Greg Sargent has provided a very insightful look at the administration’s basic political strategy that underies the current maneuverings over the budget. As he says, “I’m not defending this thinking; I’m simply detailing it.”

…here is my understanding of White House thinking on why a Grand Bargain is a good outcome.
Obama and his advisers don’t necessarily view Chained CPI [which is included in Obama’s budget] as good policy. But they think a Grand Bargain is ultimately a better outcome than continued sequestration, and the only way to the former is to peel off individual Republicans who are open to new revenues. They believe a Grand Bargain is good for Democrats in general, because it essentially would lock in a medium-term agreement over core disputes — about the safety net and about the size of government, and who should pay for it — that have produced a debilitating stalemate in Washington.
Yes, Republicans would continue railing about government spending, the thinking goes, but no one would listen, since they would have already endorsed a deal stabilizing the deficit. This would deprive Republicans of the ability to focus attention on one of their core targets — Big Government — as a way to avoid grappling with other issues, such as jobs and long-term middle class economic security, immigration, guns, and perhaps even climate change. Reaching a deal on the deficit will force Republicans to confront those problems more directly and to choose between real cooperation on them or continue to calcify as a hidebound, reactionary party incapable of addressing major challenges facing the country.
Liberals will point out that it’s folly to offer Republicans so much up front, because they’ll only denounce the offer as “unserious” and demand more, shifting the debate further in their direction. But officials insist the White House has no intention of budging on its demand for new revenues or allowing Republicans to pull Obama further towards them. (This doesn’t mean liberals shouldn’t make it clear that any further concessions on revenues are unacceptable.) The offer in the budget, the thinking goes, will drive home that Obama is the one who occupies the compromise middle ground, and if Republicans refuse to deal, it will be crystal clear in the public mind who is to blame for continued austerity. The White House doesn’t worry about putting its fingerprints on entitlements cuts, because Obama has long proposed them himself.
I’m not defending this thinking; I’m simply detailing it. In my view, it’s not clear yet that the sequester will shape up as enough of a political liability to force Republicans back to the table.
Liberals…need to start thinking right now about how to answer this question: Which is worse, a Grand Bargain, or continued sequestration? It’s unclear to me that there is any other likely outcome. Either Republicans will decide to weather sequestration or they will agree to some kind of a deal to replace it. So liberals need a good policy answer to that question.