Now it gets really interesting.
Republicans in the House are determined to shut down the government, by holding defunding of Obamacare hostage for continued funding of the rest of the budget. In past budget negotiations, Obama has often been too quick to fold a strong hand.
But this time, the Tea Party badly miscalculated. They targeted Obama's personal crown jewel, the one piece of progressive social legislation that the president won't throw under the bus. So a showdown is increasingly likely, and Democrats could well win it.
The shutdown scenario could backfire on the right in several respects. First, Republicans are split at least three ways on how to play this game. The Tea Party is spoiling for this showdown, but the House and Senate GOP leadership wants to avert it. Even Karl Rove has argued against it.
As Rove warned, deliciously, in the Wall Street Journal, the GOP picked up a near-record 66 House seats in 2010 because independents broke for Republicans. But:
There is, however, one issue on which independents disagree with Republicans: using the threat of a government shutdown to defund Obamacare. By 58 percent to 30 percent in the GPS poll, they oppose defunding Obamacare if that risks even a temporary shutdown ... Going down that road would strengthen the president while alienating independents. It is an ill-conceived tactic, and Republicans should reject it.
You know the Republicans are in trouble when they reject Karl Rove's advice as too moderate. Polls show that most voters are more likely to blame Republicans for a government shutdown.
After covering budget standoffs as symmetrical "partisan bickering," the mainstream press is at last treating these capers as irresponsible Republican cynicism. But the Tea Party Republicans, who dominate the House GOP caucus, are doubling down on what could be a suicidal strategy.
Another split is between several Republican governors in swing states and the Tea Party faction that dominates the House and is trying to make blockage of Obamacare a loyalty test. But one of the key elements of the demonized Obamacare is expansion of Medicaid. As more working people lose their employer-provided health insurance, increasing the reach of Medicaid coverage is increasingly popular. That's why conservative governors including Jan Brewer of Arizona, Rick Synder of Michigan, John Kasich of Ohio and even the far-right Rick Scott of Florida have all embraced expansion of Medicaid under the Affordable Care Act.
The spectacle of Republican rank and file House members divided from both their leadership and from Republican governors, and pursuing a shutdown strategy unpopular with voters, has Democrats jubilant. Intra-party recriminations will only grow more public and more messy as the Republican budget caper goes off the rails.
So for once, President Obama will hang tough. What's likely is a brief shutdown much like the Clinton-Gingrich standoff of 1995, in which the Republicans are forced to blink first.
This, in turn, could increase the Democrats' chances of taking back the House in 2014. That's what has Rove so anxious.
Normally, the incumbent's party does not do well in the sixth year of his presidency. But this time could be different. The incumbent party in the House, after all, is the Tea Party, and it increasingly out of step with most voters.
This very high-profile mess, just a year before next mid-term election, could upend assumptions about 2014. Democrats need to pick up just 17 seats to take back the House. Most analysts put the number of at-risk Republican seats at between 20 and 25, meaning that Democrats would need to run most of the table. But a deeper look suggests that more Republican seats could be vulnerable. In 2012, Republicans won 41 seats with 55 percent of the vote or less. If Democrats hold their own seats and win back even half of those, they take back the Majority.
Turnout will be key. The off-year electorate tends to be much smaller than the voters who turn out in presidential years. Progressives who stayed home in 2010 came out in 2012 to vote for Obama. In the off-year election of 2014, the Tea Party Republicans will be fired up and ready to go. Democrats will need to match them.
In the last mid-term election, progressive Democrats faulted the White House for several blunders, including a premature embrace of budgetary austerity and a mishandling of the Affordable Care Act, costing House Democrats their majority in 2010. In 2014, however, failure to take back the House and loss of the Senate could put President Obama's most cherished legacy at risk, so the White House will be in high gear to help House and Senate candidates.
Assuming that the Republicans do blink first in the coming fight over the government shutdown, one problem remains. If Republicans do climb down from their self-inflicted ledge, and agree to reopen the government after a few days or weeks, they will want something in return from the president: if not de-funding of Obamacare, deep cuts in other social programs.
In the post-shutdown negotiations, President Obama is at risk of giving away too much. In his December 2012 private budget summit talks with House Speaker John Boehner, Obama was prepared to give the Republicans cuts in Social Security and Medicare, and more. Only Boehner's failure to sell the deal to his own caucus saved Obama and the Democrats from this fate. Obama has already put some disguised cuts in Social Security into his own budget, via a change in the consumer price index.
Progressive Democrats in Congress will back their president when he refuses to toss Obamacare overboard. Obama needs to be equally resolute in protecting the Democrats' other jewels that don't bear his name.
Social spending has already been slashed. If Obama is inclined to cave in on other social outlays, to show what a reasonable and bipartisan fellow he is, Democrats in Congress need to hold his feet to the fire.
Robert Kuttner's new book is Debtors' Prison: The Politics of Austerity Versus Possibility. He is co-editor of The American Prospect and a senior Fellow at Demos.