Give Peas A Chance: Obama Stakes Out Centrist Ground On Debt Ceiling (The Note)

By MICHAEL FALCONE ( @michaelpfalcone) and AMY WALTER ( @amyewalter)

As budget negotiations continue to grind on in Washington, we know two things for sure.

First, the divide between Republicans and Democrats remains deep and the differences are real. And, second, everybody at the negotiating table believes they must get a deal that can pass by August 2.

ABC’s Jonathan Karl (and resident political odds-maker) puts the chance of failure at 25 percent -- and the failure would likely come in the form of an inability to pass whatever deal the leaders ultimately reach.

House Speaker John Boehner was right, according to Karl. This is like a Rubiks cube -- solve one side and you mess up the other in the process. It is going to be tough to cobble together 218 votes. The number of Republicans who will ultimately vote against the final package remains an open question.

Republican negotiators are counting on President Obama to cave on taxes because he has done it before and they may push the talks to wire to make that happen. But, there are signs that Obama's bully pulpit strategy -- on display at his news conference yesterday -- is working.

A new Washington Post-Pew Research Center poll shows that “the number of Americans who are ‘very concerned’ about an economy-hurting default has ticked higher since late May, but a slim majority is also now highly worried that lifting the debt limit will simply spur more spending and ever higher debt.”

More important, the Post’s Jon Cohen notes, “In late May, independents sided more with the GOP concerns, but it is about evenly split: 46 percent of political independents are mainly concerned with raising the debt ceiling; 45 percent with not doing so. One thing that’s little changed from late May is widespread uncertainty with what would happen if the government’s debt limit is not raised: Now, as then, just 18 percent say they understand the consequences ‘very well.’”

Most of the Republican presidential candidates have been urging GOP Congressional leaders to hold their ground in the negotiations though they vary on how far they’re willing to go. Rep. Michele Bachmann, for one, has vowed never to vote to raise the debt ceiling. GOP front-runner Mitt Romney has largely avoided the issue, sparking criticism from some of the other campaigns.

“The debt ceiling is a gut-check time for all Republicans on spending and size of government," former Minnesota Gov. Tim Pawlenty’s spokesman, Alex Conant, told the Wall Street Journal. “Apparently, Gov. Romney is still checking his gut to figure out where he should stand.” BOTTOM LINE: At this stage at least, it appears that President Obama is winning the political war over the debt ceiling. He has used his bully pulpit to stake out the moral high ground and position himself as a leader who's willing to tell his own party to “eat our peas.”

That said, once this battle is over, another huge one remains: the lagging economy. And this is why Romney is smart to try to stay above the fray on the debt ceiling as much as possible. He needs to avoid getting lumped in with the dysfunction in Washington so he can focus his campaign on the dysfunctional economy.

ABC's Jonathan Karl, Jake Tapper and John R. Parkinson contributed reporting.

DEBT CEILING COUNTDOWN: Watch ABC’s Jonathan Karl and Jake Tapper’s “Good Morning America” report on the latest developments in the budget negotiations. Tapper notes that the White House is “still pushing for the big deal –- a lot of pain at once, tax increases, spending cuts, entitlement cuts.”

ON TODAY’S “TOP LINE”: ABC’s Amy Walter and Z. Byron Wolf sit down with Democratic Congressman Earl Blumenauer of Oregon, a member of the House Budget Committee. Also on the program, New York Times political reporter Jeff Zeleny. Watch “Top Line” LIVE at 12:00 p.m. Eastern.

“TOP LINE REPLAY”: RNC CHAIRMAN REINCE PRIEBUS. While some are predicting an economic apocalypse if Washington fails to raise the debt ceiling by August 2, Republican National Committee Chairman Reince Priebus disagreed. Yesterday, on ABC’s “Top Line,” Priebus suggested “that the deadline was not so important” and said that “any tax increases whatsoever are unacceptable,” ABC’s Z. Byron Wolf reports. “‘I think we have enough revenues to pay our soldiers and we have enough revenues to pay our seniors and we have enough revenue to cover our - our - the debt payments that we owe for our bonds,” Priebus said.


