Now: Call The GOP's Bluff

Because Obama has been so "partisan" in framing healthcare reform - even as he junked single payer, included cost controls, made it budget neutral, and won over the drug and insurance companies - his proposal is apparently in tatters. Scott Brown has said he supports universal healthcare with an individual mandate, as in Romneycare, but wants to "start over" on the federal level. The GOP pretends that there was always a better way. So what do they now propose? Here's Eric Cantor's offer:

He noted the goals of getting rid of discrimination against those with preexisting conditions, producing more competition, and getting rid of “frivolous lawsuits,” adding: “We can do those things together.”

I asked Cantor if that was the full extent of the foundation for possible compromise. “Listen, we have to start somewhere,” he answered. “They now have found themselves in a cul de sac. They’re trying to find their way out. Republican have put a plan on the table that is the result of bipartisan agreement on some issues.”

The Republican concept of compromise is adoption of the McCain plan. Which does nothing significant to control costs and nothing to extend insurance to the working poor. Because McCain, remember, won the election. But the alternative? Nothing.

So in my view, Obama should agree. Why not salvage something? And in a stroke, you embrace a bill that clearly does nothing to solve the real problems, but you can simply say it's all that can be achieved in the current system and climate, given total Republican resistance to everything the president is trying to do, and the usual Democratic disarray, incompetence and mismanagement.

Then pivot immediately and strongly to the fiscal question and lay out a real plan to balance the budget with big long-term entitlement cuts, a hike in the retirement age, and a serious tax increase. And make the Republicans and Democrats vote it down as they surely will. If the system is going to destroy Obama and reform, then he should simply fight, fight, fight for real reform against the agendas of both parties. If he fails, so be it. But we know now that he cannot win by the usual methods. He cannot win in an alliance with a dysfunctional Democratic party. That system is broken. It can neither please its own base nor win over the middle nor do anything to counteract the total obstructionism of the far right, which is the only right we have left.

This stinging defeat should therefore be marshalled into a new reformist ferocity. In his SOTU next week, Obama needs to reiterate the need for real reform, which requires real bipartisanship. He should remind voters that he was elected to get things done, to avoid the old red-blue argument so desperately needed by the FNC/RNC. He should say he will adopt a minimalist health bill because doing nothing is worse. And then he should commit to restoring fiscal sanity. Tackling the long-term debt head-on is what Independents want, and what the economy needs for true confidence to return. By demanding entitlement cuts the Democrats don't want and tax increases the GOP hates, Obama can frame the future of his presidency.

And he may surely lose. But what we have seen is that by trying to make the current system work to solve deep problems, he loses anyway. The Democrats cannot unite; the Republicans simply want to destroy. Obama won the election with a new coalition; but he has had to govern through the existing system, which is essentially broken beyond repair. Hence he is as stranded as the country.

But he is also all we have left. And how he responds to this crisis will tell us a huge amount about him.