Obama sees potential for tax cut compromise

Sun Nov 7, 2010 12:00am EDT

* Tax cut battle first major post-election challenge

* Strikes conciliatory tone

By Steve Holland

WASHINGTON, Nov 7 (Reuters) - President Barack Obama says a Republican proposal to extend tax cuts to wealthier Americans for two years represents a "basis for conversation" and he sees a potential for compromise heading into negotiations.

Obama told CBS' "60 Minutes" in an interview to air on Sunday night that his top priority was making sure taxes did not rise on Americans making less than $250,000 a year when Bush-era tax cuts expire at the end of the year.

Obama has been forced to consider a compromise to extend the tax cuts for all Americans after congressional elections last week in which Republicans routed Democrats from control of the U.S. House of Representatives and narrowed the Democratic majority in the Senate.

The battle over the tax cuts represents the first major challenge facing Obama and resurgent Republicans, testing both sides' willingness to compromise.

In the interview, Obama was asked about a proposal from Republican John Boehner, who is in line to replace Democrat Nancy Pelosi as House speaker, to extend the tax cuts for two years and roll back domestic government spending outside of entitlement programs to 2008 levels.

"I think that when we start getting specific like that, there's a basis for a conversation," Obama said.

"I think that what that means is that we can look at what the budget projections are. We can think about what the economy needs right now, given that it's still weak. And hopefully, we can agree on a set of facts that leads to a compromise," he said.

The conciliatory tone comes after Obama argued fervently for months that the country could not afford to keep tax rates low on high-income earners, contending it would cost the budget $700 billion over a decade.

"I believe we can't afford to borrow and spend another $700 billion on permanent tax cuts for millionaires and billionaires," Obama said in his weekly radio and Web address on Saturday. [ID:nN05108466]

Currently on a 10-day Asia tour, Obama will meet Democratic and Republican leaders at the White House on Nov. 18 to discuss taxes and other issues.

Senate Republican leader Mitch McConnell, who ruffled Democratic feathers by saying his top priority would be working to ensure a Republican defeats Obama in the 2012 presidential race, said, "Republicans will work hard to ensure Democrats don't raise taxes on anybody." (Editing by Stacey Joyce)

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Comments (9)
Lakini wrote:
“I believe we can’t afford to borrow and spend another $700 billion on permanent tax cuts for millionaires and billionaires,”
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This keeps getting framed wrong. The above statement presupposes that Congress is already going to spend the money and that its just a matter of whether they take it from us now or later. The flip side is to NOT spend the $700 billion in the first place, that is exactly what voters have been trying to tell Washington.

The federal government took 2.1 trillion in receipts in 2009, the last time the federal budget was 2.1 trillion was in 2003. Lets just have the House propose the 2003 budget be used for fiscal 2011 and voila, the budget is balanced and the tax rate can stay the same for everybody, including the people who worked hard to get to the top and already pay 70% of the tax burden.

Nov 06, 2010 12:43am EDT  --  Report as abuse
ugg wrote:
I hope Obama reads this. It’s the best thing to do for all parties involved.
The best tax compromise for the rich would be to stop the 3% tax break for the rich and give it to small business. It would be the most effective trickledown economics to help small business and would signal the party of no has finally said yes to help small business create jobs and get the economy going again.

Nov 06, 2010 12:47am EDT  --  Report as abuse
Blahya24201 wrote:
@Lakini: Actually the top 3% do not pay 70% in taxes. That is a lie. Most Americans fall within the 0-65 thousand range that had in the past paid 25% of their pay check. While Capitol gains has been around 10 to 15% on those that make millions. 80% of the wealth in this country is in the hands of the upper 3%. You should realize there are no free rides and they should pay something back to their country.

Nov 07, 2010 1:01am EST  --  Report as abuse
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