In the national debate, Obama now looks like the centrist voice of reason instead of an over-ambitious lefty (I'm caricaturing, of course, in the spirit of the cable-news coverage). Inside Congress, Obama may not get a public option, but if he doesn't, he was never going to get it. And now he can extract a ton of concessions in return, because he can point to a left-wing of his party that's ready to eat him alive for failing to deliver on it (whereas that left-wing outrage was largely hypothetical before now). That kind of leverage is extremely helpful.This might well be true (though it might well eat at Obama's approval further), but at least the media is focusing on a policy dispute instead of paranoid idiocy. I don't think that the Administration wanted this storm, but it seems like it could turn out like the New Coke marketing campaign, in that got people excited about original Coke again. It's been my experience that quite a few liberals incline either toward hopeless defeatism or overconfidence, and one hopes that the latter group will be more engaged on the issue now.
Still, I am concerned about the liberal fixation on the public option. As I've stated, I think it's based on liberals' desire to move us toward single payer, and thus the public plan is a strategy toward that goal. I'm not unsympathetic toward that goal. But I'm more concerned with actually providing some security and protection for people who wouldn't be covered by the public option, even if it were in the bill, as well as making sure that everyone gets some form of insurance. Those are the goals I'm interested in accomplishing. As for the rest of it, que sera, sera.
Update: Ezra Klein makes roughly the same point as I did, as well as why the public plan under consideration isn't even a good beachhead to achieve single-payer.