As Bernie Sanders (I-VT) is unquestionably the most liberal member of the Senate, I don't think it pays to put too much stock in what he says as a predictor of what is going to happen with the public option. It's no surprise that he is a strong advocate of Obama's plan, and he shares my view that single-payer would make eminently more sense than anything the Senate is considering. But it was still a good day for progressives who favor a public option. The most significant development was reported by Roll Call:

Senate Majority Leader Harry Reid (D-Nev.) on Tuesday ordered Finance Chairman Max Baucus (D-Mont.) to drop a proposal to tax health benefits and stop chasing Republican votes on a massive health care reform bill.

Reid, whose leadership is considered crucial if President Barack Obama is to deliver on his promise of enacting health care reform this year, offered the directive to Baucus through an intermediary after consulting with Senate Democratic leaders during Tuesday morning’s regularly scheduled leadership meeting. Baucus was meeting with Finance ranking member Chuck Grassley (R-Iowa) Tuesday afternoon to relay the information.

According to Democratic sources, Reid told Baucus that taxing health benefits and failing to include a strong government-run insurance option of some sort in his bill would cost 10 to 15 Democratic votes; Reid told Baucus it wasn’t worth securing the support of Grassley and at best a few additional Republicans.

That was followed by a letter to Obama from the chairman of the House Progressive Caucus, Rep. Raul Grijalva (D-Arizona):

July 7, 2009
The Honorable Barack Obama
President of the United States
1600 Pennsylvania Aye, N.W.
Washington, D.C. 20500

Dear Mr. President,

I read with alarm and dismay the article in the July 7th edition of the Wall Street Journal, "White House Open to Deal on Public Health Plan". In particular, White House Chief of Staff Rahm Emanuel stated in the article that one of several ways to meet your health care reform goals is a mechanism under which a public plan is introduced only if the marketplace fails to provide sufficient competition on its own.

I want to be crystal clear that any such trigger for a strong public plan option is a non-starter with a majority of the Members of the Progressive Caucus (CPC). As the CPC has repeatedly stated, its Members cannot support final passage of any health care reform bill that does not include a robust public plan option, akin to Medicare, operating alongside the private plans.

Public opinion polls show that 76% of Americans want a robust public plan option and I will stand in solidarity with them. Moreover, I consider it unacceptable for any of the cost savings that you are negotiating with hospitals and other sectors of the health care industry to be made contingent upon a robust public plan option not being included in the final legislation.

Thank you for your thoughtful consideration.

Sincerely,

Raul Grijalva

At this point, Rahm Emanuel backed down like a scolded puppy.

White House Chief of Staff Rahm Emanuel reassured House Democrats on Tuesday night that President Barack Obama strongly backs a government-run health insurance plan, seeking to quell a firestorm among liberals upset at Emanuel’s comments in the Wall Street Journal that suggested such a plan could be delayed.

Progressive Caucus Co-Chairwoman Lynn Woolsey (D-Calif.) warned Emanuel that he would lose the caucus’ votes if the White House compromised on the issue and included a “trigger” that could delay a public insurance plan indefinitely. The trigger idea is backed by conservative Democrats but is anathema to liberals.

“We have compromised enough, and we are not going to compromise on any kind of trigger game,” Woolsey said she told Emanuel. “People clapped all over the place. We mean it, and not just progressives.”

House Energy and Commerce Chairman Henry Waxman (D-Calif.) said he was reassured by Emanuel. “He doesn’t stand by that trigger,” Waxman said. “He said the president and his administration and he are for a public plan as one of the options.”

So, while most of the news is good we still have to worry about Evan Bayh:

“Most Senators vote their conscience and they do what they think is right. They didn’t come here to be told what to do by somebody else,” moderate Sen. Evan Bayh (Ind.) said.

Mary Landrieu:

...Sen. Mary Landrieu (La.) said she would “be supportive of many Democratic priorities” and is “absolutely committed to help the Democratic leadership and the president get health care reform that our people can depend on.” However, she flatly refused to rule out filibustering any bill, including health care and climate change legislation.

“I’m going to keep an open mind, but I am not committing to any procedural straitjackets one way or another,” she said.

And Ben Nelson:

“I’m not a closed mind on cloture, but if it’s an abuse of procedure, if it’s somebody trying to put a poison pill into a bill, or if it’s something that would be pre-emptive of Nebraska law, or something that rises to extraordinary circumstances, then I’ve always reserved the right to vote against cloture,” Nelson said.

Nonetheless, the overall lesson from today was that Rahm Emanuel floated a trial balloon to examine the support for putting in a trigger mechanism for the public option (thereby passing health care reform without a public option) and his balloon got blasted out of the sky. That's good.