; it’s over the role of government. And the New York Times takes it one step further: “Underlying the budget drama between the White House and Congressional Republicans is another compelling drama among Republicans, which exposes an ideological and generational gap. On one side are older, more senior conservatives like the two top leaders, Speaker John A. Boehner and Senator Mitch McConnell, the minority leader, who remember the budget fights and Republican setbacks of the 1990s and want some deal.”

“On the other are the proudly uncompromising junior lawmakers, many of them Tea Party sympathizers, whose ranks were so inflated by Republican gains in the midterm elections. Representative Eric Cantor of Virginia, the House majority leader, has emerged as their standard bearer, debating Mr. Obama in the White House sessions and then boasting of it afterward.”

BACHMANN: “The husband of Republican presidential contender Michele Bachmann has come forward to defend his family-owned Christian counseling business against growing questions and criticism that it benefited from federal payments and tries to turn homosexuals straight,” the Minneapolis Star Tribune reports.

“Rep. Michele Bachmann sent out a fundraising letter Thursday bashing Whoopi Goldberg, who criticized the Republican presidential hopeful on her television show this week for signing a pledge penned by a socially conservative group in Iowa,” the Washington Post reports.

CAIN: Herman Cain traveled to Murfreesboro, TN, and talked about his opposition to a planned mosque there, per the AP: "It is an infringement and an abuse of our freedom of religion. And I don't agree with what's happening, because this isn't an innocent mosque. "It is another example of why I believe in American laws and American courts," Cain said. "This is just another way to try to gradually sneak Shariah law into our laws, and I absolutely object to that."

GINGRICH: “Gingrich said on Wednesday that as president he would draw down U.S. troops in Iraq and Afghanistan as quickly as possible,” Reuters reports. “As rapidly as the generals think is safe,” he said. "And I would go to a much different style of using covert operations and using diplomatic and economic pressures. And I'd have a very clear goal, which is replace the Iranian dictatorship. But I think this is a very hard problem."

Gingrich had a slightly awkward moment at a Tea Party town hall in South Carolina, when a woman, who happened to be the county coroner said, "I'm the coroner, but I'm not here because you're looking ill or anything.” Byron York: “Taken aback, Gingrich smiled, laughed and expressed mock relief.”

GIULIANI: During a stop in New Hampshire, Giuliani gave support for raising the debt ceiling, per Reuters: "We have to recognize as Republicans that we don't control the entire government. We control the House of Representatives. They (Democrats) control the Senate and the Presidency. We should not put the country into default.” On timing, he “said he would decide by mid-September whether to make another bid for the Republican nomination.”

HUNTSMAN: “Jon Huntsman's campaign for president has rolled out a Conservatives for Huntsman drive,” FOX writes. Their goal is 5,000 conservative leaders 100% committed to supporting Huntsman, who then can recruit others. “Huntsman is traveling to Utah where he served two terms as governor. The schedule has not been released yet, but Miller says he's expected to talk with local business leaders during the Friday-Saturday visit. A motorcycle ride has already been publicized.”

The New York Times notes that Huntsman Corp. is so widespread it makes “chemicals that are used in everything from food packaging to fertilizer to car dashboards -- and even your Nike running shoes.” But, the Times writes, Jon Huntsman Jr.’s role is unclear. “A closer look, however, reveals few specifics about Huntsman's role in a company that by most accounts has been run by his father and brother Peter, the company's CEO since 2000. It also has green groups raising some long-term environmental and public health questions about the company's products -- including Huntsman Corp.'s original cash cow: Styrofoam and polystyrene food packaging like egg crates and the original McDonald's Big Mac "clamshell," which it no longer produces.”

PALIN: Fiscal responsibility? “Sarah Palin’s political action committee spent tens of thousands of dollars covering the costs of the former Alaska governor’s ‘One Nation’ East Coast bus tour this spring — a trip that Palin (R) has repeatedly characterized as a ‘family vacation,’” the Washington Post reports. “According to a list of itemized expenditures filed by SarahPAC to the Federal Elections Committee and published Thursday, Palin’s committee spent nearly $14,000 on the ‘bus wrap’ that festooned the family’s tour bus with images of the Liberty Bell, Constitution and American flag. The committee spent $10,000 on ‘logistical trip consulting,’ $3,600 to the bus driver and at least $7,000 on lodging.”

More: “The trip is expected to resume in the Midwest this summer, but it has been delayed in part because Palin was called for jury duty in Alaska and must report to the local courthouse each morning for the rest of July or until she is placed on a jury.”

Bristol Palin was on with Jay Leno last night and said that her mom quitting as governor of Alaska was putting “her state first.”

PAUL: “Republican presidential hopeful Ron Paul is using his first campaign television ad to promote his long-time opposition to raising the federal debt limit,” AP writes. Of Republican leaders Mitch McConnell and John Boehner on spending, an announcer in the ad says, “Will they choose compromise or conviction?” (Here’s the ad.) According to the New York Times, “The 65-second spot promoting his candidacy for president will start running Friday in Iowa and New Hampshire, according to the campaign’s chairman.”

