I've been saying that the facts so far fit two different stories...basically, I think that the Dems would be doing what they have been doing up to this point whether they intended to do anything possible to pass a bill with 70 votes, no matter how weak it would be -- or if they intended to eventually pass a strong bill. The key idea is that marginal Democrats want some cover, and since they can't realistically compromise in order to get GOP votes, the only available cover is to convince the Broder types of the world that they gave bipartisanship their best shot.
If the latter was their plan, today was a really good day, with Grassley's admission that he won't vote for a bill he likes if other Republicans won't go along, and now the unsurprising shift to attacking co-ops. Liberals, naturally, expected this all along, but I think there's a big difference to the shapers of Washington conventional wisdom when suspicion of GOP opposition to "reasonable" dealmaking is confirmed.
The next step for Obama and Congressional Democrats is to start selling the spin: the Republicans have not negotiated in good faith, the Republicans are going to oppose any bill, the Republicans care more about sinking Obama than they do about solving real problems.
The Republicans have very little maneuvering room here (their hope is mainly that polling turns strongly against the president and reform, which it hasn't really done yet). Among other things, I have to wonder whether they risk seriously pissing off Kent Conrad. I don't know that he'd ever be willing to vote for a public plan, but if co-ops are going to be attacked as a renamed public plan, he might wind up supporting just that.
It would be nice to hear what Baucus has to say. He's been pretty quiet recently, AFAIK.