What happens when you try to play games with the counter-puncher (updated x2)

For a while now everyone has been focusing on the so-called "fiscal cliff" we could be heading for on January 1, 2013 with the Bush tax cuts set to expire and $1.2 trillion in cuts to both the military and discretionary spending. Given President Obama's leverage in those negotiations, it appears that the Republicans will concede on extending the tax cuts only on income under $250,000. It remains to be seen what will happen to the spending cuts.

But I'd like to remind everyone once again that prior to the election, President Obama suggested that these fights over taxes and spending would likely be resolved in six months.

In the short term, the good news is that there’s going to be a forcing mechanism to deal with what is the central ideological argument in Washington right now, and that is: How much government do we have and how do we pay for it?

So when you combine the Bush tax cuts expiring, the sequester in place...we’re going to be in a position where I believe in the first six months we are going to solve that big piece of business.

That takes us well past the date most people had been focused on.

Much of the talk over the last couple of days has now shifted to the post-cliff issue of the need to raise the debt limit that is likely to come sometime in February 2013. As I suggested yesterday,  one of the things motivating the Republicans to concede and move on from the fiscal cliff is that they believe they gain leverage by once again threatening the full faith and credit of the U.S. in an attempt to get what they want.

President Obama has said he's not going to play that game. And I'm not the only one who has been wondering what his plan is to avoid it. Kevin Drum identified "4 theories that would allow President Obama to ignore the debt ceiling." He doesn't find most of them credible. Here's his best bet:

For what it's worth, I agree that the president's best option is to simply start shutting down chunks of the government if Congress refuses to raise the debt ceiling. Republicans seem to have convinced themselves that the lessons of 1995 no longer apply, but I think they do. This would be a PR disaster for them. They'd cave before long.

Josh Marshall agrees and sees it as The Mother of all Government Shutdowns.

By my reading of the constitution, the President has a primary obligation to honor the debt of the United States. Pragmatism points in the same direction. But as a constitutional matter the President is required not to default on the public debt. So the only thing the President can do — if he’s really not going to negotiate — is continue to service the existing debt and shut down big enough parts of the federal government to be able to fund it through existing tax receipts. And no, shuttering the national parks would by no means cut it.

Just how much you’d have to shutter and which parts I’m not completely sure. But a whole, whole lot.

I'm not suggesting this is actually what is going to happen. But if you agree with me that this President doesn't bluff, then you know that he has a plan for when/if Republicans are actually stupid enough to play this game. Boehner and McConnell should have learned by now that you don't mess with the counter-puncher. But in case they haven't - this is what is likely waiting for them.

UPDATE: Matt Yglesias weighs in on how this would be different from other government shutdowns:

The key point is that even without the authority to borrow money, the federal government still has a lot of tax revenue coming in. You use that money to make sure bond holders get paid in full and there's no default. You use that money to make sure Social Security checks keep paying out. You keep paying federal workers' wages. But contractors, state governments, and health care providers just get IOU notes signed from the president telling them to keep doing their jobs and promising full payment—as required by law—as soon as congress relents. And you say in advance that this is the plan. Congress can either surrender right away and spare Medicare providers and defense contractors some inconvenience, or else they can hold out for a week or two until every hospital administrator in America is banging on every congressman's office demanding surrender.

The key point is that the funds for everything have already been appropriated. It's the law of the land that those bills will be paid. Congressional inaction can't repeal Medicare or change the fact that guys with standing contracts to deliver bullets to the Pentagon are entitled to money in exchange for their munitions. All congress is doing here is creating a mechanical roadblock to the transfer of funds from the party legally obligated to pay to the parties legally entitled to be paid. You send them IOUs, tell them to keep doing their jobs, and tell them that if they want money they should ask congress.

That is why President Obama made sure this week that he has the Business Roundtable behind him on this one. He's working to ensure that the Republican leadership in Congress knows that ALL the pressure will be on them if they decide to play this game.

2nd UPDATE: David Corn weighs in. You really should read the whole thing. He provides some history to demonstrate that President Obama isn't playing games with this one.