Player of the Week: President Obama

President Obama has to take the lead now that the debt-ceiling talks led by Vice President Biden have been put on ice.

With Republicans in charge of the House and Democrats still holding the Senate, neither party on Capitol Hill can move a deal on its own. In reality, bipartisan votes will probably be required in both chambers to raise the nation’s $14.3 trillion debt ceiling, as even in the House it’s doubtful that Republicans can pass a debt deal with votes from only their own conference members.

{mosads}The ramifications for Obama are huge, and he will be challenged to find a proper balance between offering concessions to Republicans and holding the line for his own party.

If he is unable to make a deal and the debt ceiling isn’t lifted, Treasury Secretary Tim Geithner has warned of economic catastrophe. Republicans would be blamed too, but Obama could see his chances of winning a second term disappear if the economy falls into a tailspin.

On the other hand, agreeing to a bad deal could also hurt the president.

If markets see the deal as doing little to better the nation’s long-term finances, they will punish the dollar, U.S. equities and the underlying economy.

Politically, a president trying to court independent and Democratic voters risks losing both if he is seen as too weak in caving to GOP demands to slash spending, or too uncompromising in taking a hard line on taxes or entitlements.

Forging a deal that actually increases global confidence in the U.S., on the other hand, could improve the economy on its own and secure Obama’s reelection. Seen from that point of view, the next four weeks represent a huge opportunity for the president.

The delicate talks will be a steep challenge for Obama, given that neither party greatly trusts him.

Distrust of Obama in the House is deep, meaning any deal Speaker John Boehner (R-Ohio) works out with the president will undergo extreme scrutiny by conservatives determined to prevent the president from snookering them with a deal that does not make deep cuts to federal spending.

Senate GOP Leader Mitch McConnell (Ky.), who met with Obama on Monday, has said his No. 1 priority is to defeat the president.

Democrats don’t trust Obama either. Many think he gave away the farm with his December deal extending all of the Bush tax rates as well as a lower estate tax. Now they worry they’ll be sold out again if Obama caves on the elimination of tax deductions for businesses and wealthy households in a deal to close annual deficits.

It was always going to be impossible for seconds-in-command Biden and House Majority Leader Eric Cantor (R-Va.) to forge a final compromise.

By walking out last week, Cantor gave Obama more than a month to craft a deal before Aug. 2, when the Treasury Department warns it will no longer be able to pay all of the nation’s bills.

It is crucial that Obama take the baton and make progress this week.