* Update: Negotiators just reached a deal on the payroll tax cut extension. A Senate Dem aide emails:

Senate leaders have reached an agreement on a two-month deal to extend the payroll tax cut and unemployment insurance.

Democratic negotiators offered a fully-paid for, one-year continuation of the middle class payroll tax cut and unemployment insurance, but Republicans rejected it, insisting on cutting Medicare benefits and refighting old battles on health care reform as part of any one-year deal. Republican negotiators wanted to raise premiums on Medicare beneficiaries and charge middle class families more for their health care.

If Republicans are going to make cutting Medicare benefits the price of extending a middle class tax cut for one year, we’ll take the two month extension and gladly have this fight for American families again in February.

* Negotiating 101: After Dems agree to drop the millionaire surtax to pay for the payroll tax cut extension, the two Republican leaders double down on their insistence that it be tied to the Keystone XL pipeline.

* David Dayen knocks down the seemingly widespread assumption that Obama would be taking a grave political risk in nixing the pipeline, pointing out that State has already said the 60 day deadline makes assessing it impossible.

*Aaron Blake has a very good roadmap to the top 10 Senate races in a cycle that may be the most competitive Senate contest in years, with over half the seats potentially in play. Note the stuff about Elizabeth Warren’s growing strength.

* Obama reelect reality check of the day: Today’s AP poll also finds that Obama has a dismal 38-59 approval rating among independents.

Interesting caveat: Obama beats Romney among them, 45-41, and beats Gingrich by even more, 55-31.

* Smart point from Neil King: All three top GOP rontrunners have negative favorability ratings, unlike the last five GOP nominees, all of whom went into the general election with positive ratings.

* Newt-mentum!!! Nate Silver’s projections are in: Gingrich, he predicts, will take three of the four early states, Iowa, South Carolina, and Florida.

* Bonus Newt-mentum!!! Interestingly, many Republicans running in downballot races would like Newt at the top of the ticket, because he’d ensure a revved up base, which is key in Congressional races.

* Jed Lewison: No, the fact that a single Dem Senator (Ron Wyden) endorsed something akin to Mitt Romney’s Medicare-privatization plan will not make it any less toxic among 2012 general election voters.

* Keep this one from Dem pollster Stan Greenberg in mind: At this time of enormous economic uncertainty, voters may simply opt for the candidate who most successfully projects an air of basic competence. A central reason why Dems would rather face Newt.

*Adam Serwer walks through what the defense bill does and doesn’t do, and why it’s a dangerous first step towards a greater military role at home (which is why Lindsey Graham likes it).

* Key point from Steve Benen: Even if the Obama administration’s civil liberties record has been disappointing, craven Congressional Dems who constantly side with the national security fearmongerers often make things far worse.

* And Marc Ambinder marvels, as did I, at the fact that the Iraq War — which defined our politics for years and launched Obama on the road to the presidency — is likely to be relegated to a political footnote in 2012.

What else is happening?