The WH is playing a huge game of chicken. They know they’ll have their maximum leverage on Aug 1 at around 1130PM. They think that when it comes down to it the GOP will fold, just as they largely did in April over the CR.
I don’t knwo what will happen but it won’t happen until the very end. I think there’s a good chance we go past Aug 2.
And that is EXACTLY what will happen.
My cynical side says Obama views it as a win-win. If the deadline passes with no resolution and everything starts cratering then he has accomplished his puppetmaster's orders, and if he pulls out a secret plan at the 11th hour and can cause the GOP to cave and pass it, then he regains the adulation of his fawning useful idiots and rides it to a reelection in 2012. Grant it, I hope this is all completely wrong.
Y2k all over again! ;-)