Obama signals may compromise on Bush-era tax cuts

* Obama sees “room for compromise”

* Republicans taking hard line

By Matt Spetalnick

WASHINGTON, Nov 6 (BestGrowthStock) – President Barack Obama gave
his clearest signal yet on Saturday of a possible post-election
compromise with resurgent Republicans that could prevent tax
rates from rising for any American, even the wealthiest, come
January.

Obama, in his first weekly radio address since his
Democrats suffered big losses in Tuesday’s congressional
elections, reasserted that Bush-era tax cuts should be made
permanent for the middle class before they expire at year-end.

But while insisting tax cuts for wealthier Americans should
not become permanent because of a $700 billion impact on the
deficit over the next decade, he left the door open to a
temporary extension for higher income levels — as long as it
falls short of costing that much.

“I believe there’s room for us to compromise and get it
done together,” Obama said, previewing his administration’s
negotiating stance when the current Congress returns later this
month for its final session.

It was the latest sign that Obama might give ground in the
high-stakes tax battle, which could test the new dynamic in
Washington after Republicans won control of the House of
Representatives and weakened the Democrats’ Senate majority.

The conciliatory tone comes after Obama had argued
fervently for months that the country could not afford to keep
tax rates low on those with individual incomes above $200,000.

The possible makings of an agreement that the Democrats
could support points to a permanent extension for the middle
class coupled with a temporary extension — possibly for a year
or more — of higher earners’ tax cuts.

Republicans, emboldened by their election victories and
vowing to block Obama’s agenda, have taken a harder line on
making permanent for all Americans, including the wealthiest,
the tax cuts enacted under former President George W. Bush.

GRIDLOCK OR COMPROMISE

Obama, for his part, made clear he still does not want the
rates for the wealthier Americans to be set permanently lower
but stopped short of saying he would oppose a temporary fix.

“I believe we can’t afford to borrow and spend another $700
billion on permanent tax cuts for millionaires and
billionaires,” he said. He will meet Democratic and Republican
leaders at the White House on Nov. 18 to discuss the issue.

The pressure for compromise is that neither party wants to
alienate middle-class voters, who on Tuesday punished Democrats
at the polls for Obama’s economic policies that have failed to
put much of a dent in persistently high unemployment.

“All of us want certainty for middle-class Americans,”
Obama said. “None of us want them to wake up on January 1st
with a higher tax bill.”

Lawmakers return the week after next for a post-election
“lame duck” session. Until the new Congress convenes in
January, Democrats will still be in charge in the House.

But gridlock is still possible, especially over sensitive
tax policy in the context of a $1.3 trillion budget deficit.
Republicans must now decide what their best option is — take
what they can get from Democrats now or wait until next year.

Republicans say small businesses would be hurt if taxes on
the wealthiest rise. About 3 percent of small business would be
impacted, but they account for about half of small business
income, according to the congressional Joint Committee on
Taxation. The lower rates for the wealthiest would impact about
3 percent of all Americans.
(Additional reporting by Kim Dixon; Editing by Eric Beech)

Obama signals may compromise on Bush-era tax cuts