Deal done. Crisis averted, a feisty president has come out fighting.
He's been humiliated and blown off course by the Republican victory, compelling him and his party to swallow deep spending cuts.
But he used his short Rose Garden speech to insist that tax rises had to be part of the eventual solution.
That is exactly why the Tea Party are grumpy about what looks like a clear win for them.
They fear tricks further down the line, and that after the special committee reports in November they will have to choose between tax rises swingeing cuts to defence spending.
Mr Obama said that money couldn't be cut too abruptly and that spending on education and science had to continue. He argued for a "fair" and "balanced" approach: getting rid of tax breaks for the rich and gas and oil companies.
This was a red rag to make the Republican bull rage... and it was intended as such. The more the Tea Party boil and steam, the more Obama's own party will feel that it is not such a defeat after all.
The president then promised to put job creation first, saying cutting spending was not the only thing that mattered, and called on Congress to reach agreement after the summer on extending middle-class tax cuts, something Congress wouldn't put in this agreement.
This deal is a serious knockback for the president, but he bounced right back, in terms of rhetoric at least.
It was the right response politically. However, no one doubts that when he's fired up and ready to go the president can make a fine speech.
It is still a question if he can turn today's defiance into a lasting theme and a winning strategy for 2012.