This is clearly a very time-sensitive post, so let's get to the point. If the rumours about the Clegg-Cameron agreement are correct, there are three potential ways in which it would fail both progressive politics and, in the long term, the Liberal Democrats themselves.
1. By avoiding a "progressive alliance" with their natural bedfellows in Labour and others, the Lib Dems will have let go of the possibility of not just proportional representation and a number of seats -- perhaps six or seven -- in the cabinet. They will also have failed in the immense historic possibility of reunification between two movements -- Labour and Liberal -- that belong together and that were, once, together. From such a reunification, there might have flowed a fairer Britain, if not a fairer world, with a more progressive tax system and a more ethical foreign policy.
2. Much is being made of this bizarre concept of "supply and confidence", under which the Lib Dems would prop up a minority Tory government, passing through the "emergency Budget". The Tory-supporting press in particular is excited about it. Not surprising. But what is not clear is how it benefits the Lib Dems, other than to retain an element of their already heavily qualified "purity" as they avoid becoming tainted by a party with which they have been in intense talks for days. It is hard to see how a one-party government of the Tories would support the progressive politics advocated by people such as Charles Kennedy. Further, it would mean the Lib Dems have bottled out of sitting in the cabinet and making politics better and more plural. I do know some anti-Tory voters who are happy for a Tory-Liberal coalition, but -- far away from the Westminster village -- it has not occurred to them that there will not be any Lib Dems in the cabinet. "Supply and confidence", they would neither understand nor welcome.
3. Even if there is some sort of perceived Tory concession on electoral reform, it would be a mirage, not least because the Tory government would campaign for a "No" vote, resulting almost certainly in just that, and in the Lib Dems having squandered their most real chance in decades for genuine change.
Nonetheless, some version of the above seems likely to happen, if rumours are to be believed. If so, a progressive moment this is not.