State of the Union Early Bird for December 12, 2010

(CNN)–It's early, and State of the Union is bringing you the best of the morning headlines to go with your coffee.

On our radar this morning: The latest on the Bush tax cut extensions, tensions in North Korea, and Richard Holbrooke's hospitalization.

Check out what we're reading, and watch the show today at 9AM/12PM ET.

President Obama/Tax Cuts

The Triviality of Taxes

Tax cuts may be the red meat of politics, but as even the Congressional Budget Office avers, on their own they are an effective form of stimulus only in the short term. Tax breaks and rebates tend to be saved or spent — not invested.

What happens next in the tax standoff: Three scenarios

Scenario No. 1: The Senate passes deal, the House amends the measure and sends it back to the upper chamber, which approves it. Obama signs it into law.

Scenario No. 2: The Senate approves the deal, the House amends it, and gridlock ensues.

Scenario No. 3: Senate passes the deal, House Democrats bend and agree to vote on the legislation, and it is signed into law.

As the Ground Shifts, Biden Plays a Bigger Role

Among Democrats on Capitol Hill, Mr. Biden’s role in the back-channel compromise with Republicans on tax cuts has engendered some resentment, along with questions about whether he will encourage further accommodation with Republicans or serve as a liberal counterweight to those in the White House who are advocating a move to the center.

Republicans beat President Obama to the boardroom

While Obama and his top aides were struggling to reach a tax deal this week with congressional leaders, the incoming House speaker pulled off a summit of his own, quietly slipping into a meeting Wednesday of 80 CEOs that make up the powerful Business Roundtable.

Foreign Policy

North Korea Says U.S., Allies Aiming to Provoke an `All-Out War' in Region

Afghan police crisis threatens British withdrawal as thousands quit force

Nawa turns into proving ground for U.S. strategy in Afghan war

To Petraeus, the top U.S. and NATO commander in Afghanistan, what has occurred here validates his contention that a comprehensive counterinsurgency strategy can reverse Taliban momentum and stabilize Afghanistan after years of downward drift.

Jailed Afghan Drug Lord Was Informer on U.S. Payroll

In Other News...

Holbrooke in critical condition following aortic surgery

Explosions in Stockholm believed to be failed terrorist attack

Indiana Sen. Evan Bayh won't run for governor in 2012

Financial arms race underway in Washington

Those who survived already are plotting how to deal with the attacks next time. There is no down time. Even the most entrenched incumbents — including many Republicans, who could face left-leaning independent attacks in 2012 — feel compelled to go into permanent campaign mode, further impinging on the already limited time lawmakers spend on policymaking and constituent service.

"It's a sad situation," said Rep. Maurice D. Hinchey of New York, a nine-term Democrat who came close to losing after facing more than $744,000 in independent attacks from outside conservative groups in the final weeks of the campaign. "This is destructive to the Democratic process, to the average American citizen, but we are going to have to pay more attention to fundraising."

Thanks for reading!

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