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At the end of President Obama's speech tonight, he read from a letter Ted Kennedy wrote to him in May, but which was only delivered upon his death.

"For me, this cause stretched across decades," Kennedy wrote. "[I]t has been disappointed, but never finally defeated. It was the cause of my life. And in the past year, the prospect of victory sustained me-and the work of achieving it summoned my energy and determination."

There will be struggles - there always have been - and they are already underway again. But as we moved forward in these months, I learned that you will not yield to calls to retreat - that you will stay with the cause until it is won. I saw your conviction that the time is now and witnessed your unwavering commitment and understanding that health care is a decisive issue for our future prosperity. But you have also reminded all of us that it concerns more than material things; that what we face is above all a moral issue; that at stake are not just the details of policy, but fundamental principles of social justice and the character of our country.

And so because of your vision and resolve, I came to believe that soon, very soon, affordable health coverage will be available to all, in an America where the state of a family's health will never again depend on the amount of a family's wealth. And while I will not see the victory, I was able to look forward and know that we will - yes, we will - fulfill the promise of health care in America as a right and not a privilege.

I've obtained a copy, which you can read below the fold.

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This is pretty wonky, but it's a clear sign that, though he's criticizing Republicans pretty starkly, Obama's also going the extra mile to show he's open to Republican ideas.

"[M]any in this chamber - particularly on the Republican side of the aisle - have long insisted that reforming our medical malpractice laws can help bring down the cost of health care," Obama said.

I don't believe malpractice reform is a silver bullet, but I have talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs. So I am proposing that we move forward on a range of ideas about how to put patient safety first and let doctors focus on practicing medicine. I know that the Bush Administration considered authorizing demonstration projects in individual states to test these issues. It's a good idea, and I am directing my Secretary of Health and Human Services to move forward on this initiative today.

That should mean health care reform gets 90 votes in the Senate and 402 votes in the House, right? No, I didn't think so either.

President Obama just pledged to be fiscally responsible with the health care bill -- and he called out the Republicans who might criticize him, for having been very irresponsible during this past decade:

"First, I will not sign a plan that adds one dime to our deficits - either now or in the future. Period. And to prove that I'm serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don't materialize. Part of the reason I faced a trillion dollar deficit when I walked in the door of the White House is because too many initiatives over the last decade were not paid for - from the Iraq War to tax breaks for the wealthy. I will not make that same mistake with health care."

During the applause by the Democrats, the news cameras then went to the Republican leadership -- where House Minority Whip Eric Cantor (R-VA) could be seen looking down, typing out something on his BlackBerry.

President Obama has a message for Sarah Palin, and other conservatives who have claimed, falsely, that Democratic health care reforms would create "death panels" for old people: Stop lying.

"Some of people's concerns have grown out of bogus claims spread by those whose only agenda is to kill reform at any cost," Obama said. "The best example is the claim, made not just by radio and cable talk show hosts, but prominent politicians, that we plan to set up panels of bureaucrats with the power to kill off senior citizens. Such a charge would be laughable if it weren't so cynical and irresponsible. It is a lie, plain and simple."

That's the clearest denunciation from the President of those who've engaged in the death panel smear, which was floated by Palin once again as recently as this week.

President Obama just reached out to Sen. John McCain (R-AZ), his Republican opponent in the 2008 general election -- by borrowing one of his ideas as part of the health care package:

"For those individuals and small businesses who still cannot afford the lower-priced insurance available in the exchange, we will provide tax credits, the size of which will be based on your need. And all insurance companies that want access to this new marketplace will have to abide by the consumer protections I already mentioned. This exchange will take effect in four years, which will give us time to do it right. In the meantime, for those Americans who can't get insurance today because they have pre-existing medical conditions, we will immediately offer low-cost coverage that will protect you against financial ruin if you become seriously ill. This was a good idea when Senator John McCain proposed it in the campaign, it's a good idea now, and we should embrace it."

The cameras then showed a close-up on McCain, smiling and giving a double thumbs-up. McCain certainly seemed impressed and grateful. So what's the chance that McCain actually votes for the final bill?

House health care legislation is expected to cost in the neighborhood of $1 trillion over 10 years. So is the Senate HELP Committee's bill. The Senate Finance Committee's bill, by contrast, will likely cost around $900 billion--and it looks like President Obama's siding with Baucus et al.