HUNSTMAN CALLS OUT ROMNEY … SORT OF. Jon Huntsman ditched his signature diplomatic tone at a GOP barbeque in Greer, South Carolina last night, taking aim at GOP frontrunner Mitt Romney’s home state,” ABC’s Sarah Kunin reports. ‘When you look at absolute increases in job creation, Utah led the way in United States in terms of job creation,’ Huntsman said. ‘That compared and contrasted with certain other states like say, Massachusetts that I’ll just pull out randomly; not first, but 47th. … I’m here to tell you as you evaluate and look at the candidates, simply analyze where it is they have been and what they have done and what kind of achievements they have to show from their time as a chief executive, and whether or not it has applicability nationwide,’ Huntsman continued. ‘And I’m here to tell you when you look at what we have done whether it’s healthcare reform, whether it’s economic development, whether it’s record tax cuts, you’re going to find a lot to like.’ When asked how Huntsman’s comments compare to his usual no-names-mentioned approach to campaigning, spokesperson Tim Miller told ABC News, ‘Gov. Huntsman is going to continue to contrast his record with his opponents in the republican primary and President Obama. With millions of Americans out of work, voters are looking for a candidate who knows how to turn the economy around and has the track record to back it up.’”

ROMNEY CAMP RESPONDS: “Mitt Romney created nearly 50,000 jobs as governor of Massachusetts and led his state to one of the most dramatic job market turnarounds in the country,” Andrea Saul, a spokeswoman for Romney, said in a statement.

BACHMANN CLINIC: PRAY AWAY THE GAY? "A former patient who sought help from the Christian counseling clinic owned by GOP presidential hopeful Michele Bachmann and her husband, Marcus, told ABC News he was advised that prayer could rid him of his homosexual urges and he could eventually be 're-oriented.' ... '[One counselor's] path for my therapy would be to read the Bible, pray to God that I would no longer be gay,' said Andrew Ramirez, who was 17-years-old at the time he sought help from Bachmann & Associates in suburban Minneapolis in 2004. 'And God would forgive me if I were straight.' In the past, Marcus Bachmann has disputed the clinic has treated gay patients this way. But Ramirez's account, which was first reported by The Nation, is similar to the counseling session that appears on new undercover video shot by a gay rights advocacy group last month. That footage shows another counselor at the Bachmann clinic telling a gay man posing as a patient that, with prayer and effort, he could eventually learn to be attracted to women and rid himself of his gay urges." More from ABC's Brian Ross, Matthew Mosk, Rhonda Schwartz and Megan Chuchmach:

PAWLENTY OPINES ON GOVERNMENT SPENDING. In an Op-Ed published today in the Des Moines Register, presidential candidate Tim Pawlenty writes: “In my experience, most politicians are like running water -- they flow to the path of least resistance. That's why the debt ceiling debate in Washington is so important and why we cannot allow it to increase without game-changing reforms to our federal budget.” Pawlenty notes, “Minnesota Democrats have shut down the state's government after the Republican-led legislature refused to agree to massive spending increases and tax hikes. In Washington, President Barack Obama and congressional Democrats are using the debt ceiling debate to threaten default if their thirst for more taxes and spending isn't satisfied. With America facing 9.2 percent unemployment and anemic economic growth, the last thing we need is more government. We need to balance government budgets by cutting spending and rejecting tax increases. This can be done in both Minnesota and Washington, but only if Republicans draw a line in the sand and stand firm against more spending and taxes.”

NOTED: GOP strategist Matt Mackowiak writes in the National Review today that it’s too early to count Pawlenty out just yet. Pawlenty is taking a risk in developing a contrast with Bachmann, who has strong and intense Tea Party support and whose poll numbers have shot up nationally, and specifically in Iowa, Mackowiak writes. “For the Pawlenty campaign, the road back to contention runs through Iowa -- and they know that. As a candidate, Pawlenty still has many strong qualities -- executive leadership experience, a strong conservative record, a first-rate team -- and he meets the commander-in-chief threshold in a way many other Republican candidates don’t. The fact that he had a bad month early on may prove to be a blessing, as it was for John McCain in 2008. Adversity helps campaigns focus their effort; it brings the team together, and it tests you. … As my former boss Sen. Conrad Burns (R., Montana) once told a middle-school student when asked what he wanted written on his tombstone, ‘He ain’t here yet.’”

