Obama Reaches Deal With GOP on Tax Cuts, Jobless Benefits

With it, good news for both the wealthy and the 2 million people collecting unemployment. But don't expect Democrats in Congress to go along without a fight.

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President Barack Obama (Mandel Ngan/AFP/Getty Images)

Looks like President Barack Obama has reached a compromise with congressional Republicans, though whether he can get it by lawmakers in his own party is another matter.

The tentative deal would extend for two years all the tax breaks set to expire on Dec. 31, continue unemployment benefits for an additional 13 months and cut payroll taxes for workers in a bid to get employers to start hiring again. Those who feared the president might abandon the needs of his base can at least point to the 2 million unemployed people who won't run out of benefits next year if the deal goes through.

It also includes some goodies for the wealthy, like extending the Bush tax cuts for them -- something that Obama had previously said he opposed -- as well as setting the estate tax at 35 percent for two years on inheritances worth more than $5 million. Both provisions are expected to face stiff opposition by congressional Democrats.

But Obama said in remarks this evening that he had little choice about caving in to some of the GOP's demands for the wealthy:

"What is abundantly clear to everyone in this town is that Republicans will block a permanent tax cut for the middle class unless they also get a permanent tax cut for the wealthiest Americans, regardless of the cost or impact on the deficit.

"We saw that in two different votes in the Senate that were taken this weekend. And without a willingness to give on both sides, there's no reason to believe that this stalemate won't continue well into next year. This would be a chilling prospect for the American people, whose taxes are currently scheduled to go up on Jan. 1 because of arrangements that were made back in 2001 and 2003 under the Bush tax cuts.

"I am not willing to let that happen. I know there's some people in my own party and in the other party who would rather prolong this battle, even if we can't reach a compromise. But I'm not willing to let working families across this country become collateral damage for political warfare here in Washington. And I'm not willing to let our economy slip backwards just as we're pulling ourselves out of this devastating recession."

Senior administration officials said they are banking on the upper-income tax cuts, which they estimate will cost $700 billion, to be a thorn in the GOP's side during the 2012 presidential campaign. The tax cuts are set to expire at the end of that year.

Perhaps by then, most Americans will realize that despite their dreams of joining the ranks of the wealthy, they're better off voting wallets this time around.

For a more detailed rundown of Obama's proposed deal on tax cuts, tax breaks and unemployment insurance, read Ezra Klein's column at the Washington Post.

Sheryl Huggins Salomon is senior editor-at-large of The Root. Follow her on Twitter.

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