By deciding to make compromise a synonym for capitulation, Republicans have not only generated frayed nerves on Wall Street and high anxiety on Capitol Hill. They have succeeded in alienating most Americans.
Poll after poll tells the same story: About two-thirds of voters believe that any deal to shrink a distended U.S. budget deficit should involve a combination of spending cuts and tax increases. Cuts alone would be unfair.
House of Representatives Speaker John Boehner is acutely aware of the risk his party is courting. He has tried to nudge a recalcitrant caucus toward compromise and, on Thursday, was reportedly close to a $3-trillion (U.S.) deal with the White House that includes $1-trillion in new taxes.
But selling a dug-in GOP rank-and-file on accommodation is proving more trying than negotiating a historic deal with a Democratic President.
Beholden to a Tea Party base that would rather play Thelma & Louise than surrender, Republicans could be on the cusp of blowing a rare chance to rein in the country's bloated debt - and reassure the world they care about America's solvency - just because it requires bending a bit on taxes.
"Republicans in Congress are catering to a subset of a subset of voters," Democratic pollster Jeff Liszt insisted in an interview. "This gives Democrats an opportunity to remake the contrast that was so successful for them in 2008 about who is on the side of the middle class."
President Barack Obama wants GOP approval to lift the $14.3-trillion federal borrowing limit by the Aug. 2 deadline, and is offering a major deficit reduction package in exchange. But ideology is not the only obstacle to Republican co-operation. While Mr. Obama has cited polls to push for a "balanced" approach, many in the GOP are adamant their party has less to lose politically by standing its ground than by giving in on taxes.
"Public opinion is up for grabs," former George W. Bush strategist Karl Rove wrote in Thursday's Wall Street Journal. "If the congressional GOP wants to emerge from these negotiations in good shape, it must remain on the offence."
Mr. Rove thinks Republicans should push for a more modest package of spending cuts and an equal increase in the debt ceiling. Such a deal would require another round of negotiations to raise the borrowing limit again before the 2012 election, buying "Republicans months to fight for additional spending cuts and possibly fashion a revenue-neutral tax reform."
On Thursday, Mr. Boehner appeared to be spurning that advice. He was reportedly nearing an agreement with Mr. Obama that included an overhaul of the tax code involving $1-trillion in new revenues over 10 years.
Though Mr. Boehner denied reports of an "imminent" deal - earlier in the day, he insisted "there will be no tax increases" - Democratic leaders Harry Reid and Nancy Pelosi met with Mr. Obama at the White House late Thursday, apparently to discuss the emerging compromise.
While Mr. Reid and Ms. Pelosi face a tall order persuading Democrats to accept cuts to Medicare and other social programs, their task pales next to the sales job Mr. Boehner must perform on his caucus.
Republicans opposed to any compromise cite 1990, when George H.W. Bush reneged on his "no new taxes" campaign pledge and provoked a schism in the GOP that led to his loss to Bill Clinton two years later.
But an increasingly marginalized GOP establishment is reminding the rank-and-file about 1995, when a budget standoff between Mr. Clinton and then Republican speaker Newt Gingrich led to a disruptive government shutdown for which voters blamed the GOP.
What is tilting the balance in favour of the no-compromise camp is the memory of bank bailout bill. Those in the GOP who opposed the Troubled Asset Relief Program in late 2008 still believe they were right - politically as much as ideologically - and are drawing comparisons with the debt ceiling debate.
They and their Tea Party supporters did not buy warnings the global financial system would have gone into conniptions had the legislation been defeated, even though stock markets went into a freefall when the first incarnation of TARP failed in the House.
TARP remains one of the most loathed pieces of legislation in American history and its unpopularity benefited Tea Party Republicans in last November's congressional elections. Though it was passed under George W. Bush, the bailouts were largely executed on Mr. Obama's watch.
Anti-TARP Republicans in Congress now assert that a failure to lift the debt ceiling by Aug. 2 need not spark a default by the U.S. Treasury and are pushing back against any deal. Their core constituency is roughly the same 20 per cent of Americans who, according to a July 13 Gallup poll, think the budget deficit should be reduced with spending cuts alone.
"That 20 per cent turns out in a Republican primary and has the power to sway the GOP presidential nomination," Mr. Liszt explained. "They don't believe in apocalyptic warnings."
And until Mr. Boehner defies them, they are calling the shots.
Konrad Yakabuski