There is a headline on National Review that quotes financial writer James Pethokoukis to the effect that Speaker John Boehner’s refusal to accept a bad debt ceiling deal is similar to Ronald Reagan at Reykjavík. Reagan walked out rather than sign onto a deal that was not propitious for the United States (or human rights around the world). Immediately seen by many as failure, Reagan’ action is now often hailed as the beginning of the end of the Cold War.

I can’t find the Reykjavík quote anywhere in the linked column, but Pethokoukis does a good job of explaining why no deal was reached (and why a deal should not have been reached, given what the present was offering):  

Barack Obama could have done two things that might have saved his Mother of All Budget Deals.

First, he could have embraced market-centered, consumer -focused reforms to Medicare. That was about as likely as him accepting an Obamacare rollback.  Second, he could have agreed – as House Speaker John Boehner and Republicans suggested –  to sharply reduce tax rates in return for fewer special tax deductions/breaks/loopholes/subsidies. Recall that is what his own debt commission recommended.

This is a defining moment for the two parties. If the Republicans fail, they could trigger the rise of a third party. Arthur C. Brooks of the American  Enterprise Institute shows where the dividing line is in this week’s Weekly Standard:

Why does the president want to increase America’s tax burden? You may think it’s just a way to increase revenues and reduce the deficit. But even the president knows he can’t solve the fiscal crisis by helping himself to bigger and bigger chunks of the income of America’s most successful people. Even if individuals earning more than $200,000 were taxed at a 100 percent marginal rate-and we confiscated their passports so they could not flee-the take would come to $1.27 trillion, or just 77 percent of this year’s deficit.

For the administration, it’s not about the money-as we have heard again and again, it’s about “fairness.” The president believes that we will be a better nation if we redistribute more money from those who have more to those who have less. How much more do we need to redistribute until our system is fair?

Democrats like to say that “the rich” aren’t paying their “fair share,” even though the wealthiest 5 percent of taxpayers now pay 59 percent of taxes. But there is the other side of the equation: Nearly 70 percent are now getting something from the federal government, making us “a nation of claimants.” This is the crux of the matter: What kind of nation will we be? The debt ceiling debate is really about this. Brooks notes:

In the coming weeks and months, as the debt ceiling debate rages and new budget battles arise, we will hear more and more class-warfare rhetoric about corporate jets, miserly rich people, and the need for higher taxes. Free-enterprise advocates must be ready to make a three-part case. First, it is bad economics to tax our way out of the hole our government has dug for us. Second and more important, it betrays a lack of national moral fiber to say, in effect, “We are too weak to control our spending.” Third and most important of all, it is not “fair” in any traditional American understanding of the word to tax our way out of a spending problem.