Beutler spells it out:
The whole point of Obama’s refusal to negotiate is that what Republicans are actually demanding is to fundamentally alter the power balance between the legislative and executive branches of government. If Obama caves and offers concessions to Republicans in exchange for a debt limit increase, it will clearly weaken the presidency. By contrast, if Republicans “cave” and increase the debt limit cleanly, Congress will lose none of its fundamental power.
Moreover, senior administration officials are confident that if Obama establishes the precedent that the president should yield concessions to the opposition on a threat of default, eventually the opposition will demand something so impossible that a default will happen anyhow. Taking a hard line now is the only way to prevent that.
A more concise description of Obama’s thinking:
[I]t would be a complete abdication, in [Obama’s] mind, to leave the next president vulnerable to the nullification of his or her election.
Yes, that is indeed where we are: nullification again.
The Dish 