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I think it's probably worth it to stay closer in. Although, there's a Homewood Suites out by the Merrifield metro stop that is also very close to several grocery stores, so you would be able to save quite a bit by getting semi-ready food and fixing it at your room instead of eating out every night. The parking is free there, so it may be a good way to split the difference. Just try to get on the Metro before 7:30 a.m. or after 9:30 a.m. to avoid the worst of the rush.
A hotel in Arlington or Alexandria could probably fall within your budget since they're not subject to as much demand and DC's hotel tax.
Possibly Alexandria. Arlington however is a no. Remember that Arlington has the airport. Rates within areas like Crystal City are similar to what you would find in DC. Additionally, I find the hotels outdated for the rates charged.
Perhaps a little looking can help you find a place in the city, which IMO is a much better way to visit a city. You don't indicate what your price range is, but my GF and I recently stayed in Dupont Circle at a fairly high end hotel for $85 a night. Not cheap, but not too expensive either, and being in the city was much more pleasant/relaxing than if we had to drive out of the city every night.
Chicago driving versus DC is not worlds apart. Traffic in Chicagoland can be just as nerve racking and frightful as any thing DC offers. Additionally one could argue that parking in Chicago is worse (more expensive and harder to find).
To be sure the traffic in the Chicago area is very bad, one of the worst in the country but still better than LA or DC IMO
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