The debate over raising the nation’s debt ceiling revealed the dangerous difference between a commander in chief and an arbitrator in chief. President Obama chose the arbitrator role, imagining against all logic and experience that he could find a sliver of common ground with Republicans, who were willing to hold the economy hostage in their determination to radically redefine not just this debate but future debates about the role of government.

Obama never played to win. He never demanded straight up-or-down Congressional votes on raising the ceiling, and he explicitly rejected even the possibility of invoking the powers afforded him by the Fourteenth Amendment to avert a government default. In contrast, Republican leaders bent to the demands of their Tea Party fringe and refused to accept the notion that spending cuts had to be balanced with new revenues from undertaxed billionaires and corporations. The final deal gave House Speaker John Boehner, as he put it, “98 percent” of what he wanted.

The key to long-term political success is not so much to win a fight over a particular policy but to set the terms of debate and the rules of engagement so that future options are a variation on your theme. Franklin Roosevelt did that with such success that for decades after his presidency, bold New Deal fixes—infrastructure investment, jobs programs, Social Security, regulations and, yes, fair taxation—were proposed by both Democratic and Republican presidents. Congressional Republicans recognized the power of reframing the debate last fall, after they got Obama to agree to extend Bush-era tax cuts for the rich even before the GOP formally took charge of the House. But they showed how extremist they are during the debt-ceiling fight.

The deal Obama eventually cut with the Republicans and then pressured Congressional Democrats to approve was not the end of this debate; it was the beginning. Republicans will try to use the Congressional “super-committee” established as part of the agreement to force the draconian cuts to Medicare that House Budget Committee chair Paul Ryan could not achieve in Congress or the political arena. And Ryan’s colleagues will keep using the formerly routine process of raising the debt ceiling to extract more concessions, more cuts, more privatization schemes, more austerity for the many and increased riches for the few.

That is an unacceptable calculus economically, politically and morally. But Obama is not going break the cycle on his own. Even if he begins to denounce the false choices proposed by GOP extremists and outline smarter and fairer policies, he will need a strong push from progressive forces to implement them. Part of the surge should come from the Congressional Progressive Caucus, which has developed a “people’s budget” that cuts bloated Pentagon spending, eliminates the deficit in ten years, puts Americans back to work and restores our economic competitiveness. Obama will also need a push from the progressive base that elected him in 2008—and that he will need to win re-election in 2012. It has already begun, in the form of the American Dream Movement, launched this summer by more than seventy organizations, including MoveOn.org, Change to Win, the Campaign for America’s Future and Green for All.

This is not a fight that can be arbitrated. It must be joined, with all the boldness of FDR when he condemned the economic royalists and declared to the nation that he welcomed their hatred. Obama must stop searching for common ground with extremists and start defining the higher ground, where debt-ceiling gimmickry is discarded and debates focus on fairness, equity and economic justice—or he will lose in 2012 and America will lose for years, perhaps decades, to come.