UPDATE at 8:19 PM EST:
The Associated Press is reporting that Reid is looking to remove Lieberman from his post as chairman of a powerful Senate committee:
Reid, in a sternly worded statement after the 45-minute meeting, said no official decisions have been made. But an aide to the Nevada Democrat said Reid was leaning toward removing Lieberman as chairman of the Senate Homeland Security and Governmental Affairs Committee. The aide spoke on condition of anonymity because the discussions were confidential.
Bolstered by a newly expanded majority, Harry Reid met with Joe Lieberman on Thursday to sketch out the conditions by which the Connecticut independent could continue to caucus with Senate Democrats. But Lieberman did not accept Reid's initial offers, leaving his future in the caucus uncertain, and potentially setting off a campaign to pressure the Democratic steering committee to decide Lieberman's fate.
Reid offered Lieberman a deal to step down as chairman of the homeland security committee but take over the reins of another subcommittee, likely overseeing economic or small business issues, officials said.
Immediately after his meeting with Reid, Lieberman told reporters that he had not made a decision about his future in the caucus, and appeared to launch his first public appeal to members of the Democratic steering committee, whose members decide committee chair assignments.
"I completely agree with President-elect Obama that we must now unite to get our economy going again and to keep the American people safe. that is exactly what I intend to do with my colleagues here in the Senate in support of our new president, and those are the standards I will use in considering the options that I have before me," Lieberman told reporters.
Likewise, Reid said in a written statement that negotiations will continue.
"Today Senator Lieberman and I had the first of what I expect to be several conversations. No decisions have been made," he said. "While I understand that Senator Lieberman has voted with Democrats a majority of the time, his comments and actions have raised serious concerns among many in our Caucus. I expect there to be additional discussions in the days to come, and Senator Lieberman and I will speak to our Caucus in two weeks to discuss further steps."
At this point, Lieberman's only shot at retaining his committee chairmanship appears to be lobbying members of the Senate Democratic Leadership besides Reid. One key target would be the Senate Democratic Steering and Outreach Committee, a group of nearly two dozen Democratic Senators who play a role in deciding committee seats.
Unfortunately for the Connecticut Senator, it is highly unlikely that Democrats would act against the wishes of Majority Leader Reid, who wants Lieberman to give up his chairmanship. Moreover, progressive activists have been anticipating this move for months, and have organized efforts to pressure steering committee members to strip Lieberman of his perks.