This really ups the ante on a fight that has been simmering ever since the House GOP made the decision to renege on the debt limit deal:

In a major escalation of a slowly building fight over funding the government, the White House has warned House Republicans, in no uncertain terms, that the government will shut down in September if the GOP does not adhere to an agreement they cut with Democrats in August during the standoff over raising the nation’s debt limit.

“Until the House of Representatives indicates that it will abide by last summer’s agreement, the President will not be able to sign any appropriations bills,” writes Jeffrey Zients, acting director of the White House’s Office of Management and Budget, in a letter addressed to congressional appropriators Wednesday.

Not many letters from the Office of Management and Budget are breathtaking, but this one is. First, a little backstory. Last August, Congress passed the Budget Control Act, which set spending caps for discretionary funding going out ten years. For Fiscal Year 2013, this means a discretionary budget of $1.047 trillion, and it even sets a defined split between defense and non-defense programs. But conservatives considered that cap too high, and reasoned that the legislation set a ceiling but not a floor. So in the House budget that was “deemed” passed this week, they dropped $19 billion below the target for discretionary spending in the BCA, with all of it coming out of non-defense programs.

The White House obviously feels that breaks the deal. Zients, in the letter to House Appropriations Committee chair Hal Rogers (R-KY), cites this as a $28 billion cut, along with the rejection of a reserve fund for disaster assistance, which adjusts the cap in the BCA upwards depending on the emergency disaster spending made by the government (it could be that Zients is lumping in the program cuts with the rejection of the disaster relief allowances). “The result is that the Resolution’s framework allows only two options,” Zients wrote. “Every appropriations bill will provide inadequate funding, or some bills will provide adequate funding so that other bills will face even deeper, more problematic cuts.” Zients states clearly that this is unacceptable, and that no business will move forward on the budget until the House walks back their budget resolution.

Keep in mind that $1.047 trillion for FY 2013 is actually too low. It reduces public investment to a very small portion of GDP, and puts discretionary spending at its lowest level since the days of Dwight Eisenhower (and no, Mr. President, this is nothing to brag about). Conservatives want to drop that even more, but we’ve finally found the line in the sand at 1600 Pennsylvania Ave., and this is it.

The FY2012 budget ends September 30 and some funding mechanism must be in place at that time. The White House marker is that such funding must rise to the level of the Budget Control Act targets. There’s no wiggle room in there at all. The White House must feel they would have the upper hand in a government shutdown fight that would play out just weeks before the Presidential election.

Wow.

I think Republicans have real vulnerabilities in this fight, which will play out over several months. John Boehner has no room to maneuver. He clearly cannot pass a budget or even a continuing resolution with his preferred cuts. And if he gives in to the White House and passes something at the $1.047 trillion level, he’ll lose substantial amounts of Republicans to his right. So far in his tenure, Boehner has not secured a deal that would require large amounts of Democrats for passage. But that appears to be his only option short of a shutdown.

This little mini-drama will loom over Congress and the President right up until the election.