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Top negotiators are nearing a deal to extend the payroll tax cut, unemployment benefits and a fix to Medicare doctors’ payments, sources close to leadership in both parties said today.

With leaders in both parties publicly threatening to move ahead with backup plans, members of a conference committee assigned to resolve the differences between the House and the Senate appear to have gotten the boost they needed to break their impasse when House GOP leaders Monday backed off demands that the payroll tax holiday be fully offset.

Both leadership sources and sources close to the conference committee were cautiously optimistic that the group could have a deal in hand before the House moves to a vote on a stand-alone tax cut bill, which is slated for floor action Wednesday.

Aides said the remaining key issues facing lead conferees House Ways and Means Chairman Dave Camp (R-Mich.) and Senate Finance Chairman Max Baucus (D-Mont.) are whether to include expiring tax extender provisions. They also were working on the final details on offsets for the nearly $60 billion required to pay for jobless benefits and the Medicare “doc fix,” which fills the gaps for doctors treating Medicare patients.

Major progress in the talks began in earnest at the end of last week and continued through the weekend. Sources said they believe the next 12 to 24 hours will be crucial in determining whether the House and Senate will vote on the conference report, which can’t be amended, or whether they will move on separate legislation which would have to start in the House.

“I’m hopeful and cautiously optimistic that the House will work with us so that the conference can be completed to include that, and hopefully also some of our tax extenders,” Senate Majority Leader Harry Reid (D-Nev.) said today. “So I’m not going to get into hypotheticals to what happens, but right now, we’re waiting to see what we get from the House, and then we’ll decide what we have to do in the foreseeable future after that.”

A source familiar with the talks said spectrum auctions and savings from federal workers’ pension reform likely will be used to offset the costs of the unemployment insurance and doc fix extensions.

Multiple sources confirmed that House Republican leadership will present the potential agreement to their conference at a meeting tonight.

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