Political Cortex: Brain Food for the Body Politic

[A] source close to the investigation told TIME that Fitzgerald and Libby's attorney Joseph Tate discussed possible plea options before the indictment was issued last week. But the deal was scotched because the prosecutor insisted that Libby do some "serious" jail time.

Mike Duffy at the Huffington Post also talks about a Libby deal:

[A] number of veteran criminal-defense attorneys believe a trial will be avoided for one reason: Libby's lawyers face the prospect of calling veteran journalists' credibility into question and permitting the prosecutors to call some of the most senior officials in the government, like the Vice President, to the stand. In an environment in which little to nothing has gone right for the White House, politics alone could compel a Vulcan like Libby to take one for the team.

Of course, any plea bargain also has the potential to endanger higher-level officials like Cheney, who is mentioned more than once in the indictment.