Obama, GOP strike deal to extend Bush-era tax cuts for two years

President Obama, while acknowledging the disappointment within his own party, announced Monday that he has agreed to sign a two-year extension of all of the Bush-era tax cuts.

Obama addressed reporters after meeting with Democratic leaders and said he reluctantly agreed to extend the tax cuts for the wealthiest Americans in exchange for a 13-month extension of unemployment insurance benefits.

Calling the deal a "framework for a bipartisan agreement," the president also secured Republican support to maintain some of the tax cuts that were included in Obama's stimulus plan. The GOP balked at keeping one of the stimulus tax breaks, the so-called Making Work Pay Credit, and instead accepted an administration proposal to reduce the payroll tax by 2 percentage points — a more expensive plan that would represent a sharper reduction in taxes for most Americans.

Obama repeatedly said that he opposes extending the high-end tax cuts, but he said it is "abundantly clear to everyone in this town that Republicans" would block an extension for only the middle-class cuts.

Obama said there is "no reason to believe that this stalemate won't continue well into next year," which he said would have a "chilling effect" on the economic recovery.

"I am not willing to let that happen," Obama said.

The president acknowledged the anger of many Democrats who think Obama caved in to Republican demands, saying he is "sympathetic to those who prefer a fight over a compromise."

But Obama said a protracted battle would mean letting the tax cuts expire for all Americans, an outcome that he said would cost $3,000 per year for typical families and could cost more than 1 million jobs.

"The American people did not send us here to wage symbolic battles or win symbolic victories," Obama said. 

Vice President Joe Biden briefed House Democratic leaders Monday afternoon on the contours of the agreement the White House had negotiated with congressional Republicans. Shortly before Obama spoke, however, a House Democratic leadership aide cautioned that the deal was not done. 

"House Democrats have not agreed to any deal," the aide said. "We need to present the package to the caucus and have it thoroughly reviewed and discussed."

The aide predicted that House Democrats would not have a problem with the addition of the payroll tax cut but that the concession on the estate tax, which Obama himself lamented, "may cause Democrats heartburn."

Russell Berman contributed to this report.

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