Doesn't look like Martin will do a deal with the NDP: according to this story the Martinites are cool to the idea of getting rid of all those corporate tax cuts Layton's demanding.
If I were Martin I wouldn't do a deal like that with Layton, especially since there's no guarantee the government would even survive a confidence motion WITH a deal. By doing a deal like that the Liberals would be certain to lose both the confidence motion AND the election! In Paul Martin's shoes, I'd rather keep the corporate tax cuts and gamble that corporate Canada will hang in with the Liberals in the election. Actually if I were Martin I'd resign in disgrace, but I don't have to worry about that.
As for Jack Layton, I personally think that he's doing the smart thing from his position. He's trying to take advantage of the situation and get the best deal possible for his party and look important. He should also walk away if he doesn't get his deal and should pull the plug; that way he stands to gain votes in Toronto from people who'd usually vote Liberal but who are turned off by Paul Martin always cozying up to corporate Canada. Among other things.
Like I say, when you read these stories about deals with the NDP you have to remember that even with the NDP on side there's no guarantee the Liberals will even win a confidence vote. Their only real hope, I think, is for the Conservatives to somehow back off. And speaking of that confidence vote, kicked-out Liberal Carolyn Parrish will vote to prop the Liberals up in spite of the fact that she got tossed out of there by her friend Paul Martin. She is calling a new election a waste of $250 million dollars. An election would also probably cost her her job as MP as well, but that's another story, too.