We’re likely to see the Senate move first on the only debt limit deal that has the ability to pass at this point, the McConnell-Reid hybrid plan that includes around $1.5 trillion in deficit reduction – virtually all of it from the spending side – a complicated mechanism that forces three separate debt limit votes and absolves Republicans of the responsibility to vote for them, and a Catfood Commission II which would negotiate a fast-track process to additional cuts getting an up-or-down vote at the end of the year.

Keith Hennessey has a rundown of what the cuts, which come out of the Biden talks, would actually look like.

$203 B in health mandatory savings over 10 years. All of this is spending cuts (technically, reductions in the rate of spending growth). I think that “health” here includes only Medicare and Medicaid, with maybe a few billion savings from cutting a bell or whistle attached to the Affordable Care Act (aka ObamaCare). Of this $203 B in savings, $195 B comes from traditional cuts in how much the government pays a doctor, hospital, or other health provider for a given service. The other $8 B comes, I think, from changes that more directly affect beneficiaries (maybe a smidge more means-testing or higher copays, these amounts are small enough to likely be trivial in their effect).

$220 B in other mandatory savings over 10 years. I understand that one quarter of this ($55 B) comes from policy changes that would look to an average person like a spending cut. The other $165 B are real policy changes that involve policy pain to certain constituencies, but to the average person they don’t look like spending cuts. Higher fees on Fannie & Freddie, on defined benefit pension plans, on aviation, and telecommunications spectrum and property sales all fit in this box because they are technically user fees rather than tax increases.. This is real deficit reduction and these are not gimmicks. Even though they are technically classified as spending cuts, you cannot conclude that they actually reduce government spending or the size of government (good luck figuring that one out – it’s an accounting convention).

$1,050 B ($1.05 trillion) in discretionary savings over 10 years. I understand this is a $2 B cut in the topline for next year (FY12) relative to FY11. After that, the topline would be allowed to grow at 2/3 the rate of inflation. The savings figure is (apparently) calculated by subtracting the resulting amounts from a baseline under which spending grows at the rate of inflation.

No change to how CPI is calculated, as was apparently discussed as part of a Grand Bargain.

Added to this, which will probably be announced, is roughly $300 billion or so in reductions on interest payments over the next ten years as a result of the deficit reduction. So you may hear a number like $1.73 trillion.

The new narrative today is that Republicans blew the negotiation and were forced to backtrack off their maximalist demands. Ross Douthat gives that perspective today, saying that Republicans couldn’t get out of the box of looking unreasonable and as a result fell into retreat. This is bolstered by a CBS News poll that shows 71% of the public disapproving of the Republican handling of the debt limit debate. A colorful piece over the weekend profiling House Republicans who would rather stop the debt limit from being increased than get re-elected cemented this theme. Republicans are madmen who will set a course for this country for the center of the sun.

Can someone tell me how this deal, if it goes through, is in any way negative for Republicans? They get deficit reduction without tax increases. There are a piddling amount of increased “user fees,” about $165 billion out of the $1.5 trillion, or a little over 10%. But a lot of that is just asset sales. They increase revenue but hardly in a progressive fashion. And they get a fast-track catfood commission to do the rest of the work they want. It’s unclear if taxes will be a part of that conversation at all. As Jonathan Schwarz said over the weekend, “it seems as though Republicans are now so crazy that they’ll refuse to vote for a deal that would give them only 98% of the right-wing agenda right away (i.e, it would include some tax increases). So now the most likely outcome seems to be a deal that would give them 60% of the right-wing agenda right now, with the promise of a vote to give them the remaining 40% next year.”

Furthermore, Republicans don’t have to take a vote to increase the debt limit. They can politically attempt to pin this on Barack Obama and the Democrats. I personally don’t feel like this will amount to much, but I don’t see what, if anything, Democrats get back in exchange other than the ability to raise the debt limit, heretofore a routine vote.

If this means that Republicans are losing the debate, I’d hate to see what winning looks like.