Obama opposes permanent extension of tax cuts for rich

SEOUL Fri Nov 12, 2010 7:33am 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

SEOUL (Reuters) - President Barack Obama said on Friday he does not want to permanently extend tax cuts for the wealthiest Americans, sending another signal he is willing to forge some sort of compromise with newly emboldened Republicans to win an extension for the middle class.

The White House has been hinting it may be willing to come to some kind of deal on the cuts, which Republicans, heartened by their election successes this month, want to extend for the rich as well as the middle class.

"I continue to believe that extending permanently the upper-income tax cuts would be a mistake and that we can't afford it," Obama said at a news conference at the end of the G20 summit in South Korea.

"And my hope is, is that somewhere in between there we can find some sort of solution."

Obama meets next week with Democratic and Republican congressional leaders. The cuts enacted under his predecessor George W. Bush and expiring at the end of the year are expected to be a focus of their discussions.

"My number-one priority is making sure that we make the middle-class tax cuts permanent, that we give certainty to the 98 percent of Americans who are affected by those tax breaks," Obama said.

Obama's Democrats will control both houses of the U.S. Congress through the end of 2010. If there is no deal 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.

Obama and his fellow 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 the wealthiest 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.

Obama adviser David Axelrod told The Huffington Post website this week 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 and contained nothing Obama had not already said.

(Reporting by Patricia Zengerle, editing by Sanjeev Miglani)