PAWLENTY: “Tim Pawlenty ended June with $1.4 million to spend on his bid for the Republican presidential nomination as his campaign dumps money into Iowa ahead of a crucial August straw poll,” the Wall Street Journal says. “The former Minnesota governor raised $4.5 million during his first three months as a presidential candidate, according to a Pawlenty aide. He closed the quarter with $2 million in cash and negligible debt, but $600,000 of the remaining total was raised for the general election and can only be spent if he wins the nomination.”

Former Iowa talk-show host Steve Deace writes in the Washington Times of a focus group of undecided voters he hosted in the Hawkeye State and found problems for Pawlenty: “A cringe-inducing moment came when we asked group members to give their instant reactions to each of the GOP candidates. When former Minnesota Gov. Tim Pawlenty’s name came up, some of things this group of conservatives said included: ‘Soft.’ ‘Vanilla.’ ‘Insufficiently aggressive.’ ‘Spineless.’ ‘Indistinguishable.’ ‘Yawn.’”

Pawlenty said on CNN, per GOP 12: “Now the preseason's over, and we've got to start showing progress, and I'm confident that we will when my message... when my record of results gets out in Minnesota, we're going to do better. You'll see that in the poll numbers.”

PERRY: Texas Monthly (via GOP 12) notes that Gov. Rick Perry is soliciting donations of up to $100,000 at an Aug. 9 fundraiser.

ROMNEY: The Boston Herald has this harsh cover today: “Get a clue, Mitt!” The subhead: “Awkwardness on campaign trail could sink Romney, pundits say.” Here’s the story: “From pretending a waitress pinched his behind in New Hampshire, to cracking jokes about being ‘unemployed,’ to pulling out a $100 bill in a Colorado restaurant, Romney has raised eyebrows with a series of stumbles as he stumps in the harsh glare of the national spotlight… In New Hampshire yesterday, Romney declined to acknowledge any recent missteps, smiling and shutting his car door, saying ‘Thanks guys!’ when a reporter asked about his campaign trail foibles.”

AP (via GOP 12) notes Romney’s smaller campaign team this time around: “His New Hampshire operation is significantly smaller than four years ago, with seven staffers and one consultant on the payroll compared with 14 at this point during the 2008 campaign… Romney has just three paid staff in Iowa, two in South Carolina and one in Florida, according to Williams.

SANTORUM: The Des Moines Register notes endorsements for Santorum in Iowa.

By NBC's Libby Leist:  As deficit talks continued for a fifth night at the White House, details are emerging about negotiations between Harry Reid and Mitch McConnell on a backup plan to raise the debt ceiling and avoid default. The plan is being crafted in anticipation that White House talks are going nowhere.

Reid told reporters this afternoon that he and McConnell are working off the plan McConnell proposed on Tuesday that would allow the President to raise the debt ceiling in three increments through the 2012 election.

"We don't have it worked out yet, but it's something that we're looking to. Hopefully, we can come up with this big, robust deal that we've been trying to get, but until we do that, we're going to have to look at other alternatives.  And this is one of them," Reid said. He noted that White House officials are now participating in their talks.

According to both Democrat and Republican aides, the McConnell plan stands to change by adding guaranteed spending cuts to the mix. The political benefits are two-fold: Including spending cuts upfront presumably would attract more Republican support while also giving Democrats the ability to say they've done something about the deficit.

Aides say the leaders are discussing attaching up to $1.5 trillion in short to medium-term cuts that were found through the Biden talks and in the White House negotiations. They say its not clear how those cuts will fold into McConnell's original plan that requires the president to propose cuts in three batches totaling more than $2.5 trillion. Reid is also not in favor of having three different debt ceiling votes over the next year.

In addition, Senator Reid has proposed establishing a bipartisan Congressional committee (they say it is not a commission) comprised of 8-12 members from the House and Senate to come up with yet more cuts that may include entitlements. The committee recommendations would go to the floor for a straight up or down vote without an amendment process. One Republican Senator told NBC News the committee might be required to report by the end of this year.

*** UPDATE:  McConnell spoke on the Hugh Hewitt show tonight after the White House meeting. He called the talks "a little more cordial" today but he did not sound optimistic about any breakthroughs. 

"Its going to be very difficult to get this president to do the kind of spending reduction package that we really need without tax increases. He will only go so far without insisting on tax increases in order to get a bigger package," McConnell said.

McConnell revealed to Hewitt the components of a deal that he is negotiating with Reid that aides say may be the way out of the deficit standoff. He says the proposal is gaining some traction.

The first part of the plan was unveiled on Tuesday. It would require the president to request of congress an increase in the debt ceiling.

Their proposal also includes a congressional "deficit reduction committee" with "no outsiders" and "no administration officials."
McConnell stressed this would not be a commission - the dreaded Washington word.

The committee would include members of the House and Senate equally balanced. He said the group would be required to produce a mandatory report by the end of the year to deal with entitlement reform.

In addition, McConnell said the hope is to also include spending cuts agreed upon by the White House and House Republicans. He said that is the key. Will the White House agree to enough cuts to pass the House. 

By NBC's Luke Russert and msnbc.com's Vaughn Ververs:  House Speaker John Boehner literally and figuratively embraced his top deputy, putting his arm around Minority Leader Eric Cantor and telling reporters that the two Republican leaders remain together, fighting in the same “foxhole.”

