Obama sees potential for tax cut compromise

* Tax cut battle first major post-election challenge

* Strikes conciliatory tone

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)