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Senate leaders forged a deal on a major piece of the endgame puzzle Tuesday, making it more likely that Congress can leave town by the end of next week.

While a lame-duck session in November remains an open question, Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) announced that they had agreed to a must-pass tax-extenders bill that has stymied the chamber all year.

“Once you resolve the tax extender issue, you’re taking off the table one of the biggest reasons why we can’t leave,” Sen. Judd Gregg (R-N.H.) said.

The Senate could vote today on the tax extender-bill. With that deal in hand, the only other essential legislation that Congress must complete before leaving town for the elections is a continuing resolution to keep the government funded in the absence of new appropriations bills.

Reid still plans on bringing up an energy bill later this week, which will spur a debate on offshore drilling. He also wants to take up the House’s economic stimulus package, which is expected to seek more government funding for road construction and social programs such as unemployment insurance and Medicaid.

The agreement on tax extenders broke the Senate’s long-standing impasse over whether to offset the costs of both energy tax credits and other tax extenders that would otherwise expire. Under the deal by Reid and McConnell, the bill would not offset the costs of preventing the alternative minimum tax from hitting millions of middle-income Americans next year, but it would fully pay for the energy credits and partially offset other tax extenders.

It was unclear as of press time whether House Democrats would agree to the deal; conservative Blue Dog Democrats have staked their reputations on making sure tax cuts are paid for with other spending cuts or revenue raisers. But Senators in both parties said they hoped an overwhelmingly bipartisan vote in the Senate would be persuasive to Speaker Nancy Pelosi (D-Calif.) and the Blue Dogs.

“We’re talking about persuading ‘Dogs.’ That ain’t easy,” Senate Majority Whip Dick Durbin (D-Ill.) said.

Senators said the tax-extenders deal has the potential to temper the partisan fury that has surrounded this summer’s energy debate because the tax bill includes energy tax credits that both parties consider high priorities.

“If they’ve already passed the tax extenders, the sense of urgency about passing an energy bill lessens,” Senate Chief Deputy Minority Whip John Thune (R-S.D.) said. Thune added that the tax deal increases the likelihood that no energy bill reaches a filibuster-proof 60-vote threshold.

Durbin agreed that the outlook appears bleak for Senate passage of any of the four energy measures on which Reid has said he would allow votes.

“I think it’s a reach,” Durbin said. “Try to add up 60 votes on any one of these.”

Reid has outlined a plan that Gregg described as “reasonable” in which the Senate would vote on a House-passed bill, a Senate Democrat bill, a Senate Republican bill, and a bipartisan bill developed by the “Gang of 10.”

Gregg added that the increasing likelihood that Republicans will win their fight to keep the yearly renewal of an offshore drilling moratorium from being placed on the CR means, “We don’t have to do an energy bill.”

Durbin said a lapse in the moratorium would not be the political disaster suggested by some on the left because the leasing and drilling process could not begin immediately, giving Congress time to come back later this year or next to put more limits in place.

“Once you decide to drill offshore, there are years that pass before anything happens,” Durbin said.

Without a fight over an offshore drilling moratorium, the CR’s path through Congress has sidestepped a major obstacle. It remains uncertain, however, whether Democrats will seek include add-ons beyond disaster assistance and government loans for the auto industry.

Because Democrats expect the House stimulus bill to fall under a GOP-led filibuster, they might attempt to add some of those spending priorities to the CR. That’s likely to provoke Republicans. Still, Senate Democratic aides insisted those decisions will not be made until after a vote on the stimulus.

Meanwhile, it appears that bipartisan consensus is growing for a CR that would allow Congress to avoid a lame-duck session after the November elections. Reid reiterated Tuesday his desire to pass a CR that funds the government until February, and some influential Republicans, such as Gregg, said they too would like to see a longer-term CR.

The White House position on that approach is unclear, Democratic aides said, given that President Bush may want a shorter CR that would require Congress to come back in November or December so the White House could leverage other policy priorities at the end of the year.

But Gregg pooh-poohed that notion, saying the lame-duck president has few priorities beyond securing adequate funding for the wars in Iraq and Afghanistan.

“The White House agenda can’t be that complex that they need to get us back. We should be able to take care of their agenda before we adjourn,” he said.

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