Constraint solver regression in mypy 1.7.1

[erictraut]

Mypy 1.6.1 didn't produce any errors in this code, but 1.7.0 does.

Link to mypy playground

from typing import Callable, Generic, TypeVar

A = TypeVar("A")
B = TypeVar("B")

class Gen(Generic[A]): ...

def id_(x: A) -> A:
    raise NotImplementedError()

def bstep(
    x: Gen[A],
    y: A,
) -> Gen[Gen[A]]:
    raise NotImplementedError()

def bfn(
    x: Gen[Gen[A]],
) -> Gen[A]:
    return bfn_generic(x, id_, bstep) # False positive error here

def bfn_generic(
    x: Gen[A],
    id_: Callable[[B], B],
    step: Callable[[A, B], Gen[A]],
) -> A:
    raise NotImplementedError()

Note that pyright has a similar bug in its constraint solver, which is how I became aware of this issue. Here's the original pyright bug report.