The Federal Reserve chairman, Ben S. Bernanke, warned on Wednesday of a “huge financial calamity” if President Obama and the Republicans cannot agree on a budget deal that allows the federal debt ceiling to be increased. Moody’s, the ratings agency, threatened a credit downgrade, citing a “rising possibility” that no deal would be reached before the government’s borrowing authority hits its limit on Aug. 2.

Yesterday was quite a day in the power centers. Everyone seems to be feeding off everyone else’s fear and anger even as they try to make their opponents appear more angry and fearful. Nothing has actually changed.

On August 3rd and thereafter — even if all of the fulminators were to up in smoke — bills can be paid. The “debt ceiling” is not a real ceiling. It’s a number. The “full faith and credit” of the US doesn’t disappear because 500 incompetent politicians in a town on a fetid river running between Virginia and Maryland blow their tops. Lean back and watch them. They get worse every day.

And the latest bipartisan negotiating session on Wednesday evening ended in heightened tension. Republicans said Mr. Obama had abruptly walked out in an agitated state; Democrats described the president as having summed up with an impassioned case for action before bringing the meeting to a close and leaving.

Depends on who’s telling the tale.

As to whether Obama lost his cool yesterday and stalked out of a meeting (Cantor’s version) or whether he put an end to the bickering and ended the meeting (other versions), there’s a good deal of disagreement, depending on who’s describing the scene Having watched Cantor’s behaviors over the past 2 weeks years, I wouldn’t listen to the guy. I bet Barack Obama can get good and mad but I think he’s far too smart to lose his cool. Actually, I bet most of his “liberal base” would like to see him lose his cool now and then. He’s dealing with schoolyard bullies who have been losing their cool and have succeeded lately in losing their self-confidence. Public opinion seems to have shifted.

The stakes are high, for the economy, the financial markets and both parties. But the pressure was particularly intense on Republican leaders, who only weeks ago seemed to be on the offensive and in a strong position to extract major concessions from Mr. Obama and the Democrats. …With negotiations stalled and a potential default by the United States government just over the horizon, they are being held to those promises by their own rank-and-file, leaving them in a bind that is defying easy resolution and putting them at risk of being blamed if things end badly.

Behind closed doors and by phone, they groped for a solution and struggled to assert some kind of control over the situation as rank-and-file Republican members, especially in the House, grew more confrontational. …NYT

There you go. If you want something to worry about, worry about the financial markets and worry about the effect the Republicans are having on our political system, the economy, and particularly unemployment.

And Obama? ““Enough’s enough,” one Democrat familiar with the talks quoted Mr. Obama as saying.”

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The Washington Post follows Senator Mitch McConnell around and watches the brewing tension between McConnell and Eric Cantor.

Senate Minority Leader Mitch McConnell (Ky.), who offered a proposal this week that would allow President Obama to raise the federal debt limit without guaranteed spending cuts, warned that the Republican Party could “destroy” its brand with voters if Congress allows the government to default.

“All of a sudden we have co-ownership of a bad economy. That is very bad positioning going into an election,” McConnell said on “The Laura Ingraham Show,” a conservative radio talk program.

But House Majority Leader Eric Cantor (Va.) rejected McConnell’s plan for resolving the debt stalemate, instead vowing to press ahead with the campaign to roll back government spending.

And WaPo is closer to the “Obama walked out” sidebar and calls it a “blow-up” between the two men.

The president lectured about the need to drop political posturing, saying several times, “Enough is enough,” according to Democratic officials with knowledge of the closed-door meeting.

“The president told me, ‘Eric, don’t call my bluff. You know I’m going to take this to the American people,’?” Cantor said. “He then walked out.”

But as he left, Obama added: “I’ll see you tomorrow.”

Before the blow-up, Obama offered a detailed package of $1.7 trillion in spending cuts “that he was comfortable with,” one of the Democratic officials said, adding that he would go even higher if Republicans would accept revenue increases.

In other words, the president offered a plan and a compromise. “Lectured” is the Posts’s choice over something like “spoke of.”

The Washington Post’s editors dismiss Senator McConnell’s wild and complex plan to save the day.

The McConnell plan offers political cover for cowardice and irresponsibility. If it is the best Washington can do, it is better than nothing. But it’s not much of an advertisement for what Washington can do.

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EJ Dionne sees danger in the wounded elephants.

The wounded are especially dangerous fighters. President Obama now occupies the high ground in the debt-ceiling debate, having called the Republicans’ bluff on the debt. He showed that deficit reduction is not now, and never has been, the GOP’s priority. He dare not get overconfident.

But Dionne sees a waspish Cantor getting angrier because the man realizes he may have handed the president a 2012 win.

.

..Obama thought that solving a big problem would outweigh any political difficulties his deal with Boehner might cause him. But Cantor saved Obama a lot of trouble. He protected him from a bitter intra-party fight and made crystal-clear that preserving low taxes for the wealthy and for corporations is the GOP’s driving objective. Even the most resolutely centrist and cautious have been forced to concede this essential truth of American politics.

And Cantor possesses a weapon which could do some real damage to Obama and to America.

Here’s the worrisome scenario: Cantor takes every domestic spending cut that was discussed as part of the negotiations with Vice President Biden, declares that the administration has blessed them, and packages them together for a vote.

Never mind that Cantor walked out of the talks before there was serious negotiation about defense cuts and revenue, and thus no real agreement. Cantor, who needs to embarrass the Democrats and pull Obama down from the commanding heights, was shrewd to get the administration talking early about cuts in domestic spending and to put a lot of its cards on the table. He can now play those cards against Obama by forcing the president to reject reductions he had once considered when a larger agreement looked possible.

This might look like a political game. But at this stage, House Republicans can’t afford to end this whole sorry episode with a whimper. The bang they are looking for could yet cause a lot of collateral damage.

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Joshua Green watches John Boehner take a dive.

… Boehner did what he could to protect his right flank, assigning Eric Cantor, his majority leader and possible Brutus-in-waiting, to negotiate a debt increase with the White House. But Cantor quit those talks last week, which thrust Boehner into the role of lead negotiator and finally exposed his true weakness.

The strategy failed. The pity of it is that although Boehner was derided as weak for breaching the latest right-wing orthodoxy and considering revenue increases (something most Republicans understand is necessary, but few admit for reasons now obvious), his $4 trillion deal with Obama would have cut spending far more than any current alternative. It also would have reformed entitlements like Medicare and Social Security that conservatives rail against, but dare not touch for fear of a backlash. Boehner would have bought cover from the Democrats at a bargain price. What he proposed – and what his party killed – would have done more to advance conservative objectives than anything that will now be considered.

Boehner, in other words, had the judgment, but not the power, that a speaker requires. And the irony now lost amid the clamor of his failure is that it was he, and not the Tea Party, who has proved to be the true radical.

What this tells me about Congressional Republicans doesn’t surprise me at all: everyone is shouting, no one is listening. No matter what one thinks about Obama’s policies, one has to credit him with actually listening. Until the Republicans learn to pay attention — to each other no less than to everyone else — governance is out of the question.

Cross posted from the blog Prairie Weather.