Editor's note: David Gergen is a senior political analyst for CNN and has been an adviser to four presidents. He is a professor of public service and director of the Center for Public Leadership at Harvard University's Kennedy School of Government. Follow him on Twitter.
Washington (CNN) -- With America now perilously close to default, here's where I sense we stand. My observations may be off as I have only had a brief time in Washington to take measure, but let me give it my best shot.
First off, the good news: The next several days are likely to be tortuous, but odds are shifting now in favor of a resolution that will prevent default. Behind the scenes, congressional leaders on both sides are talking to each other about ways out of this mess -- talks that are quiet, frequent and urgent.
Importantly, the two key plans now on the table -- one from House Speaker John Boehner, the other from Senate Majority Leader Harry Reid -- bear important similarities. Both are based squarely on spending cuts, and the Democrats aren't now pushing for tax increases. That makes it easier to find common ground.
Finally, there are hints that if a bipartisan deal is shaping up, President Barack Obama may be willing to accept an extension of the debt ceiling for a couple of weeks, give or take a bit. Default is still a serious threat, but there may be enough will and enough time to hammer out a compromise that both sides can swallow.
Now the bad news: Even if they reach a compromise and we avoid a default, prospects are growing that we will get hit by a second bullet: a downgrading of our AAA credit rating.
Standard and Poor's, which rates securities such as U.S. bonds, has made increasingly clear that it is looking for more than a resolution of the debt-ceiling fight. It also wants the resolution to be built on a credible plan to reduce deficits by $3 trillion to 4 trillion over 10 years.
The president still wants that "grand bargain" and perhaps so does Boehner (see below), but it is a real long shot. Well-informed people now think that a credit downgrade is a near certainty. And that could bring some of the same damage as a default: higher interest rates, troubles in banks and state governments and a blow to American prestige. It shouldn't be an economic catastrophe by any means, but it is definitely bad news.
Those are the bottom lines. Now for a little speculation about how this may unfold in coming days.
As noted, there are two plans now on the table -- Boehner's and Reid's. House Majority Leader Eric Cantor and some of his GOP allies may be calculating that the Boehner plan will pass the House but the Reid plan will fail in the Senate. With that, Cantor may hope, the Senate could actually accept the Boehner plan, and it would be sent to the president with a simple message -- accept what you hate or veto and throw us into default.
My sense is those calculations won't hold. Yes, Reid will never pass the House and may not even pass the Senate. (Where will Reid find seven Republican senators for cloture?) But by the same token, the Boehner plan doesn't have a bright future, either. Enough hard-line Republicans are coming out against it that it could fail in the House, and if it gets to the Senate, the president and Democrats are so dug in against it that it won't pass there.
What all of this means is that both the Reid and Boehner plans are likely to die by the end of the week, and congressional leaders will then be under intense pressure to unveil yet a new compromise -- that's why they are talking so much. Perhaps the new compromise will blend elements of Reid and Boehner. Perhaps Senate Minority Leader Mitch McConnell -- unrecognized as the key figure in this drama? -- will come up with a variation of his old plan, which would have allowed Congress to agree tacitly to increasing the debt ceiling while casting symbolic votes against it.
But there is yet another possibility that intrigues: Will Obama then try to persuade Boehner to go back to the "grand bargain" they nearly reached several days ago. (Question: Was that deal blown up by the sudden announcement of the "Gang of Six" plan? Maybe.) In any event, Obama clearly harbors a hope for a grand bargain.
Indeed, his prime-time TV speech was a strong appeal to his base and to independents to flood Congress with demands for a "balanced," grand approach -- and a rejection of Boehner's new plan. Indications early Monday night suggest that it may have worked: Electronic messages were reportedly pouring in, and Boehner's website (among other congressional pages) reportedly crashed. But it remains to be seen whether the heavy traffic was a grass-roots surge begging for compromise -- or a tea party-led clamor to hold the line.
Still, it seems that partisans in both parties will kill the idea of such a grand bargain -- after all it contains both higher taxes for some and Medicare cuts. Much more likely is a more modest agreement with all the danger that brings for our credit rating -- a blend of Reid/Boehner or a McConnell special.
Finally, what more deserves to be said about the two television speeches Monday night? Very little, frankly. Had they been given a few weeks ago, they would have been welcomed as standard rhetorical fare. But to have such political speeches -- both containing partisan barbs -- on the eve of a crisis struck me as one more reminder of how far we have drifted from the statesmanship of yore.
Americans are rightly angry, frustrated and more than a little scared by this debt fight. It has only confirmed that our politics have taken a terrible turn. And how striking it is to have an emergency that has not been caused by our foes -- but is entirely a self-inflicted wound. Wouldn't it be wonderful if we didn't have to listen to more arguments from politicians -- as well as pundits -- and could actually wake up to a bold, courageous, bipartisan solution?
The opinions expressed in this commentary are solely those of David Gergen.