From the White House's perspective, the debt limit is nothing to fool around with. Without borrowing authority, Treasury Secretary Timothy Geithner would have to forgo payments on our debts, though he has tools at his disposal that allow him to keep paying the bills through Aug. 2.
Still, just the hint that the debt limit would not be lifted would send domestic and international financial markets into turmoil along with our own economy, plunging the dollar and threatening another recession, which would end Obama's prospects for a second term.
Obama is now caught between his own spend-like-there's-no-tomorrow policies and his leftist political base, which opposes any cuts in spending. The far left Moveon.org is urging all Democrats not to agree to any deal that includes cutting Medicare.
Meantime, several dozen business groups, including the U.S. Chamber of Commerce and some of the nation's largest banks, sent a letter urging lawmakers to raise the debt ceiling in "timely" steps but said nothing about spending cuts.
"Raising the statutory debt limit is critical to ensuring global investors' confidence in the creditworthiness of the United States," they said.
In the end, the debt limit will be raised -- perhaps in incremental steps -- with an agreement to cut spending by some amount over the next 10 years.
However, it isn't exactly clear how much that debt-limit agreement will govern the third battle to come this summer over the size and shape of the 2012 budget and the appropriations to put it into effect.
My guess is that Boehner and the House Republicans have the upper hand in this titanic struggle over the size and cost of our government.
The Democrats have a firewall in the Senate that can kill any bill that comes from the House. But Obama also understands there will be no agreement on the debt limit or next year's budget unless his side meets the House at least halfway or more. And that he cannot afford to head into the 2012 election year without putting the nation's fiscal house in order.
Obama said, "Showing an unwillingness to compromise would not only limit the ability to reach a deal with Republicans but could also have a negative impact on financial markets," the Washington Post reported Wednesday.
Geithner has painted an ominous picture of what would happen to the economy if the debt limit isn't raised, but Obama's political advisers have crafted an even bleaker outlook of his bid for a second term if the country descends into economic turmoil again.
Boehner's tough no-budging stance on spending cuts speech in New York this week came at the right time. Obama got the message.