Congressional leaders and the President had blocked out about 4-5 hours for meetings tonight on a deal to increase the nation’s debt limit. They broke up after 90, without an agreement.

The U.S. Treasury has said it will exhaust its borrowing capacity by August 2, meaning it will run out of money to pay all its debts. Republicans have balked at raising the congressional-set $14.3 trillion debt ceiling without steep spending cuts.

Failure to seal a deal by August 2 could put the United States at risk of another recession, Treasury officials and private economists have warned.

Obama made clear at the start of the talks that they were racing the clock. Asked whether a deficit-reduction deal could be agreed to within the next 10 days, he told reporters: “We need to.”

Everyone in that room would tell you that they will not allow the debt limit to be reached. Mitch McConnell said it out loud today, telling Fox News Sunday that “nobody is talking about not raising the debt ceiling. I haven’t heard that discussed by anybody.” The markets are trading on the expectation that, after a lot of political grousing, the debt limit will be increased. It’s hard to see how we get from point A to point B, but everyone’s saying the same thing: we’ll get there.

What we know is that the sails have been trimmed on a more wide-ranging debt deal, with the medium-term option in the range of $2 trillion over 10 years eyed. And we know that the economy would not be able to absorb austerity on that scale without worse outcomes. Indeed, even traditional media outlets like Reuters have this one figured out.

Economists and investors fear that with weak labor and housing markets causing consumers to tighten their own belts, the last thing the economy needs is an aggressive dose of austerity from the federal government [...]

Much depends on the size, scope and timing of spending cuts. If they are large enough and take effect next year, they will depress corporate earnings and weigh on equity markets, according to Credit Suisse U.S. equity strategist Doug Cliggott.

Solid corporate earnings and loose monetary and fiscal policies have helped the S&P 500 index double in value since early 2009.

Granted, every analyst in this article prefaces their remarks with “we have to cut the deficit, we can’t put this off” and chalks up the human suffering that will result to bad timing. But even they can’t talk their way around the numbers. The negotiations in the White House today are over how much and when to cut, not how much and when to stimulate the economy. So it’s the wrong discussion.