In a significant retreat, House Republican leaders on Friday unveiled a plan for a three-month increase to the debt ceiling, with the condition that the House and the Senate pass a budget by April 15. The House GOP had previously demanded dollar-for-dollar spending cuts for any increase in the borrowing limit, seeking to use the threat of a debt default to extract deep concessions from President Obama. But Obama held firm, and in recent weeks pressure had mounted on the GOP — from business groups and conservative media outlets — to drop the threat, since the economic impact of a default would have been devastating, to say the least.

As part of the proposal, House Majority Leader Eric Cantor warned that members of Congress would not be paid a salary if they failed to meet the April 15 deadline. "No budget, no pay," he said in a statement. The Senate has not passed a budget in four years, while the House, led by former vice presidential candidate Paul Ryan (R-Wis.), has passed budgets with sweeping changes to the country's entitlement programs that are viewed as non-starters in the upper chamber.

The White House tentatively welcomed the news. "We are encouraged that there are signs that congressional Republicans may back off their insistence on holding our economy hostage," the administration said.

The idea of a three-month extension has been kicking around the conservative world for several days. In fact, influential columnist Charles Krauthammer of The Washington Post urged this exact same strategy in a column published earlier today, arguing that it was the best way for the GOP to escape charges of irresponsibility and to underscore the Democrats' "fiscal recklessness" — all while keeping "the debt ceiling alive."

However, the demand that Congress pass a budget is widely seen as a fig leaf to obscure the fact that the GOP has lost the debt-ceiling fight without winning any concessions. While the country's borrowing limit will have to be raised again in three months, the latest move effectively removes the debt ceiling as a bargaining chip in negotiations over the budget, since the GOP has all but admitted that it doesn't have the will to follow through on its threat. As Jonathan Chait at New York recently put it:

You have to ask yourself what the point is. If Republicans can't threaten to shoot the hostage, what do they gain by holding new debt ceiling votes every few months? It's either leverage or it isn't. If it isn't, then a new vote every few months won't do anything for the GOP. Indeed, it will annoy Republicans, who will be forced to take more and more "he voted to increase the debt ceiling fourteen times!" votes. [New York]

But that doesn't mean Republicans have lost all their leverage. Remember, Congress will have its back against the wall three times in the next few months: On March 1, a slate of $1.2 trillion in spending cuts will take effect, which both Republicans and Democrats hope to avoid; on March 27, funding for the government will run out, raising the prospect of a government shutdown; and now, on April 15, the government will once again reach its borrowing limit. Instead of taking a stand on the debt ceiling, by far the most dangerous gamble of the three, Republicans have pushed it past the other two deadlines, which presumably will become their new points of leverage.

In the meantime, the country can breathe a sigh of relief: The possibility of a debt default is looking vanishingly remote.