AS GOES MINNESOTA, SO GOES WASHINGTON? “Minnesota appears to have set a modern-day record for deadlocked state government, with its eleven-day shutdown of all but essential services,” long-time political observer Walter Shapiro writes in The New Republic. “[Beyond] the narrow implications for [Tim] Pawlenty’s political fate, the broader national message from Minnesota is how easy it is for both parties to step off the cliff, heedless of the consequences. Already, there is talk that the government shutdown could last for months. Minnesota’s predicament underscores how difficult it is for politicians who willingly close down state parks over the Fourth of July to accept anything less than total victory. But this is what happens when political differences morph into moralistic struggles over unyielding principle. And, from the state that once gave the nation political figures like Hubert Humphrey, it is a chilling precedent for Washington, as the debt clock ticks towards its August 2 rendezvous with destiny.”

GOLDEN STATERS GO TO THE POLLS. The special election to replace former Rep. Jane Harman, D-Calif., who resigned earlier this year to head the Woodrow Wilson Center, wasn't supposed to be a major headache for Democrats. But now both sides concede the increasingly bitter runoff contest between Democrat Janice Hahn and Republican Craig Huey is closer than it should be, and Hahn and her party have been pulling out all the stops to ensure their base turns out on Tuesday,” the National Journal’s Jessice Taylor reports. “On Monday, Hahn faced a personal tragedy when her mother, Ramona Hahn, passed away on the eve of the election at the age of 86. ‘On behalf of the campaign staff and thousands of loyal volunteers, we wish to extend our deepest condolences to the Hahn family,’ said senior Hahn adviser John Shallman. ‘They are in our hearts and prayers during this difficult time. We understand that Janice needs to be with her family, but the campaign will move forward -- as her mother would have wanted.’ Polls are open from 7 a.m. until 8 p.m. PT (10 a.m. until 11 p.m. ET) on Tuesday.”

HERMAN CAIN SETS UP SHOP IN IOWA. “Former Godfather’s Pizza CEO Herman Cain officially opened his Iowa campaign office in Urbandale by outlining the ‘guiding principles’ that he said would steer his presidency,” the Des Moines Register’s Josh Hafner reports. “Inside a crowded office room lined with stars and stripes banners, Cain said his list of self-developed ideals drew upon his ‘common sense’ management experience. In a 30-minute speech, he pitched himself to Iowans as a Washington outsider with the business know-how for a financially unsteady America. ‘I’ve lived my American dreams and then some,’ he said. ‘Why? Despite the problems this nation’s having, it’s still the greatest nation in the world.’ … Cain, who came in third in The Des Moines Register’s recent Iowa Poll, listed and commented on his principles, which include philosophies like ‘Do what’s right,’ “’Help those who help themselves’ and ‘Empower people.’”

@ ellencarmichael : RT @IowaGOPer: At Herman Cain Office Opening. Good crowd.

ISSA REFLECTS ON OVERSIGHT ROLE: ‘WE HAVE A HUGE BACKLOG’ “When Rep. Darrell Issa assumed the role of chief watchdog of the Obama administration, both sides of the ideological spectrum had big expectations,” The Washington Post’s Ben Pershing notes. “Liberals thought the Republican from California would be a media-hungry inquisitor who would stop at nothing to embarrass President Obama. And some conservatives believed he would quickly uncover high-level corruption that must be lurking just behind the White House gates. Six months into Issa’s tenure as chairman of the House Oversight and Government Reform Committee, neither side’s predictions have proved quite right — although they still disagree about whether he’s doing a good job. And the congressman has been surprised by the experience. ‘There’s more job than I expected,’ Issa said in an interview last week. ‘With the limited resources that we have .?.?. we’ve done about 80 hearings and forums [but] what you find is it’s not even half of what we should have looked into or what we should do. We have a huge backlog.’”

