Apoologies to those who already came across this OP embedded as a reply in other threads, but rather than keep pasting it into more threads it makes more sense to create an OP and focus discussion regarding it here:

There is more than one way to look at the reports coming out of the default talks taking place in Washington DC this weekend. The Hill reports that the White House says it was willing to pursue entitlement cuts as part of a grand bargain but Republican balked at including any new revenue sources in a final deal. Some say the Republicans blinked, and maybe they did. Some say the White House called their bluff, and maybe they did.

I think the White House called the wrong Republican bluff. Democrats had offered trillions of dollars in spending cuts and showed willingness to settle on closing a couple of outrageous tax loopholes that even Bohener couldn't defend with real conviction. The spending cuts Democrats were poised to sign off on cut 4 or 5 times much from the deficit than the loophole closings would have contributed.

That was when to call their bluff. Republicans got to slash trillions from government spending in return for sacrificing stuff like tax write offs on private jets and ending tax subsidies for Big Oil, the most profitable corporations in America who get more from the government than they give to it. Try to sell refusing that deal and forcing an economic crisis instead to the American public, and you can see how weak a hand Bohener was holding.

By not simply calling that bluff instead of offering a grand bargain instead here is what the Democrats lost.

Number one, as unlikely as you say it may have been that Republicans would ever have taken that deal, stranger things have happened before in politics. Yes it was a long shot, but would you feel comfortable playing Russian Roulette with one bullet in a hundred chamber gun instead of in a standard six shooter. It is reckless to unnecesarily bet your politcal soul no matter how good the odds are in your favor

Number two, Democratrs just blunted the best political argument in their favor heading into the 2012 elections by putting Medicare Medicaid and Social Security on the potential chopping block. The clearest most winning contrast to Republicans that Democrats had was a reputation of being time tested true guardians of those programs who will defend them to their political death. Now that no longer is so clear cut. Now it looks like Democrats could sell them out if the price is right.

Number three. An offer once made never simply vanishes without a trace. It permanently establishes that Democrats were open to making that type of deal with Republicans. You might hsave noticed that the need to raise the debt ceiling has a tendency to come along again every so often. What if Republicans insist that cutting Social Security and Medicare benefits be placed on the table for the next round of talks, and what if Republicans prove slightly more flexible next time? It is much harder to refuse to do something that you have shown a willingness to do before. Think of it as gathering dust somewhere, sitting on a table.

I'm pretty certain what the next Republican move is going to be now. They will propose taking the notes from those never completed negotiations with Biden and pulling out of them all of the spending cuts that Democrats showed a willingness to consider. They will say, "This isn't enough, we need more, but for the sake of the nation we propose moving forward now and craft a solution that implements those cuts and doesn't raise taxes. It's a compromise we all need to make for our country even though no one is getting exactly what they want." What will Democrats do then?