UPDATE 1-White House: tax deal won’t worsen long-term deficit

(Adds background on deal, quotes from White House)

WASHINGTON, Dec 7 (BestGrowthStock) – The White House defended on
Tuesday the proposed tax deal championed by President Barack
Obama, saying an extension of all Bush-era tax cuts over two
years would not worsen the medium- and long-term U.S. deficit.

“These are responsible, temporary measures to support our
economy that will not add costs by the middle of the decade,”
the White House said in a statement after some Democrats
accused Obama of caving in to Republican demands on taxes.

The proposed deal would renew tax cuts for the middle-class
— the top demand of Democrats — and for the wealthiest
Americans, which Republicans wanted.

“The president does not believe it is affordable to make
the high-income tax cuts permanent and will continue to have
that debate in the years ahead,” the White House said.

Prospects that the tax breaks will prompt increased
consumer spending and buoy the economy boosted U.S. stocks (Read more about the stock market today. ) in
early trading on Tuesday. [ID:nN07173299]

The deal comes as both parties say they are concerned about
the U.S. deficit and want to take on measures such as spending
cuts to tackle it.

Extending all the tax cuts for two years would cost $501
billion, according to the congressional budget office, at a
time when Obama is under pressure to cut the $1.3 trillion
budget deficit. The CBO said renewing the rates will boost the
economy in the short term but be harmful in the long term.

The White House highlighted what it saw as key
accomplishments from the deal: $56 billion in unemployment
insurance, a roughly $120 billion payroll tax cut for “working
families” and tax relief for students.

Left unclear was whether the Build America Bonds program
would be included in the deal. Congressional Republicans will
block the inclusion of that program, which is popular with
states and other municipal bond issuers, a Republican aide
said. [ID:nN7276802]
(Reporting by Jeff Mason; Editing by Anthony Boadle)

UPDATE 1-White House: tax deal won’t worsen long-term deficit