Cantor has been the target of Democratic criticism in the wake of the tense budget negotiations on Wednesday and there have been rumblings about a split between himself and the speaker.  “Let me just say, we have been in this fight together,” Boehner said.  “And any suggestion that the role Eric has played in this meeting has been anything less than helpful is just wrong.  Listen, we’re in the foxhole and I’m going to tell you this is not easy.  What we are trying to do here is solve a problem that has eluded Washington for decades.  I’m glad Eric is there and those who have other opinions can keep them to themselves.”

Cantor was asked about comments by Senate Majority Leader Harry Reid, who said Cantor should not be at the bargaining table for the talks aimed at raising the debt ceiling.  “The speaker and I have consistently been on the same page,” Cantor said, adding, “Just as he laid out in terms of the principles that we are operating under that our conference is fully behind. That we are not going to raise the debt ceiling if we don't have cuts in excess of that amount. That we don't want to raise taxes and that we want to structurally change the system so we stop this from happening again.”

By NBC's Libby Leist:  At a press conference this morning at the Capitol, Senator Chuck Schumer (D-N.Y.) told reporters that Senate Minority Leader Mitch McConnell's "backup" plan may be a way out of the deficit standoff, with some spending cuts added in that would help pick up Republican votes.  

Schumer said President Obama still wants a bigger deal but that House Majority Leader Eric Cantor is blocking compromise. 

"There's really only one person who has not made any concessions of all the eight, nine [people] in that room, and that is Majority Leader Cantor. He is basically standing in the way and it's a shame." 

Schumer added later, "If Eric Cantor decides everything I fear we'll be in default." 

On the McConnell plan, Schumer revealed that Senate Leaders Harry Reid and McConnell are working on a proposal of spending cuts that could be added to the plan that would make it more appealing to Republicans, especially in the House. McConnell's plan as it stands now would allow the President to raise the debt ceiling three times on his own before the 2012 election without any guaranteed spending cuts. 

"We believe we have to avoid default, obviously, but we also have to reduce the deficit and lower the debt and so we would like to see even if we can't get a grand deal, that some real cuts be added to Senator McConnell's proposal and perhaps Senator McConnell's proposal be modified." 

Schumer ticked through best to worst case scenarios. He said the best case is a large deal negotiated at the White House. Second best is to avoid default by adding some spending cuts to the McConnell plan. Third would be to avoid default without any cuts. Last would be default. 

Schumer held the press conference with fellow Democrats Mark Begich, Chris Coons and Ben Cardin to warn of the dangers of default. Standing next to two giant charts the senators illustrated what they called the "dark and difficult" choices that the Treasury will have to make if the debt ceiling is not raised. 

Schumer said that next month after Social Security, Medicare, Medicaid, military payments and interest in Treasury securities is paid there would be large parts of our government at risk of losing funds. 

He listed areas like: education, labor, justice, energy, health, food nutrition, IRS payments, and unemployment insurance.

By NBC's Libby Leist:  Senate Majority Leader Harry Reid continued Democratic attacks on House Majority Leader Eric Cantor Thursday morning, saying the Republican has shown he doesn’t belong at the negotiating table for the debt ceiling talks.  

“Even Speaker Boehner and Minority Leader McConnell seem to understand the seriousness of the situation,” Reid said as he opened the Senate for business.  “They're willing to negotiate in good faith, which I appreciate.  Meanwhile, House Majority Leader Eric Cantor has shown that he shouldn't even be at the table.” 

Democrats pushed back Wednesday night after Cantor told reporters that President Obama “abruptly” left Wednesday evening’s negotiating session.  Cantor’s account was disputed by Democrats who accused Cantor of “juvenile” behavior and interrupting the president during the meeting.  Democrats were also quick to point out that Cantor himself had walked out of earlier debt talks led by Vice President Biden, a point Reid reiterated Thursday. 

Reid warned of the consequences of default, saying payments to the military would be in jeopardy and that “millions” of Americans would lose their jobs.  “If we allow this nation for the first time in its history to default on our national obligations, it will not only be a black mark on our reputation but also a massive financial disaster will sweep the world into global depression.”

It’s always darkest before the deal… Yesterday’s Obama vs. Cantor clash… Cantor’s isolation (and how he’s become the person to watch in this whole debate)… Despite yesterday’s theatrics, there are still three ways to resolve the impasse… And those three paths could combine to form a grand bargain of sorts… How campaigning in the early states helps the out-of-power party… Summer of Speculation: Rudy is in New Hampshire, Christie to raise money for Steve King, and Perry calls Grassley… And on the 2012 trail: Romney’s in New Hampshire, while Cain visits Tennessee. 

*** Always the darkest before the deal: With the clock ticking on debt ceiling, the news appears grim. Moody’s says it’s reviewing a possible downgrade of the government’s AAA bond rating. Fed Chairman Ben Bernanke warned of financial calamity if the debt ceiling isn’t increased. And at yesterday’s White House meeting to find a resolution to the legislative impasse, President Obama clashed with House Minority Leader Eric Cantor (more on that below). But as we said during the looming possibility of a government shutdown in the spring, it’s always darkest before the deal. 

