[O]bama gave away the one big legislative stick he has in his arsenal. He said he wouldn't risk a government shutdown by demanding a sequester fix in the continuing resolution needed to fund the government past March 27.

"I think it's the right thing to do to make sure that we don't have a government shutdown," he said on March 1.

The White House had been quietly signaling to its Democratic allies on the Hill that Obama would not threaten a veto out of fear the public would blame Democrats for the shutdown.

But the decision only underscored what many Hill Democrats believe was a major negotiating error by the White House and Vice President Joseph R. Biden Jr. in the fiscal-cliff deal.

By making all of the tax cuts permanent but only avoiding the sequester for two months, the president traded away most of his leverage in return for only half of the revenue he had been seeking -- and no clear way to force Republicans to the table for more.

"It's playing out exactly as we warned them it would," a senior Senate Democratic leadership aide said.

It's not as if Republicans were shy about making that argument at the time: GOP leaders immediately said that the deal effectively set in stone revenue for the president's second term.