Here’s the state of play. Right now, leadership aides say, the White House is in talks with House and Senate leaders over the so-called “Cadillac” tax. The House wants the threshold tweaked to make it more palatable to Dem members who oppose it. Some Senators adamantly oppose this. But the leadership is discussing various tweaks that could work.
Crucially, the House leadership may sign on to the compromise even without a tweak to the Cadillac tax, according to a senior leadership aide. That’s because the compromise is not going to be voted on — it’s merely to create something to take to the summit. So this logjam may still get resolved in time.
Basically, what Sargent is reporting is that Democrats might soon reach a deal on a fake compromise that doesn't have the votes to become law to show that they have made progress. This fake deal (that can't pass both chambers) would need to be passed using reconciliation. It appears Senate Democrats still have not even reached a general agreement on using this tool.
After reaching a general agreement to use reconciliation, then the real negotiations will start to find a package that can get the votes of 50 Democrats willing to use reconciliation in the Senate and a majority of the House. This fake compromise, they might possibly reach before the summit, would be the starting point for those further negotiations to reach the real compromise.
It sounds like Democrats are very far from finding a reconciliation sidecar package that would allow the House to pass the Senate bill along with a set of fixes. It is possible that the current Senate bill is just too politically toxic to pass, and the only hope is a new reconciliation-only bill not based on the current Senate bill. At the very least, if House Democrats starting demanding that, it might make Senate Democrats more open to the reconciliation sidecar solution.