There have been no formal talks between the President and Congressional leaders for the last three days about raising the nation’s debt limit (though there has been “activity and progress” according to OMB Director Jack Lew), but the endgame is nonetheless coming into focus. The House, which did not submit to the President a plan that could pass both houses of Congress, as the President requested, will hold votes on Wednesday on the “Cut, Cap and Balance Act,” a bill that would cut spending by $100 billion in Fiscal Year 2012, force a spending cap at 18% of GDP and and attach a radical balanced budget amendment to the Constitution, before any debt limit increase. It’s likely to pass the House and die in the Senate. Meanwhile, McConnell-Reid, the fallback option to match an elaborate scheme to raise the debt limit without Republican votes to a cuts-only package amounting to around $1.5 trillion in deficit reduction, has moved into the forefront as the only way to end the stalemate. The deal would not include tax increases or cuts to Medicare and Social Security (it’s unclear to this point where it leaves Medicaid), but it would include a Catfood Commission II, a Congresscritters-only panel which would make recommendations on entitlements (and possibly tax reform) that would be guaranteed an up or down vote in each chamber of Congress.

Both sides acknowledged on the Sunday shows today that McConnell-Reid was likely the only possibility to avoid a debt default. Even far-right Republican Jim Jordan (R-OH) said that a coalition of Democrats and Republicans could probably muster the votes to get McConnell-Reid done. I think he’s right, as a lot of House Republicans have been softened up by reality to avoiding default:

At a closed-door meeting Friday morning, GOP leaders turned to their most trusted budget expert, Rep. Paul D. Ryan of Wisconsin, to explain to rank-and-file members what many others have come to understand: A fiscal meltdown could occur if Congress fails to raise the debt ceiling [...]

“He said if we pass Aug. 2, it would be like ‘Star Wars,’” said Rep. Scott DesJarlais, a freshman from Tennessee. “I don’t think the people who are railing against raising the debt ceiling fully understand that.”

The warnings appeared to have softened the views of at least some House members who, until now, were inclined to dismiss statements by administration officials, business leaders and outside economists that the economic impact would be dire if the federal government were suddenly unable to pay its bills.

Freshman Rep. Steve Womack (R-Ark.) said the presentation about skyrocketing interest rates that could result from downgraded bond ratings was “sobering.”

“It illustrates to us that doing nothing is unacceptable,” he said. “I think the conference understands this is a defining moment for us. It’s time to put the next election aside.”

We don’t really know the details of McConnell-Reid. We don’t know what the cuts are, we don’t know when they will hit and if spending will be reduced in FY2012 (which would be really bad for the economy), and we don’t know the full status of that Catfood Commission II. We also don’t know if the report about McConnell insisting on a spending cap for FY2012 and FY2013 is accurate; that would negate the Administration’s political strategy of controlling the timing of the cuts. But the McConnell-Reid package should be unveiled by Wednesday or Thursday, so we’ll have more information then.