*** Obama vs. Cantor: As for yesterday’s Obama vs. Cantor clash, it ISN’T striking that it happened; after all, these players have to be plenty frustrated by now. But what IS striking is that Cantor went directly to the press to tell his version of the story. After yesterday's meeting, Cantor recounted telling the participants that there would have to be multiple debt-ceiling increases to get through Nov. 2012. “Well that's when [Obama] got very agitated seemingly and said that had sat there long enough and no other president, Ronald Reagan wouldn't sit here like this, and that he's reached the point that something's gotta give,” Cantor said, per NBC’s Frank Thorp. “And he said to me, ‘Eric, don't call my bluff.’ He said, ‘I'm going to the American people with this.’” After that, Cantor says Obama got up and said, “I’ll see you tomorrow.” (And they meet again today at 4:15 pm ET.) There are a LOT of folks on all sides of these talks who believe the group is too big and that too much leaks out or simply gets read out, which is why there is speculation the president asks them all to come to Camp David (keep them from cameras). 

*** Dems push back: Democrats dispute Cantor’s version of events. One Democratic aide said Cantor’s story was overblown. “For someone who knows how to walk out of a meeting, you'd think he know it when he saw it. Cantor rudely interrupted the president three times to advocate for short-term debt ceiling increases while the president was wrapping the meeting.”  

*** Cantor’s isolation: What has become increasingly clear is that Cantor has become the person to watch in this entire debate. He’s either the Tea Party hero or scapegoat. Or both. He also has become isolated -- even within his party. There’s Senate Minority Leader Mitch McConnell, who told conservative talk-radio host Laura Ingraham yesterday that Republicans are at risk if there’s a default. "You know, it's an argument he has a good chance of winning, and all of a sudden we [Republicans] have co-ownership of a bad economy," McConnell said. "That is a very bad positioning going into an election." And GOP Sen. Lindsey Graham said that Republicans should be open to increasing revenues. As Politico writes, “Cantor has a lot riding on the outcome of the debt-limit negotiations. He’ll share in the public blame if they fall apart and the economy tanks, and he’ll face recriminations from his conservative base in the House if he cuts too soft a deal with the president.”

*** The three options to a resolution: Despite yesterday’s conflict, you can still see the making of a deal. And there are essentially three paths to a resolution. One is the somewhat maligned but viable McConnell “Hail Mary punt,” which would only deny the president’s request for a debt ceiling raise if veto-proof majorities in BOTH houses of Congress disapprove of the request. Two is the cuts the members of the so-called Biden group came up with (Cantor is among the advocates of this route). And three, Senate Majority Leader Harry Reid is pushing the idea of creating a binding congressional commission to handle either tax reform, Social Security reform, or both (modeled after the Social Security reform commission of the ‘80s and a little bit from the military base closing commission in the early ‘90s). The commission recommendations would NOT be subject to any alterations by Congress and instead would only be subject to an up-or-down vote.

*** How you still get to the grand bargain: Per one Democratic leadership insider, pieces of all three contingency plans could turn into the "grand bargain." For instance: You get a significant amount of cuts from the Biden group (think $700 to $800 billion) to get a six-month raise in the debt ceiling. Also included would be the binding Reid commissions to tackle tax reform and entitlement reform. They’d have, say, three months to get tax reform done and six months to get the entitlement reform done. Whatever they agreed to would be subject to the up-or-down vote, and if tax reform got enacted, then it would be linked to another large chunk of cuts (the rest of the Biden cuts, plus maybe more). And as a failsafe, the McConnell concept on the debt ceiling would also be part of the deal if both tax reform and entitlement reform failed. To be clear, the above plan is not being considered right now. It’s more of an example of how convoluted the eventual roadmap to a deal is going to be.

*** How campaigning in the early states helps the out-of-power party: Although it’s still early, a new Mason-Dixon poll showing Obama trailing Romney in Iowa -- after another poll showing a similar spread in New Hampshire -- suggests how the early primary states are helpful to the opposition party. In 2008, Obama’s constant primary campaigning in Iowa and New Hampshire allowed him to win those states in the general election. And remember that John Kerry flipped New Hampshire in the ’04 general election, though he fell short in Iowa. 

*** Summer of speculation: Rudy Giuliani today embarks on a two-day swing through New Hampshire, the AP reports. “Giuliani says he's not convinced any of the Republican presidential contenders can defeat President Obama. Until he is, Giuliani says he won't rule out a run at the White House himself… The 67-year-old Republican tells The Associated Press that a decision about his political future won't come until late August or early September.” Meanwhile, the Washington Post says that New Jersey Gov. Chris Christie will headline a fundraiser for conservative Iowa Congressman Steve King when Christie visits the Hawkeye State later this month. That Christie is doing this for King – and not someone like Tom Latham – certainly raises eyebrows…    

*** Perry calls Grassley: And speaking of the summer of speculation, the Des Moines Register notes that Texas Gov. Rick Perry yesterday called Iowa Sen. Chuck Grassley (R). “Grassley, in a conference call with reporters, didn't disclose what Perry had to say, but he wasn't shy about repeating the advice he offered: ‘I gave him the advice that if he's going to run, he'd better run in Iowa, and he'd better cover a lot of territory.’” 

