This is a scary economic moment.
The response we need is not easy, but it is totally obvious. We need a Grand Bargain between America’s two parties — and we need it right now. Until you read the following news article, we’ll be stuck in a world of hurt.

Washington (AP) — It was a news conference the likes of which the White House had never seen. President Obama stood in the East Room, flanked by the House speaker, John Boehner; the Senate minority leader, Mitch McConnell; the Senate majority leader, Harry Reid; and the House minority leader, Nancy Pelosi. The president asked Mr. Boehner to speak first:

“My fellow Americans,” the Ohio Republican began. “We have just concluded a meeting with the president, prompted by this moment of extraordinary economic peril. Our party, as you know, is convinced that the main reason for our economic decline is that we have too much debt, that government has grown too big and that taxes and regulations are choking our dynamism. But I have to acknowledge that, over the years, our party has contributed to this debt burden and government spending binge. We are not innocent, and, therefore, we owe the country a strategy for governing and for fixing a problem that we helped to create — instead of just blocking the president. The G.O.P. is better than that and has more to offer the nation. Therefore, we have informed the president that our legislators are ready to reopen negotiations immediately on a ‘Grand Bargain’ to address all these debt issues once and for all and that everything will be on the table from our side — including tax reform that closes loopholes and eliminates wasteful subsidies, and, if need be, tax increases. To those who voted for us, rest assured that we will bring our conservative values to these negotiations and an emphasis on markets and meritocracies, but also a spirit of compromise and a recognition that both sides will have to bend if we are going to get the kind of comprehensive budget agreement the country needs. To my Tea Party colleagues, I say: thank you. Your passion helped spur the nation to action, but the country cannot be governed, and our future secured, by bowing solely to the passions of any single group — liberal or conservative. I know that the Tea Party activists are true patriots and they will work with us as well. President Obama: Let’s fix the country together and then compete in 2012 over who can best manage a growing pie rather than a shrinking one.”

President Obama warmly embraced Mr. Boehner and then took the podium and said:

“Speaker Boehner and Senator McConnell, thank you for your commitment to act in our nation’s highest interests. Let me say publicly what I committed to you privately: I have asked Erskine Bowles and Alan Simpson to revive their deficit commission and to use their recommendations for how to cut spending and raise revenues as the starting point for our negotiations. But it will now be called ‘The National Commission for American Renewal.’ Because in addition to the original Bowles-Simpson members, it will include Senator McConnell, Speaker Boehner, Senator Reid and Congresswoman Pelosi, and its goal will indeed be a comprehensive plan for American renewal. Everything will be on the table — spending cuts, tax reform and increases, a framework for restructuring the debts of Americans whose homes are under water and the investments we need to renew the primary sources of our strength — infrastructure, education and scientific research. Each component will be integrated and timed to minimize pain and maximize job creation — and the entire package will be presented to Congress for an up-or-down vote. I am confident that real tax and entitlement reform will unleash billions of dollars in investments.

“But the most important thing that will be on the table will not just be a plan to make our country solvent. It will be a plan to make America great and guarantee that another generation will enjoy the American dream. Any fair-minded person who looks at all the stimulus investments I’ve made in education, clean energy, research and infrastructure can see that this has been my goal from the start. But I know those investments can’t be sustained without a new long-term budget deal. And I, too, have a confession: I’ve done a poor job integrating my nation-building ideas, including health care, into a single vision so people understood where I was going. I also let tactical political considerations — like abandoning the Bowles-Simpson commission — intervene, so Americans lost sight of my priorities. That will not happen again. No one loves this country more than I and my Democratic colleagues. While we will bring our traditional concerns for social justice and equality to these negotiations, we will not quit until a Grand Bargain to ensure American greatness is enacted into law.”

At that point, all five leaders shook hands and retreated into the Oval Office. It was exactly 9:29 a.m. One minute later, the New York Stock Exchange opened. The Dow was up 1,223 points at the open — an all-time record.

What’s sad is how much this is a fantasy and how easily — with just a little political will — it could be a reality.