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On this depressing day when the crazies, willing to destroy what’s left of the economic engine that is barely sputtering down the road got their ransom paid, everyone has to pick themselves up and decide what to do next. The President, having once again (in his memorable words) given in to the hostage takers, has to decide how to rebuild his political coalition that is in tatters, and how to show some strength after looking weak. Harry Reid and Nancy Pelosi have momentous decisions to make: Are they going to appoint strong negotiators who won’t back down on Democratic Party principles, or will they give away a crucial seat on the super-duper commission who will once again give in to Republican demands? And progressives have to decide as well: do we give up, move away, get out of politics — or do we get out of this depression we’re feeling and come up with a winning political strategy? As to the President, what is important to understand is that he wanted this negotiation. He had opportunities to avoid it last year, getting this deal done as part of the lame duck budget deal, or at the beginning of this year by making clear that he would only sign a clean debt ceiling increase. But he waded into these negotiations willingly and eagerly, hoping that reason and Wall Street lobbyists would help him craft the grand compromise he was willing to make if the Republicans agreed to raise taxes. It was part of his long-term strategy for getting the deficit issue off his back — Ezra Klein’s piece here (which I have been assured by people at the White House that it very much reflected Obama’s thinking) lays out the thinking: cut a big dramatic budget deal, get the deficit issue off his back, look like a centrist going into the next election. And through most of this showdown, he did look far more reasonable than the Republicans and was doing better than them in the short-term polling. The problem is that if Republicans don’t ever compromise, if they don’t care about being reasonable or not blowing up the economy, the President is the one who would have to fold, and that is exactly what happened. It made him look weak, and it tore a gaping hole in his relationship with his base. D.C. centrists loved his reasonableness, his willingness to reach out, and all those other things praised in the editorial pages of the Washington Post, but even the pundits who were praising him — in fact, especially the pundits that were praising him — turned on him when he lost. Such is the nature of this town. What he needs to do now is to show strength and reconnect with his disillusioned and depressed base. He needs to pick some fights with the Republicans who just beat him, and show he’s not willing to back down. He needs to take on the bankers (who once again came out of this entire showdown completely unscathed, fancy that) and aggressively move to revive the housing market. Most importantly, he needs to introduce a bold new jobs initiative with two tracks. The first track should be a legislative package in Congress. The Republicans will never agree to it, which will show people how little they care about actually creating jobs. The second track should be the initiatives that the administration can do itself to create jobs, things they don’t need Congress to help them on. There are at least five all-important things the administration could do right now that would make a big difference in creating jobs: aggressively move on China currency manipulation; force Fannie Mae and Freddie Mac to write down underwater home mortgages; force the banks to write down underwater mortgages (which can be done through the administration’s regulatory powers and by pressing them on their servicers’ legal violations); step up enforcement of the “Buy American” provisions already in existing laws; and use the remaining TARP money authorized as a public bank to make investments in businesses that want to expand their workforce. All of these things would put more money into middle-class Americans’ pocketbooks, and would create real jobs right away. These five policies, by the way, all have the added benefit of taking on the big banks on Wall Street, which will do more to show strength and rally his base than anything else Obama could do. Even more importantly, all of these initiatives would actually produce good jobs and help stabilize the American middle class, which is being crushed to death by the economy. As for Reid and Pelosi, they now have much of the future of their party resting in their hands. If even one Democrat is appointed who is a weak negotiator and/or is not a progressive, we could see another absurdly one-sided deal that will be like a worse horror movie sequel to this one (and the one before where Obama gave the Republicans tax cuts for the rich) — Capitulation 3: The Ax Cutting Continues . Given that option vs. the cuts that will come automatically because of the way the deal is written, the automatic cuts would be better because at least they involve a lot of military cuts and they hold at least some progressive priorities harmless. But progressives don’t control either chamber, and the pressure to pass the bill — from the punditry, and from defense contractor and health provider lobbyists — will be enormous, and we would almost certainly lose that fight, leaving us with one more terrible deal that would make Democrats look weak, and would dishearten and divide us even more going into the election year. I worry less about Pelosi appointing anyone who would sell us out — her own values and her political smarts are too strong, and the political dynamics in the House give her the freedom to appoint good people. But the culture and clubbiness and tradition of the Senate create a lot of pressure on Reid to appoint people who could be very bad. Sen. Conrad, the Budget Committee chairman, who protocol and tradition say should be appointed, is an extremely conservative Senator who has been happy to cut terrible deals with Republicans in the past, and who doesn’t have to worry about grassroots anger back home because he is retiring. Remember, even one vote from the Democrats is all it would take, and the bill cannot be filibustered once it comes out of the Super Commission. Progressives should be spending a massive amount of time and effort working on Reid to not give a seat to a Senator whose history shows they will sign off on a bad deal, especially someone like Conrad who is very conservative and accountable to no one since he isn’t coming back. What should progressives do now? My friend Bob Creamer today in the Huffington Post argues that we need to focus issue-wise on two major things: building a firewall of support on Social Security/Medicare/Medicaid so that politicians will fear going after them, and creating a major new campaign on the jobs issue. I agree with him on both priorities, but would add a third: the Super Commission is mandated to be talking about tax reform as well. The phrase “tax reform” is, as another friend Mark Schmitt says, music to a progressive’s ears, but the details matter enormously. The Simpson-Bowles Commission and the Gang of Six both targeted middle-class tax breaks like the home mortgage deduction and health care benefits with the idea of using much of the money to cut tax rates for high-income individuals and big business. That is precisely the opposite direction we need to be going: tax reform should benefit the hard-pressed working and middle class, not the wealthy and multinational corporations. Progressives need to get engaged in this debate very aggressively. As to elections, progressives need to fully commit to trying to keep these extremists Republicans from controlling everything in 2013, because if that happens, everything they are pushing for — the destruction of Medicare and Medicaid, huge cuts in Social Security, more massive cutbacks in everything that matters to the middle class and poor — will come to pass. My own priority will be retaking the House, where Republicans have created a track record of stunningly crazy extremism, and where a large number of tea partiers who swept in last year will be deeply vulnerable. Beyond elections, though, progressives need to be very clear about something: as aligned as we need to be with Democrats on elections in order to keep the Republican wolf from the door, we need to be very clear that our alliance with Democrats electorally will not save the values and programs we care most about when it is time for the deals to be done. We have to rely on our own independence, our own organizing, our own imagination, our own demonstrating, our own online communicating to fight for what we hold most dear. We have to hold Democrats just as accountable as Republicans in order to save the middle class and poor from being traded away when push comes to shove. The fight goes on, and we can’t give way for anyone.