*** On the 2012 trail: Mitt Romney spends his day in New Hampshire, hitting Portsmouth, Rochester, and Derry… And in Cain is in Tennessee.

*** Thursday's "The Daily Rundown" lineup: Reps. Jason Chaffetz (R-UT) and Xavier Becerra (D-CA) on the debt talks... Former State Department spokesman Jamie Rubin on the Mumbai attacks, Syria, and more... MSNBC’s Jonathan Alter, Politico's Maggie Haberman and National Review's Reihan Salam on 2012...

Countdown to Wisconsin recall general/primaries for Dem senators: 5 days
Countdown to Wisconsin recall general for GOP senators: 26 days
Countdown to Iowa GOP straw poll: 30 days 
Countdown to Wisconsin recall general for Dem senators: 33 days
Countdown to NV-2 and NY-9 special elections: 61 days
Countdown to Election Day 2011: 117 days
Countdown to the Iowa caucuses: 207 days
* Note: When the IA caucuses take place depends on whether other states move up

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“President Obama bluntly told Republican congressional leaders yesterday they must compromise quickly if the government is to avoid an unprecedented default, adding, ‘Don’t call my bluff’ by passing a short-term debt limit increase he has threatened to veto,” the AP writes. “The presidential warning, directed at House majority leader Eric Cantor, Republican of Virginia, marked an acrimonious end to a two-hour negotiating session at the White House that produced no evident progress toward a compromise. Another round of talks is set for today.”

“The meeting ‘ended with the President abruptly walking out of the meeting,’ Cantor told reporters after the session,” per the New York Daily News. "I know why he lost his temper. He's frustrated. We're all frustrated."

The New York Post: “Angry Obama walks out on debt-limit talks.”

The Hill: “Obama warns Cantor: 'Don't call my bluff' in debt-ceiling talks”

Roll Call: “As news broke late Wednesday that Moody’s Investors Service was mulling a downgrade of the U.S. government’s triple-A credit rating, Congressional leaders emerged from a ‘tense’ White House meeting that ended abruptly after a heated exchange between President Barack Obama and House Majority Leader Eric Cantor (R-Va.).”

The Wall Street Journal: "Moody's Investors Service said it was reviewing the government's top Aaa bond rating for a possible downgrade, citing the ‘rising possibility’ that the government's $14.29 trillion borrowing limit won't be raised soon enough to prevent the U.S. from running out of money to pay its bills."

Stu Rothenberg’s take: “Fundamentally, the two parties are fighting over values, not dollars. … [I]n reality, what we are witnessing is nothing less than a fight over the role of government. And it is much harder, if not impossible, to “split the difference” on these kinds of matters of opinion.”

“Failing to pay what is owed holders of Treasury bills, bonds, and other investments tied to the US government could cause catastrophic short-term problems, such as the credit market freezing as fearful banks refuse to loan money,” the Boston Globe writes. “Long term, any failure to meet these obligations would drive up costs of borrowing, adding hundreds of billions of dollars to the deficit. For those next in line to receive money due from the government, the future is much murkier.” That includes Social Security.

"The White House on Wednesday declined to challenge an account in a new book that suggests that President Obama, in his campaign to overhaul American health care, mischaracterized a central anecdote about his mother’s deathbed dispute with her insurance company," the New York Times says. During his presidential campaign and subsequent battle over a health care law, Mr. Obama quieted crowds with the story of his mother’s fight with her insurer over whether her cancer was a pre-existing condition that disqualified her from coverage."

"But in 'A Singular Woman: The Untold Story of Barack Obama’s Mother,' author Janny Scott quotes from correspondence from the president’s mother to assert that the 1995 dispute concerned a Cigna disability insurance policy and that her actual health insurer had apparently reimbursed most of her medical expenses without argument... The book concludes that although Mr. Obama often suggested that Ms. Dunham 'was denied health coverage because of a pre-existing condition, it appears from her correspondence that she was only denied disability coverage.' Ms. Dunham, an anthropologist who worked on development projects in Indonesia, died in 1995, less than a year after her diagnosis."

“Sen. Charles Schumer (D-N.Y.) on Wednesday afternoon criticized House Majority Leader Eric Cantor (R-Va.) as the only congressional leader who has failed to make meaningful concessions or bring a plan to the table in the ongoing debt-ceiling negotiations,” The Hill reports. “ ‘There is one person who hasn't come up with a plan, hasn't compromised, hasn't reached out to the other side in an effort to move forward, and that is the majority leader in the House, Mr. Cantor,’ Schumer said from the Senate floor. ‘He is the only one who still says, 'My way or the highway.'”

The Washington Post writes that Senate Majority Leader Reid and Senate Minority Leader McConnell “are discussing a strategy that would pair McConnell’s debt-limit proposal with at least $1.5 trillion in spending cuts identified through bipartisan talks that Vice President Biden has led in recent weeks. The deal also could create a committee of 12 lawmakers who would be assigned with identifying trillions of dollars in additional savings. The panel’s recommendations would be fast-tracked to votes in the House and the Senate and would not be subject to amendment, a process similar to the one Congress uses for closing military bases.”  