NOTABLE: The group , Securing America’s Future Energy, is hosting a National Summit on Energy Security tomorrow, which will feature "Oil ShockWave," a fast-paced wargame simulation where former government, military, and cabinet officials grapple with spiraling oil prices and geopolitical turmoil. Participants at the summit include, former George W. Bush National Security Adviser Stephen Hadley, former Bush White House press secretary Ari Fleischer and two former directors of national intelligence, John Negroponte and Admiral Dennis Blair. Following the simulation, SAFE will host a CEO panel on energy security, with guests including Fred Smith, CEO of Fed-Ex and Andy Taylor of Enterprise Holdings (the rental car company). A spokesman for the group calls the event, “a big push for SAFE and its mission to improve the country’s economic and national security” by tapping domestic sources of oil and other energy alternatives.

RICK PERRY WATCH: As he inches closer to a 2012 decision, Texas Gov. Rick Perry is ramping up his outreach to key political operatives and party donors, ABC’s Arlette Saenz reports. Over the weekend, Perry personally called GOP leaders in New Hampshire, including “kingmaker” Ovide Lamontagne, and in Iowa, telling Lt Gov. Kim Reynolds he'd see her "soon." Perry will head to a two-day summit for the Republican Governors Association in Aspen, Colo. July 21-22, putting him in contact with 200 of the organization's top donors. A group of donors is set to meet in Austin later in the month to help the Texas governor gauge whether he can rally the cash to carry him through the race. All these preparations come as Perry gears up for the National Day of Prayer and Fasting in Houston on Aug. 6. "As an elected leader, I'm all too aware of government's limitations when it comes to fixing things that are spiritual in nature,” Perry said in a web video. “That's where prayer comes in, and we need it more than ever. With the economy in trouble, communities in crisis and people adrift in a sea of moral relativism, we need God's help. That's why I'm calling Americans to pray and fast like Jesus did and as God.”

NOTABLE: Democratic Super PAC American Bridge 21st Century has brought aboard Ty Matsdorf as its War Room Director and Senior Advisor. Matsdorf has worked for Senator Richard Blumenthal, D-Conn., and Senator Baucus, D-Mont. “If I was a Republican running for office, Ty would be the last person I’d want managing a war room against me,” American Bridge president Rodell Mollineau said in a statement.

MUST FOLLOW: @ DianeSawyer

MUST WATCH: ABC News will air an encore presentation of “A Special Edition of Primetime with Diane Sawyer -- Jaycee Dugard: In Her Own Words,” this Saturday, July 16 at 9:00-11:00 p.m. ET. The program drew nearly 15 million viewers on Sunday, and this Saturday’s two-hour encore will include updates with viewer reaction to Jaycee Dugard’s amazing and inspiring story and new material from Diane's exclusive interview with Jaycee.


@ ThePlumLineGS : Why the White House thinks a big deficit deal is good politics:

@ jeffzeleny : A great Adam Clymer front-pager on a family dispute over where RFK's papers should go: JFK's library or elsewhere?

@ GOP12: Huntsman: "I don't sign pledges -- other than the Pledge of Allegiance and a pledge to my wife" (h/t @DStraussTheHill)

@ pwire : Who knew Marco Rubio's brother-in-law was a convicted drug trafficker?

@ President : Tim Pawlenty Loves Lady Gaga.


* California holds a special election in the state’s 36th Congressional district.

* Jon Huntsman speaks at Clemson University International Center for Automotive Research in Greenville, S.C., at noon.

* Newt Gingrich attends a Town Hall Meeting hosted by the Charleston Tea Party in North Charleston, S.C., at 7:30 p.m.

* Rick Santorum tours a pregnancy center in North Charleston, S.C. in the morning. Then he is the special guest at a fundraiser for the Horry County GOP in Conway, S.C., at 6:30 p.m.

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