I was beginning to get into this a bit but Buster Olney just weighed in (Insider required) and he captures it well here:
The Yankees’ belief is that their current three-year, $45 million offer is fair, and that by offering arbitration to Jeter, they essentially would bail him out after a down year. Jeter might make $22-23 million through arbitration. The Yankees feel that in the past, Jeter has fairly negotiated from his standing in the market place — when he went to arbitration in 1999, when he negotiated a 10-year, $189 million deal in 2001. And now the Yankees feel these talks should reflect Jeter’s place in the market; they also believe that no other team would be willing to pay him what they have offered.
Here’s one big factor working against Jeter in this negotiation: While the Yankees want Jeter and are offering him above what his market value is, they operate in the knowledge that if Jeter doesn’t re-sign — if he actually walks away — then his departure would not be a mortal blow to their pennant hopes in 2011. If Jeter walked away in 2001, that would have been different; he was an exceptional player then.
Now he is a good player, but far from irreplaceable.
The sentiment towards Jeter is slowly turning. Yes, this will get done and it will be generally acceptable for each side. It just needs to be done soon.