White House reiterates Obama open to compromise on tax

WASHINGTON Thu Nov 11, 2010 4:53pm EST

President Barack Obama holds a Veterans Day event at U.S. Army Garrison at Yongsan military base in Seoul, November 11, 2010. REUTERS/Jason Reed

President Barack Obama holds a Veterans Day event at U.S. Army Garrison at Yongsan military base in Seoul, November 11, 2010.

Credit: Reuters/Jason Reed

WASHINGTON (Reuters) - The White House sent more signals on Thursday of the potential for a tax cut compromise with newly emboldened Republicans, who want to extend the cuts for wealthier Americans as well as the middle class.

"The president has been clear that extending tax cuts for middle-class families is his top priority and he is open to compromise to get that done," said White House spokesman Bill Burton.

"He has also expressed concern about the cost of making the highest income tax cuts permanent and is looking forward to discussing this and other issues with bipartisan congressional leaders next week," Burton said.

The Bush-era tax cuts, which are due to expire at the end of the year, are expected to be a top priority next week when President Barack Obama sits down with Democratic and Republican congressional leaders.

Obama's Democrats will continue to control Congress through the end of the year. If there is no deal on tax cuts by then, the new Congress, which will feature a House of Representatives with a Republican majority after a strong showing in November 2 elections, could take up the issue again in January.

Republicans also reduced the Democratic majority in the Senate in this month's elections.

Obama and Democrats want to extend the tax cuts only to families making less than $250,000 a year while Republicans want them extended to all Americans.

Obama has insisted tax cuts for wealthier Americans should not become permanent because of a potential $700 billion impact on the deficit over the next decade. He has left the door open to a temporary extension for higher income levels.

Republican John Boehner, who is in line to become House speaker, has proposed extending the upper-class tax cuts for two years and saving money by rolling back domestic government spending -- excluding entitlement programs -- to 2008 levels.

Obama senior adviser David Axelrod told The Huffington Post there are concerns Congress will continue passing temporary extensions for the wealthy "but I don't want to trade away security for the middle class in order to make that point."

Axelrod, asked about the article, said by e-mail that the Huffington Post's conclusion that Obama was ready to accept an across-the-board temporary continuation of the tax cuts was overwritten.

He said the article contained "no news" and that he had said nothing that had not already been said by Obama.

But Axelrod and others made clear there is the possibility of a compromise -- although the president would strongly oppose an effort to make tax cuts permanent for wealthier Americans.

Senate Republican leader Mitch McConnell said he is willing to listen to what the president has in mind.

"While the president and some of his allies in Congress have a strange desire to raise taxes on hundreds of thousands of small businesses across the country, we would welcome the president's help to extend all the current tax rates so that no one sees a tax hike," he said.

(Reporting by Jeff Mason and Steve Holland; Editing by Bill Trott)