Obama may delay tax-cut rollback for wealthy

WASHINGTON Sun Nov 23, 2008 11:54am EST

President-elect Barack Obama shakes hands with customers after ordering lunch at Manny's Coffee Shop and Deli in Chicago, Illinois November 21, 2008. REUTERS/Frank Polich

President-elect Barack Obama shakes hands with customers after ordering lunch at Manny's Coffee Shop and Deli in Chicago, Illinois November 21, 2008.

Credit: Reuters/Frank Polich

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WASHINGTON (Reuters) - President-elect Barack Obama may consider delaying a campaign promise - to roll back tax cuts on high-income Americans - as part of his economic recovery strategy, two aides said on Sunday.

David Axelrod, the Obama campaign strategist who was chosen to be a senior White House adviser, was asked if the tax cuts could be allowed to expire on schedule after tax year 2010 rather than being rolled back by legislation earlier. "Those considerations will be made," he said on "Fox News Sunday."

Bill Daley, an adviser to Obama and commerce secretary under former President Bill Clinton, said on NBC's "Meet the Press" that the 2010 scenario "looks more likely than not."

President George W. Bush's tax cuts are set to expire at the end of 2010. After that they would revert to 2001 levels, when the top individual tax rate was 39.6 percent.

Obama has called for reducing taxes for the middle class, but requiring the wealthiest Americans to pay more than the current top rate of 35 percent.

His aides' comments suggest Obama may be wary of imposing any additional tax burden at a time of deep crisis, despite the outlook for record budget deficits and mounting national debt. He may also be seeking to bolster Republican support for his recovery measures.

"The main thing right now is to get this economic recovery package on the road, to get money in the pockets of the middle class, to get these projects going, to get America working again, and that's where we're going to be focused in January," Axelrod said.

Obama said on Saturday he was crafting an aggressive two-year stimulus plan to revive the economy, aiming to save 2.5 million jobs by January 2011 through projects including transportation infrastructure, school modernization and alternative energy.

Obama called in October for a $175 billion stimulus measure, but he suggested he was ready to push for a much larger package.

U.S. Sen. Charles Schumer, a New York Democrat who is part of the majority leadership team in the Senate, told ABC's "This Week" that an economic recovery package between $500 billion and $700 billion is needed and could be ready by the time Obama takes office on January 20.

"I think it has to be deep. In my view it has to be between five and seven hundred billion dollars," Schumer said.

(Additional reporting by Donna Smith; Editing by Doina Chiacu)

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