'World News' Political Insights: Democrats, President Obama Set to Cave on Taxes

Major concession comes on eve of Republican House takeover.

ByABC News
December 5, 2010, 4:38 PM

WASHINGTON, Dec.05, 2010 -- Even a shellacking couldn't leave enough gloss to make things move on Capitol Hill.

The slow-motion lurch toward a conclusion of the current session of Congress has hardly provided surprises -- including the failed weekend Senate votes on tax cuts that all involved agreed were only symbolic anyway.

While the final results of negotiations between the White House and congressional leaders won't be known for another week or two, the broad outlines have become clear -- and are testing the relationships among Democrats who are set to cede control over the House in a month's time.

The worst kept secret in Washington right now is that President Obama is set to cave on tax cuts. This marks a reversal of a long-held position, dating to the early months of Obama's presidential candidacy, to allow tax cuts for couples making more than $250,000 a year to expire.

The best kept secret is what Democrats might get in return. The White House is pushing for a range of other priorities -- everything from an extension in unemployment benefits to an agreement to vote on a nuclear treaty with Russia -- to be packaged as part of a deal on the expiring Bush tax cuts.

As the recent votes, particularly those in the Senate, make clear, the White House realistically has little maneuvering room when it comes to the tax cuts. A small handful of moderate Democrats are joining all Senate Republicans in insisting that all the tax cuts are extended, even if that means holding up tax cuts that would benefit primarily the middle class.

Viewed from that perspective, Democrats are making the best of a difficult political situation that's set to get tougher in January.