The offer involves scaling back, but not repealing, the alternative minimum tax for corporations to give them moderate tax relief, extending unemployment benefits such as increased health care by thirteen weeks, and accelerating the income tax rate reduction in one bracket and bringing forward (by four years) the lowering of the 27 per cent rate by 2 per cent so that it can take effect in 2002.

On an optimistic note media reports say that House Speaker Dennis Hastert, R-Ill, has claimed that 'everything is negotiable at this point' and Senate Majority Leader Tom Daschle, D-S.D, said: 'We don't have a lot more opportunities here to resolve our differences. But I'm still hopeful that we can resolve them in time to get this job done.'

But the negotiations have been struggling for some time. Bush's compromise is perhaps a way to re-start the talks but there is no guarantee that they will come to a conclusion before the year-end. It is estimated that the compromise could cost around $93 billion.