Via Matthew Yglesias, Gene Sperling, director of the National Economic Council, explains one of the administration's key demands as deals with Republicans on the fiscal cliff—an end to the debt ceiling as a negotiation tool:
Make no mistake about it: no budget agreement – however robust – will provide the economic certainty and confidence we aspire to if job creators, investors and working families believe that, after we reach that agreement, just months down the road, we will start the next round of debt limit debacles. As both economist and business leaders have told us, only the greatest national tragedies have competed with the debt limit debacle of 2011 in terms of damaging consumer confidence. So let’s be clear: if we want to see the economic benefit of a bipartisan budget agreement we need to agree that the era of threatening the default of the United States as a budget tactic is over. The full faith and credit of the United States of America is something we should cherish and never use as a bargaining tool by any side. This should be beyond question at this moment. [Emphasis added]
In fairness to congressional Republicans, President Obama bears some blame for the fact that the debt ceiling is now a weapon in budget negotiations: Last spring, he signaled a willingness to use the debt limit as the basis for negotiations over spending.
Which, of course, was a mistake. Even if the GOP weren't willing to cause a default, there was never any justification for negotiating over the debt limit—it's an administrative function and should be treated as such.
With that said, you can sort of see the rationale behind the administration's decision; Republicans had just won a huge majority in the House of Representatives, and had the political wind at their back.
Now, the tables have turned. It's President Obama who won an election, and who has significant leverage over the situation. As indicated by Sperling, the administration wants to use this leverage to put the genie back into the bottle, and take the debt limit threat off of the table.
Republicans find the proposal ridiculous, but it was actually adapted from something Mitch McConnell offered last year. Here's how Tim Geithner described it on Meet the Press this past weekend:
[T]he way that works is the President would have the obligation periodically of requesting an increase in the debt limit, and then Congress would have the chance, then, to express its views on the merits of that proposal by disapproving that. And then the President would have to decide, if a bill came to his desk, about whether to veto that or sign it.
Republicans get a chance to express their disapproval of the debt limit, and the administration can rest assured with the knowledge that the global economy is safe from a U.S default. It's a win/win solution.
Whether it happens is a different story. But given that the administration holds a strong negotiating position, I wouldn't be surprised if it were part of a final deal.