Politico has a big reported story today that claims Obama is searching for a grand bargain involving entitlements and new revenues because he “has no choice.” The basic idea is that, by refusing to deal on the sequester, Republicans have boxed Obama into a position where he must come to the table with entitlement cuts, or be stuck with the sequester cuts.

Politico characterizes the thinking of GOP leaders this way:

A lull in the deadline-driven budget battles could soon give way to a fresh round of fiscal crises — from rising public pressure to lift the sequester to a looming summer deadline to increase the debt limit. If the president is to have any hope of resolving either fight to his liking, he’ll need more revenue. But Republicans won’t even consider it unless entitlement reforms are on the table. […]
Privately, House Republican leaders think they’ve checked two of the three boxes of a grand bargain: first, the Jan. 1 tax increases; second, the spending cuts via the sequester. Now, in their view, all that’s left is entitlement reform. Top Republicans are also skeptical Obama would agree to the kind of tax reform that House Republicans have drawn a firm line on: The revenue to be generated by closing loopholes would go to lowering rates.

I don’t know how to be any clearer than this, but here goes: Entitlement reforms are on the table. The President’s offer includes Chained CPI for Social Security and means testing for Medicare has also been floated. As for the suggestion that Republicans have drawn a “firm line” against any new revenues from closing loopholes, this gets us back to the most basic fact about the fiscal battle, which is this: There is no conceivable scenario under which Republicans will get serious entitlement cuts without agreeing to new revenues. None.

The President and Senate Dems will never agree to a package that only cuts entitlements. There’s a simple reason for this: From the point of view of Democrats, the sequester cuts are preferable to replacing them with entitlement cuts. There is no imaginable scenario under which Dems would agree to replace the sequester only with entitlement cuts. Such a thing could never be sold to rank and file Democratic officials, let alone to the base.

The Politico piece portrays Obama as having no option other than a grand bargain to avoid both the political backlash from sequester cuts and the showdown over the debt ceiling that could come next month. That may be true, but the flip side of this is that Republicans have no option for avoiding these things other than reaching a deal. And the deal must contain new revenues, because Democrats would prefer to live with the sequester than replace it only with entitlement cuts.

The basic dynamic here is simple for both parties. Either a deal is reached involving new revenues and entitlement cuts, or the sequester continues indefinitely. And it needs to be restated that the sequester is not a good option for Republicans, either, despite all the triumphalism about it. They risk taking the blame for the economic damage it does (Obama does, too, but he’s not up for reelection, and they are), and it doesn’t give them the entitlement cuts they claim to want. Giving Obama more flexibility over the sequester doesn’t really solve anything, either: The magnitude of cuts remains the same, and nothing happens with entitlements. What’s more, it seems that even some Republican officials are realizing that being the party of deep austerity and crisis-to-crisis governing (such as would happen with another debt ceiling fight) is not sustainable over the long term.

The most important fact about the situation — the central fact about it — is that there’s no route to a resolution that doesn’t involve a new cuts/revenues compromise of some kind. As Noam Scheiber detailed yesterday, there is a route to that compromise, albeit a difficult one, that could be viable even if GOP leaders hold out against it. I don’t necessarily think Republicans will agree to new revenues because they actually care about the deficit or about entitlement reform, but it is conceivable that some non-leadership GOP officials may break away and do so simply because the alternative for the GOP, over time, looks a lot worse.