Update Clive Crook says:
I think Obama needs to drop the public option, despite the dismay this will cause among progressive Democrats, and he needs to be honest about the need to raise taxes to pay for universal coverage. Politically, one can see why he has preferred to do neither, but the calculation has gone wrong. His strategy has done a very improbable thing: it has alienated centrists and progressives alike. He cannot repair his standing with both of those groups, and must now choose whose support he needs more. In any event he must start being clear, consistent, and honest.
I disagree about the tax increases. It is entirely true that taxes will need to go up to pay for this--all of the proposals on the table seem to be "revenue neutral" only if you squint hard and ignore the year after the 10-year deficit horizon. But Obama cannot say so. If he did, it would doom the reform. And it wouldn't do much for his re-election chances, either. Eventually he's going to have to raise taxes, but I expect him to wait until the very last minute.