The overview of the Republican position right now is that the overwhelming majority of Republicans do not want to cut a deal with President Obama to reduce the deficit in return for raising the debt ceiling. They don't want this deal even if it's very friendly to their ideological position. The split is over what to do instead. The craziest House Republicans (and Mitt Romney) want to continue holding the debt ceiling hostage until Obama gives them total capitulation, like a balanced budget amendment. Mitch McConnell just wants to lift the thing and stick Democrats with the vote. The constituency for any remotely plausible policy bargain seems vanishingly small.

The interesting thing with McConnell is the political calculation, because that's the only kind of calculation McConnell usually engages in. A bipartisan deal to lift the debt ceiling would help Obama to position himself in the center and assuage some fears about debt and big government. But what about adopting the crazy House republican position, holding out for total victory and precipitating a default crisis? Political scientist John Sides argues that McConnell should be pushing for that:

Assume there is no deal and then assume, as Geithner and others have warned, that there are serious consequences for the economy when the debt ceiling isn’t raised.  This will hurt Obama.  And it will hurt him more than it will hurt the Republican Party.  Presidents suffer the consequences of a bad economy.  Divided government does not change this.  Beware pundits who see silver linings for Obama in this scenario.

That sounds plausible. Except... McConnell himself does not see the issue this way. In McConnell's view, a debt ceiling standoff would result in voters blaming Republicans:

"[W]e knew shutting down the government in 1995 was not going to work for us. It helped Bill Clinton get reelected. I refuse to help Barack Obama get reelected by marching Republicans into a position where we have co-ownership of a bad economy," McConnell said. "It didn't work in 1995. What will happen is the administration will send out to 80 million Social Security recipients and to military families and they will all start attacking members of Congress. That is not a useful place to take us. And the president will have the bully pulpit to blame Republicans for all this disruption."

To be sure, McConnell may be wrong here. But this is a case where I think Sides is over-relying on the data. Yes, historically, voters blame the president for a bad economy, even if divided government has blocked the president's agenda. But how many historical examples can we find of the opposition party engaging in high profile acts of economic destruction?

Kevin Drum has a correspondent who offers some perspective on McConnell's debt ceiling hostage release:

I spoke to some (very) conservative investment bankers yesterday on some deals we are handling and asked about the debt ceiling as an aside. They were very concerned about the ceiling and seemed very favorable to McConnell's offer. Europe is really, really spooking the investment community. Thus, they would like to tamp down the uncertainty here in the hopes that some sense of normalization here will help the sanity over there and otherwise across the board.
They said it was common knowledge that McConnell was taking very serious back-channel heat from Wall Street because the conclusion was that there was no reliable leadership in the House with Boehner unable to control his caucus and Cantor making his leadership play now. They view Boehner as out. In other words, McConnell is Wall Street's only viable player and so he is taking all the calls. And those calls are not saying to insist upon cuts only come hell or high water. They are saying raise the F-Ing ceiling NOW.

It seems highly plausible to imagine that, if the Republicans block a debt ceiling increase, that the public will turn on them. The business elite will decide that the Republicans are dangerous and must be stopped. Obama will use his bully pulpit to explain to the public that the Republicans have forced withholding of entitlement payments and the closing of vital government services. Quite possibly, this effect could overwhelm any actual economic ramifications. I know the models say the economy will be all that counts. That could be right. But the models have never seen anything like this before.