Obama defends tax deal, says best for the nation

With Democrats balking at his compromise with Republicans, President Barack Obama on Tuesday staunchly defended his decision to deal with the GOP in order to extend about-to-expire tax cuts for all Americans.

"There are some who would have preferred a protracted political fight," the president said at a White House news conference a day after the deal was announced. "And I understand the desire for a fight. I'm sympathetic to that."

Many Democrats in Congress are unhappy about the agreement because it continues tax breaks for the wealthiest Americans. But Obama said a long political battle "would be a bad deal for the economy. And it would be a bad deal for the American people."

He promised a renewed fight during 2012 when the tax cuts would expire again, making the point that he still opposes the Republican position that high-income earners should get the extension, too.

Obama called "tax cuts for the wealthy" the Republicans' "holy grail."

"It seems to be their economic doctrine," Obama added, previewing a likely argument during his expected re-election race in 2012.

In the agreement, the president gave up a key goal to let Bush-era tax breaks for the wealthiest Americans expire. But he said the deal would stop taxes from rising for middle class Americans, "which is what I promised."

"It's a good deal for the American people," Obama said. Obama cast his decision to accede to the GOP position on extending the tax cuts in stark terms.

"It's tempting not to negotiate with hostage takers - unless the hostage gets harmed. Then, people will question the wisdom of that strategy. In this case, the hostage was the American people, and I was not willing to see them get harmed."

He made a point to note that he long has opposed - and still opposes - keeping tax cuts in place for the sliver of Americans making $200,000 or more a year.

He said the American people agree with his position, but "I haven't persuaded the Republican Party." Reflecting the newly increased Republican clout in Congress, he said: "I haven't persuaded (Senate Republican leader) Mitch McConnell and I haven't persuaded (House GOP leader) John Boehner."

Even though Democrats will control both houses of Congress until January, Obama insisted the deal was necessary to ensure enough Republican support in Congress to extend unemployment benefits that also are about to expire, and he said a long, bloody battle with the GOP would be detrimental to recession-weary Americans.

"This isn't an abstract debate. This is real money for real people," he said. "This package will help strengthen the recovery. That I'm confident about."

Obama called the news conference in the face of Democratic criticism of the agreement, which still needs House and Senate approval.

It was part of a full-scale defense, with the White House arguing the deal would pump billions into the economy at a time it is recovering from the worst recession in eight decades and unemployment stands at 9.8 percent.

The plan calls for extending tax cuts from the Bush era that are due to expire at year's end, renewing jobless benefits through the end of 2011 and granting a one-year cut in Social Security taxes. Several officials said the package could add $900 billion or more to the federal deficit over two years.

Obama said he expects the unemployment rate to go down because of the compromise, although he would not predict by how much.

He also said he believes the jobless rate will recede because the economy is growing, even if businesses haven't yet picked up the pace of hiring enough to send large numbers of people back to work.

Obama spoke as Vice President Joe Biden met at the Capitol with Senate Majority Leader Harry Reid and then other Democratic senators. House Democrats were holding their own closed-door meeting later Tuesday.

"It's something that's not done yet," said Reid, D-Nev. "We're going to have to do some more work," he said after the meeting with Biden and members of the Democratic rank-and-file.

Across the Capitol, House Speaker Nancy Pelosi issued a statement that said merely, "We will continue discussions with the president and our caucus in the days ahead."

(Copyright 2010 by The Associated Press. All Rights Reserved.)

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