"Add it all up, and the plan I'm proposing will cost around $900 billion over ten years - less than we have spent on the Iraq and Afghanistan wars, and less than the tax cuts for the wealthiest few Americans that Congress passed at the beginning of the previous administration," Obama says. "Most of these costs will be paid for with money already being spent - but spent badly - in the existing health care system. The plan will not add to our deficit. The middle-class will realize greater security, not higher taxes. And if we are able to slow the growth of health care costs by just one-tenth of one percent each year, it will actually reduce the deficit by $4 trillion over the long term."

Some experts are concerned that a bill that costs $900 billion will not be enough to provide sufficient subsidies to middle class, uninsured consumers to purchase health care. But it appears to be the consensus price tag in Washington.

Here's a funny sign that President Obama could still have trouble taming the left.

Obama set out to place himself in the center of the debate. "There are those on the left who believe that the only way to fix the system is through a single-payer system like Canada's," he began -- and was then interrupted by scattered applause from some unidentified progressives. He continued: "--where we would severely restrict the private insurance market and have the government provide coverage for everyone."

He then presented the conservative approach: "On the right, there are those who argue that we should end the employer-based system and leave individuals to buy health insurance on their own."

Curiously, no Republicans applauded -- perhaps not wanting to acknowledge that this is their position, or maybe just not wanting to clap for Obama in any context.

President Obama may be frustrated with the slow pace of progress in the Senate Finance Committee, and the political head aches it's triggered. But he's citing the news that the panel is on the cusp of marking up its bill to make the point that health care reform is on its way.

"We have seen many in this chamber work tirelessly for the better part of this year to offer thoughtful ideas about how to achieve reform," Obama said. "Of the five committees asked to develop bills, four have completed their work, and the Senate Finance Committee announced today that it will move forward next week. That has never happened before."

As expected, President Obama's speech contains a clear defense of the public option--noting for the first time that the public option has popular with voters. But it also leaves him plenty of wiggle room to accept compromises.

"[A]n additional step we can take to keep insurance companies honest is by making a not-for-profit public option available in the insurance exchange," Obama will say. "Let me be clear - it would only be an option for those who don't have insurance. No one would be forced to choose it, and it would not impact those of you who already have insurance. In fact, based on Congressional Budget Office estimates, we believe that less than 5% of Americans would sign up."

It's worth noting that a strong majority of Americans still favor a public insurance option of the sort I've proposed tonight. But its impact shouldn't be exaggerated - by the left, the right, or the media. It is only one part of my plan, and should not be used as a handy excuse for the usual Washington ideological battles. To my progressive friends, I would remind you that for decades, the driving idea behind reform has been to end insurance company abuses and make coverage affordable for those without it. The public option is only a means to that end - and we should remain open to other ideas that accomplish our ultimate goal. And to my Republican friends, I say that rather than making wild claims about a government takeover of health care, we should work together to address any legitimate concerns you may have.

For example, some have suggested that that the public option go into effect only in those markets where insurance companies are not providing affordable policies. Others propose a co-op or another non-profit entity to administer the plan. These are all constructive ideas worth exploring. But I will not back down on the basic principle that if Americans can't find affordable coverage, we will provide you with a choice. And I will make sure that no government bureaucrat or insurance company bureaucrat gets between you and the care that you need.

This is a pretty clear explication of the public option proposals on offer in both the House and the Senate. It's also a fairly clear sign that Obama's quite willing to sign off on something that falls short of the public option progressives are demanding. Loosely translated, it suggests that Obama is demanding that health care reform include...something: a public option, a triggered public option, or a co-op. But he'll draw the line if it doesn't call for some sort of alternative option, triggered or otherwise.

You can read the entire public-option excerpt below the fold.

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After working out a deal to weaken it, Rep. Mike Ross (D-AR)--chairman of the Blue Dogs' health care task force--has now publicly stated that he'll oppose any health care bill with a public option. The news rankled progressives, who believe the public option in the House is already compromised enough. But is Ross' statement indicative of a larger post-August shift in Blue Dog sentiment.

The short answer is yes--at least to some extent.

According to one Blue Dog aide, skepticism rose among members of the coalition not as a result of wacked-out tea baggers, but because, toward the end of the month, they had heard a different kind of skepticism.

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