The Hill: “A curveball from Senate Minority Leader Mitch McConnell (R-Ky.) has split Republicans and Democrats over what to do on the nation’s debt limit.”

A small band of Senate Republicans said Wednesday that it intends to oppose all spending bills that are brought to the Senate floor until the chamber approves a budget — a position that could spread among GOP lawmakers,” Roll Call writes. “ ‘I plan to vote against proceeding to all individual appropriations bills until the Senate passes a budget,’ Sen. Bob Corker (Tenn.) said in a release after voting to prevent the Senate from taking up the fiscal 2012 Military Construction-Veterans Affairs appropriations bill.”

“A television spot that began airing Wednesday in Salt Lake City jointly praises Utah Republican Sens. Orrin Hatch and Mike Lee for supporting a proposed balanced budget amendment to the Constitution,” Roll Call writes. “FreedomPath, a 501(c)(4) organization, is funding the 30-second ad. It was unclear Wednesday evening who is behind the group, but its purpose could be to boost Hatch’s re-election prospects in the Republican primary by associating him with Lee on fiscal policy. The television spot is slated to run on broadcast and cable television in Salt Lake City, Utah’s largest media market.”

“Sen. Tom Coburn (R-Okla.) might look to rejoin a group of senators who tried to negotiate a bipartisan solution to the deficit, according to The Associated Press,” via The Hill. “Coburn said he has ‘floated’ a couple of deficit-reduction ideas to other members of the Gang of Six (now known as the Gang of Five without Coburn) and is waiting for their response.”

The RNC is out with ads hitting Obama. “The ad will air on cable and broadcast television in Pennsylvania, Michigan, Wisconsin, and New Hampshire, states that voted Democratic in the 2004 and 2008 presidential elections but which the RNC is focusing on as potential battleground states,” the Boston Globe writes. “The RNC is not releasing the amount of the ad purchase, but committee Political Director Rick Wiley said it will be a ‘light cable broadcast buy’ combined with a digital and new media strategy.”

Tea Party fading? “Organizers of the Freedom Jamboree announced Wednesday that they have canceled the tea party convention planned for this fall, citing low registration,” Roll Call writes. 

“All but two of the Republican presidential candidates have so far rejected a far-reaching anti-gay marriage pledge put forth by a conservative group in Iowa,” the Boston Globe writes. “The group removed a provision mentioning slavery after people complained it was offensive. But the wide-ranging remaining provisions include opposition to same-sex marriage, polygamy or polyandry; adherence to marital fidelity; support for a federal constitutional marriage amendment; rejection of Islamic sharia law; protection of women and children from human trafficking, pornography, prostitution, infanticide and abortion; and ‘recognition of the overwhelming statistical evidence that married people enjoy better health, better sex, longer lives,’ and others.”

PALIN: Sarah Palin says she’s still thinking about running for president and laid out August or September as her own deadline. "Well, legally, of course, there are timeframes. And that time is coming rapidly in front of all of us," she said on Fox News,” per The Hill. “ ‘You know, August and September, you do have to start laying out a plan if you are to be one to throw your hat in the ring. So that's basically the timeframe.’”

Sounding every bit the Tea Party, Sarah Palin said this on FOX, per GOP 12, about President Obama’s warning that if the debt ceiling isn’t raised he can’t guarantee that Social Security checks would go out: “I believe that it's absolutely shameful that he's trying to scare our esteemed seniors who built this country and have contributed and invested in this country over all these years -- that he would threaten to throw them under the bus and not write them their Social Security checks. That fear-mongering: we just can't buy into that."

PAUL: Ron Paul’s campaign will begin airing ads in Iowa and New Hampshire on Friday, Politico reports. The ad, which plays like a Hollywood movie trailer, warns against raising the debt-limit, saying congressional Democrats “did it to Reagan” in the 1908’s by forging a compromise to raise the ceiling and saying that Ron Paul has “always been true” to his fiscal principles. The six-figure ad buy is the biggest so far of any 2012 candidate and the first major TV ad to air in New Hampshire, Politico adds. 

“Republican presidential candidate Ron Paul has hired long-time New Hampshire political operative Chris Wood as a campaign consultant, Paul’s campaign said,” the Boston Globe reports.

PAWLENTY: The New York Times looks at Pawlenty's record as Minnesota governor. “Now, with Minnesota struggling through Week 2 of another government shutdown over a budget shortfall, Mr. Pawlenty’s fiscal record as governor is drawing closer scrutiny. And while Mr. Pawlenty did face economic and political challenges in balancing the state’s budget each year, his record includes what critics say was an overreliance on one-time accounting maneuvers that failed to address the underlying problems.”  

How badly does Pawlenty want to win Iowa? He Tweeted: “@ConanOBrien Wait until I unveil my Team Coco wig then everyone will want the costume. It might even deliver IA for me #ginger #iacaucus.” Here’s the story from the New York Daily News.

The Pawlenty campaign announced the support of Dublin, New Hampshire investor and long-time party activist Bruce Keough, who will become a member of Pawlenty’s national policy committee and New Hampshire Steering Committee. The New Hampshire Union-Leader’s DiStaso notes that Keough made waves in May when he said he wouldn’t support Mitt Romney after serving on Romney’s steering committee in 2008. 

