From a policy standpoint, indeed, I think the kill-bill / public-option-or-bust strategy has helped to push the bill toward an optimal outcome. Certainly not optimal in the sense of "the best bill that the Senate could possibly have passed", or "the best bill that progressives could have hoped for". But in terms of the best bill that the Senate was actually going to pass, given the 60-vote requirement, an unpopular Congress, and an inexplicably lackluster performance from the White House, this is probably fairly close -- especially if some further concessions can be realized in conference with respect to the magnitude of the subsidies.
With that said, the downside to the kill-bill / public-option-or-bust strategy was not necessarily in terms of producing a suboptimal policy outcome. Rather, it was arguably political, both in terms of having drawn out the process, and in terms of framing the bill in negative terms both during and after its passage. You certainly haven't had a lot of people, outside of the White House and the Congress itself, going on MSNBC or CNN or Fox News and talking about the good that this bill would do. It's been trashed from both the left and the right. Is it surprising that only 30-something percent of the country still supports it?
Politically speaking, indeed, this was a very costly negotiation for the Democrats. Approval ratings for President Obama, for the Democratic Congress, and for the health care bill itself have declined slowly but quite steadily over the course of the past six months, and the Democrats will exit this debate being much more vulnerable in 2010 than they were going in. Some of that was inevitable -- ultimately, you win elections and accumulate political capital for a reason, which is to achieve your policy goals. And health care -- a big, cumbersome piece of policy that does not lend itself well to 30-second soundbyes -- tends to be especially costly from a political capital standpoint. Still, even relative to those diminished expectations, this seems to have gone quite poorly for the Democrats.
Silver makes an interesting point. If you cared about the policy outcome, then Howard Dean did a great job. If you were only concerned about the political ramifications for Obama and the Dems, then you hate Howard Dean.
That divide was reflected in the comments across the blogs and the Media. Now though, I think that Obama and the Dems have to realize that Harkin has provided the political roadmap going forward. Demanding a parade and claiming "historic" achievement in this bill is, whether you believe it or not, not good politics now. Nor will it be good for policy down the road.
Speaking for me only