Just chatted with a pair of senior Republican Senate aides, both of whom are guardedly optimistic that Congress and the White House will strike a deal on the Bush tax cuts prior to their expiration on December 31. “The caucus is very unified on extending the current tax law,” says one staffer, emphasizing that the GOP’s top two priorities for the lame-duck session are thwarting a massive tax hike and enacting another “continuing resolution” (CR) to fund government operations. Senate Democrats have splintered on the tax issue, which they discussed today in a policy session. “It’s hard for them to negotiate with us when they don’t have their own position,” says one Republican aide. As for funding the government, many Democrats would prefer to pass a new omnibus spending bill in lieu of a year-long CR, but it’s doubtful that such a measure could get through the Senate.

What about the rest of Harry Reid’s burgeoning lame-duck agenda, which includes everything from the DREAM Act for illegal-immigrant students to “Don’t Ask, Don’t Tell” to health care for 9/11 rescue workers to public-safety-officer unionization? “Regardless of how you feel about that legislation, no one in his right mind can argue that those are priorities right now,” says one GOP staffer. Both aides believe that Republican concerns over the New START treaty (relating to nuclear modernization, verification mechanisms, and missile defense) can eventually be resolved — just not during the lame duck.