ROMNEY: The Romney camp traded jabs with President Obama’s campaign advisor David Axelrod via Twitter yesterday, ABC notes. “‘Anyone heard from Mitt Romney lately? Where is he on McConnell plan? On the debt talks? On the impact of a default? Why so quiet?’ Axelrod asked this afternoon on Twitter as negotiators ready for the fourth round of debt talks in as many days. The Romney camp fired back with a tweet from Senior Advisor Eric Fehrnstrom: ‘I have a question for @davidaxelrod: Where are the jobs? We're not just on wrong track; it feels like we're tied to the tracks.’”

SANTORUM: Rick Santorum will speak at the American Conservative Union’s Conservative Political Action Conference in Florida on Friday, Sept. 23, Sunshine State News reports. Mitt Romney is also slated to attend.

NEVADA: The Dem-leaning group Americans United for Change is going up with a TV ad hitting GOP Sen. Dean Heller for his two votes in support of the GOP plan to overhaul Medicare. But its real message is for the special congressional election in September to fill Heller’s old House seat. The ad will air on network TV in Reno beginning tomorrow. 

From NBC's Chief White House Correspondent, Chuck Todd:
Could a deal on the debt ceiling be both within reach and far away? When it comes to the ways of Washington, it’s always possible to see two outcomes at the same time. Just look at the legislative scheme Senate Republican Leader Mitch McConnell came up with Tuesday, which would allow the president to raise the debt ceiling by some $2.4 trillion in three installments through 2012 and require Congress to pass a resolution of disapproval to stop it – an attempt to both appease the markets and put the burden of raising the debt limit solely on the president’s shoulders.

So where are we? As Vin Scully used to say on the Saturday baseball “Game of the Week” on NBC, “pull up a chair” and spend a few minutes digesting what I think I know after conversations with folks on all sides of the talks. 

The president and Speaker John Boehner are rhetorically close, but remain far away on the details. My colleague Luke Russert used an apt analogy with me when it comes to these talks: it’s like the Israelis and the Palestinians. I’d argue it’s like the Israelis and the Palestinians about 10 years ago. What do I mean? Then, the leaders of the two factions, Ariel Sharon and Yasser Arafat, truly wanted a deal, but their rank-and-file (while claiming publicly that they agreed) didn’t truly trust the other side to follow through with the promises the leaders were making to each other. 

To boil this debt ceiling impasse down to the core issue: Neither the president nor the House Republican leadership is truly ready to put  agreement down on paper.  For the president, the hesitancy is about giving a promise of real entitlement reform.  For Republicans it's reistance to make a pledge that part of tax reform could mean the expiration of the Bush tax cuts on the wealthiest Americans (the Republicans).   

In fact, what upsets many Republicans is that the president isn’t ready to make a firm commitment on paper (even behind closed doors) that he would  agree and push for, say, means testing for Medicare or slowly raising the age on Social Security unless he gets a firm promise on those Bush tax cuts (it’s how the White House thinks they might be able to sell this to some Democrats). And the House Republicans, Boehner in particular, aren’t going to make that promise on taxes unless somehow the president gives the GOP conference (which has been battered over the Rep. Paul Ryan's Medicare plan” caucus) some real political cover on entitlements. 

In a session with a small group of reporters, Speaker Boehner compared the president’s entitlement reform offers on Social Security and Medicare to JELL-O;  there are days when it seems like it's been in the freezer and looks solid, and there are times -- like now -- where it’s a tad liquidy and hard to, well, pin down. 

The White House feels plenty burned on taxes so they’d argue that’s why they are being cagey with their best negotiating card. 

The leaders of both parties are frantically trying to figure out how to come up with anything that can get through the House when it comes to the debt ceiling. Right now, they don’t have a path. And while many of the new rank-and-filers are like Illinois freshmen Republican Joe Walsh and don’t believe there’s actual serious consequences to not raising the debt ceiling, Speaker Boehner does understand it. As he said today when asked how he thinks the markets will react if there’s no deal by August 2: “Nobody wants to go there, because nobody knows what’s going to happen. It’s a crapshoot.” 

So what could a deal look like? While Boehner and Obama are, essentially, the lone voices in the room still advocating for the “grand bargain” (both believe it’ll be easier to pass, and they may have a point), the rest of the group meeting daily with the president is busy coming up with a lot of contingency plans. 

• There’s the somewhat maligned but viable McConnell “Hail Mary punt” which would only deny the president’s request for a debt ceiling raise if veto-proof majorities in both houses of Congress disapprove of the request.
• There are the remnants of the cuts the members of the so-called Biden group came up with (House Majority Leader Eric Cantor is among the advocates of this route).
• Senate Majority Leader Harry Reid is pushing the idea of creating a binding Congressional commission to handle either tax reform, Social Security reform, or both (modeled a little after the Social Security reform commission of the ‘80s and a little bit from the military base closing commission in the early ‘90s). The commission recommendations would not be subject to any alterations by either Congressional chamber and instead would only be subject to an up or down vote. 

One Democratic leadership insider sees pieces of all of these contingency plans making up a deal that could be small at first but could turn into the “grand bargain.” For instance, the end game could look something like this. 

