It's popular now to marginalize the extremes on the Right and Left and speak of compromising in the middle as the pragmatic, democratic path to good governance. This all sounds very Aristotelian -- intelligent leaders coming to a meeting of the minds, the Golden Mean, to solve our most pressing problems. Obama has marketed himself as a pragmatic moderate just as Clinton did before, and the Bushes did this with "compassionate conservativism". Obama found out, just as Bill Clinton found out when Hillary's healthcare plan was torpedoed, where the present line lies that can't yet be crossed, and Obama's line was just a little past Obamacare, for the time being -- after 2012, if Obama wins, another line might be established.
Democrats have successfully created a line that resembles the Left form of statism -- at times, the line has more closely resembled the Right form of statism. There is little difference between Right and Left statism now, and what we have is a status quo which keeps moving the line further from a free market/limited government solution. Left and Right become more meaningless, and the real dichotomy is between statism and free market/limited government principles. But free marketers and those who propose a limited government are thrown out of the political game. The political class only argues over which form of statism will take control for awhile, but both forms are merging. The rhetoric between the establishment Republicans and establishment Democrats is the only difference -- their actions are merging, and all opposition has been marginalized.
The radical Left who demand immediate and extreme changes are tolerated by Democrats, but the pragmatists know that change has to be incremental, because the country is not ready for total transformation into complete statism. We may get to the point where the country is that submissive and malleable, and then the Democrats will go full charge, and if the country is ready, the Republican establishment will follow with only a few weak protestations for old time's sake, aimed at the few remaining believers in "small" government conservativism. By this time, libertarians will be completely marginalized as barbaric fools clinging to an ancient ideology.
The activity in the middle postures as political conflict, but it's the established status quo deciding on how much they can control and how to control it. The conflict has been eliminated. Classical liberalism is in conflict with statism, but the last vestiges of classic liberalism are being swept away as statists and dependents defend Obamacare, Medicare, SS, overseas interventions, the Fed, Fannie and Freddie and every government program created, even programs which are redundant and wasteful. At the first sign that some Tea Party Republicans were serious about spending cuts, they were demonized by Democrats and patronized by the Republican establishment, and even belittled and ridiculed by some of the Republican establishment.
So, no, there's no real conflict in government, only the status quo tightening its grip on statist control. When you hear pundits praise compromise, what they mean is that statists from both sides have agreed on more controls and power. The very few in government who present a threat to statism are urged to compromise to show their seriousness in getting things done, but to compromise in our statist system benefits the statists only because the line they use as a center has become meaningless -- it's the status quo line depicting the present point at which power and control has been expanded.