“It’s decision time”: Obama has told Congressional leaders that the drop-dead decision time has arrived on how to move forward with the debt limit. House GOPers and House Dems are each set to hold private meetings this morning, where they will likely debate whether to move forward with Mitch McConnell’s escape hatch proposal, given that the impasse seems unresolvable at this point.

No matter which route forward we take — whether it’s a “grand bargain” or the McConnell plan — it will involve major concessions by Dems in the form of spending cuts. (The emerging McConnell proposal would package spending cuts with the proposal to transfer control of the debt ceiling to the president.) Ultimately, Dems will probably find McConnell’s plan marginally acceptable, because it won’t involve major entitlements changes. But Dems will not agree under any circumstances to a grand bargain that includes massive cuts and no revenue increases whatsoever.

Republican leaders have argued that raising the debt ceiling itself is a major concession. And it’s true that this is a politically tough thing for Republicans to do, given the quasi-delusional opposition to it that has taken hold among some in their caucus. But the problem is that GOP leaders are already on record claiming that a debt ceiling hike is imperative to avoid national catastrophe. Whether Republicans like it or not, Dems will not agree to a deal that gives the GOP massive spending cuts in exchange for no concessions other than something Republicans themselves have already said is necessary and inevitable.

So here’s the choice Republicans face. They can either accept a rise in revenues, by reaching the sort of cuts-for-revenues deal Obama wants. Or they can take the McConnell route, which means surrendering their control over whether the debt ceiling gets raised and giving up their ability to use it as leverage towards the overriding ideological and policy goal of shrinking government.

The problem, of course, is that many House conservatives oppose both those courses of action with equal ideological fervor. Yet the plain, unavoidable fact of the matter is that on one of those fronts, they are going to have to give.

* Reid and McConnell quietly inch new proposal forward: The two are close to agreeing on a plan to package it with a debt reduction panel made up of appointed experts. But crucially, they are refusing to divulge details, in order to protect the emerging plan from getting sunk by political attacks — another sign that leaders know it may be our last chance to escape this mess.

* Enormous hostility to McConnell plan: The Hill games out the intense hostility to the escape hatch plan that’s developed among conservative Republicans, and the byzantine impact it will have on intra-Republican politics.

* Will House Dems support McConnell proposal? Steve Benen hears that the emerging version of the plan may “include a few sweeteners for the left, including a possible extension of unemployment benefits.”

* Eric Cantor emerging as conservative hero: Cantor gives his side of the story to National Review, and it’s worth reiterating that the pummeling Cantor is taking from Dems and Beltway commentators for refusing to raise taxes may only enhance his stock among some conservatives.

* Could a balanced budget amendment mollify conservatives? One key question is whether a chance to vote on a balanced budget amendment will make it possible for conservatives to accept the McConnell plan.

* Krauthammer to GOP: Time to swallow McConnell proposal: The conservative columnist makes a big show of urging House Republicans to “call Obama’s bluff” by passing a temporary debt ceiling hike, but the real news in his column is that he’s essentially conceding that the McConnell plan is the GOP’s only real way out.

The key takeaway is that Krauthammer is offering conservatives a way to accept the McConnell plan: Default could make it impossible for the GOP to defeat Obama, and the only way to really control spending is for the GOP to take back the White House.

* GOP’s self-defeating anti-tax fervor: An interesting big picture look by Ronald Brownstein at how the GOP’s anti-tax ideology may actually prevent them from realizing their long-held goal of cutting entitlemetns.

* The roots of impasse: GOP can’t accept Obama’s legitimacy? Paul Krugman on the ultimate reason Republicans won’t, or can’t, compromise with Obama: “the modern G.O.P. fundamentally does not accept the legitimacy of a Democratic presidency — any Democratic presidency.”

“The Reality Gap”:Dave Weigel on the right’s unwillingness to embrace reality on the debt ceiling.

* Murdoch scandal grows, and grows, and grows: Rupert Murdoch’s top liutenant, the former editor of phone-hacking News of the World, abruptly resigns as News Corp. prepares to run full page ads apologizing for the paper’s conduct. But the scandal continues to stay one step ahead of frantic damage control.

* And behold Michele Bachmann’s sudden Iowa frontrunner status: Iowa Republicans warn that Bachmann is now in danger of falling short of expectations in next month’s Ames straw poll — another mark of how surprising her success has been and how seriously she should be taken as Mitt Romney’s leading challenger.

What else is going on?