At their 1986 Reykjavik summit, Ronald Reagan and Mikhail Gorbachev were tantalizingly close to a “grand bargain” that would have abolished all nuclear weapons in ten years. But then Gorbachev laid out his price: Reagan had to effectively kill the Strategic Defense Initiative. When the Soviet leader made clear he would not budge on SDI, Reagan walked away. The press pilloried Reagan for giving up a historic agreement. But looking back today, it was one of the greatest moments of his presidency — and a turning point in the Cold War.

On Friday, House Speaker John Boehner had his Reykjavik moment. Boehner and President Obama were close to a grand bargain to reduce the federal debt. To reach a deal, Boehner had agreed to $800 billion in new tax revenue (coming not from tax increases, he says, but from a flatter, fairer tax system). But after the Gang of Six came out with a plan that included significantly higher taxes, Obama demanded an additional $400 billion in revenue that would have required large tax hikes. Boehner said no. And when Obama made clear he would not budge on the additional revenue, Boehner walked away. The press has pilloried Boehner, but it may prove to be one of the greatest moments of his speakership – and a turning point in the “cold war” over our national debt.

Boehner is discussing with Senate leaders a smaller debt limit increase tied to about $1 trillion worth of spending cuts. That would take us into 2012, when a second debt-limit increase would be tied to the enactment of still additional spending cuts. Democrats are balking at this and insisting that any deal must take us through the next election. On Sunday, Boehner told them that if they don’t come to an agreement soon, he would move forward without them. “I think the preferable path would be a bipartisan plan that involves all of the leaders,” Boehner said in an interview on “Fox News Sunday.” But that if that is not possible, he added, “I and my Republican colleagues in the House are prepared to move on our own.”

Democrats have few options to stop him. On “Meet the Press” Sunday, White House chief of staff Bill Daley warned that Obama would veto any plan that did not extend through 2013. But a few moments later on the same show, Sen. Tom Coburn, a card-carrying member of the Gang of Six, explained that this was an empty threat. “I understand why they’re saying they won’t sign a short term [deal], but I think they won’t have any choice,” he said. Coburn is right. With default looming, Senate Democrats will pass, and Obama will sign, whatever short-term deal Boehner and House Republicans give them.

What can the president do, then? Obama had threatened Republicans that, if a grand bargain was not cut, he would “take it to the American people” in 2012. But when he issued that threat, he was planning to blame the failure of the debt limit talks on the GOP’s refusal to compromise. That strategy was undermined by last week’s events. Boehner did compromise, agreeing to $800 billion in new revenue. What killed a bipartisan deal was not Republican “intransigence” but Obama’s ideological insistence on massive tax increases. That changes everything. Obama can no longer claim to be the reasonable centrist in this debate; he is positioned distinctly on the left going into 2012. Perhaps this is why the president and congressional Democrats are so insistent on a deal that gets them past next year’s election.

The plan that Boehner will force Obama to sign will fall short of “Cut, Cap and Balance,” but — provided the cuts are real and deeper than the debt limit increase — it will be a significant step forward nonetheless. And it will set up the 2012 election as a referendum on the way forward on the national debt. That is a fight conservatives can win. Consider how the freshmen elected in the Tea Party wave of 2010 have transformed the debate in Washington in half a year: When Barack Obama — the president who just five months ago offered a budget that would have increased the national debt by $10 trillion over 10 years — is talking about cutting that debt by trillions, it means the Tea Party is winning. To achieve more, the conservatives elected in 2010 need reinforcements on Capitol Hill — and a conservative president who will work with them to enact “Cut, Cap and Balance.” And therein lies another important lesson from Ronald Reagan’s experience in Reykjavik. What eventually made possible historic reductions in both countries’ nuclear arsenals was not convincing Mikhail Gorbachev to go along; it was the end of the Soviet Union. And what will eventually make possible historic reductions in federal spending will not be winning over Barack Obama; it will be the end of the Obama administration.