So, with great sadness, all Democrats have finally realized that Obama isn't a progressive, but rather a pragmatist more interested in getting small things done than providing the reform the country needs. This tax cut deal is a disaster on so many fronts - it encourages the Republicans to become more intransigent on other issues, such as Social Security, it demoralizes the Democratic base, and most importantly, its just bad policy. Yes, it could be worse (and that was Obama's point), but not by much.
Q: So, what should good progressives do about this?
A: We need to ratfuck our President.
Simply put, the Democrats on Capitol Hill should completely reject the plan. When the President calls to get people on board, they should dodge his calls. This needs to be a complete and utter loss handed to him by his own party, similar to how the GOP killed Bush's immigration reform bill in 2006.
My reasoning here is simple - right now, the President is negotiating with an intransigent GOP, and a more or less flexible Democratic Party. Democrats, by and large, are less interested in means than they are in ends. So, where a Republican will insist on tax cuts no matter the situation, a Democrat will be willing to discuss a variety of policy decisions to meet the sought after ends. As a result, the President and the policies are pushed further to the right - further than the American people want, by measure of the polls.
However, if Democrats ratfuck this deal, then the President will start having to worry about how the Left will react to his negotiations, and will adjust his behavior accordingly. In so doing, we might see real bipartisan compromise, or we might see no action whatsoever. But we will better negotiations.