• Some significant group of cuts from the Biden group (think $700-800 billion) in order to get a 6-month raise in the ceiling.
• Also included would be the binding Reid commissions (or maybe two seperate binding commissions) made up only of members of Congress to tackle tax reform and entitlement reform. They’d have, say, three months to get tax reform done and six months to get the entitlement reform done. Whatever they agreed to, would be subject to the up or down vote and if tax reform got enacted then it would be linked to another large chunk of cuts (the rest of the Biden agreed to cuts and then some).
• As a failsafe, the McConnell “disapproval” concept on the debt ceiling would also be part of the deal for the next three debt ceiling increases asked for by the president in order to avoid this problem until the summer or even fall of 2013 if both tax reform and entitlement reform failed. 

To be clear, the above plan is not being considered right now. It’s more of an example of how convoluted the eventual roadmap to a deal is going to be.  It’s the “trust-but-verify-a-million-times” approach, to borrow a Reagan phrase from the Cold War. Obama and Boehner do trust each other, and while the path forward right now is unclear, one Republican familiar with the talks said of the president and the GOP: “We’re in a spot where we need to be. It’s not a bad place for us to be.” What does he mean? An uncomfortable spot for both parties. The president painted the GOP into a corner, hence the McConnell plan, but it was a short term political process victory, not one that you can brag about to the American people. 

The president desperately wants the big deal.  How much so? When Boehner informed the president last Saturday night that he had to publicly pull out of the “grand bargain” talks, the conversation took more than 30 minutes to wrap up. While neither side has given reporters the details of that conversation, draw your own conclusions as to why a call like that, initiated by Boehner to essentially “break up” from the grand bargain talks, took more than 30 minutes to conclude. The president needs a real deal as much if not more than congressional Republicans.  

Tim Pawlenty -- not catching fire yet in the polls or among GOP donors -- is making a major push in advance of next month's Ames Straw Poll.

And the campaign has released a video to Iowa voters stressing Pawlenty's faith. But the star of the video is Pawlenty's wife, Mary, an evangelical Christian who got Pawlenty -- then a Catholic -- to join her church.

"My parents were the ones who introduced me to the importance of having God in your life and being connected to God through faith and Jesus Christ," she says in the video.

The GOP presidential candidate adds, "Hope is always with us. And our hope is not in these earthly things, but in Jesus Christ." The former Minnesota goes on to say, "We were founded as a nation under God."

As it turns out, Sarah Huckabee -- Mike Huckabee's daughter who's now working for the Pawlenty campaign -- pens the email introducing the video.

Four years ago I worked in Iowa for my dad, Governor Mike Huckabee, when he was running for President. At the time, he was low in the polls and didn’t have much money, but he won the Iowa Caucus because Iowans liked his executive experience, record of results governing a Democratic state, and conservative convictions. Today I’m back in Iowa working for Governor Pawlenty’s campaign because Governor Pawlenty has the same conservative convictions and executive experience I admire in my dad. 

[snip]

Governor Pawlenty's commitment to faith and family is not a product of coaching by campaign consultants. As a devoted husband to Mary and supportive father to Anna and Mara, Governor Pawlenty gets it. 

Strikingly, the Pawlenty campaign released this video at the same time as it announced it wouldn't be signing Iowa Family Leader's controversial marriage pledge. Says Pawlenty in a statement:

"I deeply respect, and share, Bob Vander Platts' commitment to promoting the sanctity of marriage, a culture of life, and the core principles of the Family Leader’s Marriage Vow Pledge. However, rather than sign onto the words chosen by others, I prefer to choose my own words, especially seeking to show compassion to those who are in broken families through no fault of their own.

"I respectfully decline to sign the pledge."

In a conference call with reporters this morning, the Obama re-election campaign used its fundraising numbers to signal that its base of supporters is engaged and energized for 2012.

Campaign Manager Jim Messina fired off the numbers: 552,000 individual donors, 260,000 new donors who didn't contribute in 2008, and average contribution of $69 per donor, 98% of total contributions coming from donations of $250 or less.

"This should end any chatter about our grassroots base," he said on the call.

Messina also lowered expectations for the next quarter (July 1 through Sept. 30), saying that donors are typically less engaged during the summer months, and that the 2008 Obama campaign experienced a drop-off in the 3rd quarter of 2007. (That said, in 2003, George W. Bush saw his fundraising increase from his 2nd quarter to his 3rd.)

The Obama campaign noted that none of the GOP presidential campaigns is so far disclosing its bundlers (like the Obama campaign is), and that the GOP campaigns are accepting money from lobbyists and PACs (which the Obama campaign isn't doing).

On the Senate floor this morning, Senate Majority Harry Reid praised Senate Minority Leader Mitch McConnell's new debt-ceiling plan. Reid called it "thoughtful and unique" -- and said he was "heartened" by the "serious proposal"

Reid on McConnell:

"He's come forward with a proposal to address the debt limit. I'm studying it and discussing it with my senators... He spent a great deal of time working on this... I commend him for his thoughtful and unique proposal. It's something we have to look at very closely. I'm heartened by what I read. It's a serious proposal. I commend the Republican leader for coming forward."