(FOX) – President Obama outlined the “framework” of a deal with congressional leaders for a temporary extension of the Bush-era tax cuts in all income tax brackets, a compromise that he said would avert the “chilling prospect” of a tax increase next month for all Americans.
Obama, at a White House news conference Monday evening, renewed his calls for tax relief targeting the middle class and his criticism of making tax cuts for the wealthiest Americans permanent.
But in the end, he said, a compromise must be reached before the Bush-era tax cuts expire at the end of the year, or else ordinary Americans would become “collateral damage for political warfare in Washington.”
“I am not willing to let that happen,” he said.
Obama outlined a deal with congressional leaders that would extend the expiring tax cuts for all Americans temporarily for two years. Unemployment benefits for long-term jobless would through next year. The estate tax rate would be renewed at the previously lower rate temporarily.
The Obama administration also is proposing a one-year payroll tax reduction that sources say would cut the amount contributed to Social Security from 6.2 percent to 4.2 percent.
“I have no doubt that everyone will find something in this compromise that they don’t like,” he said, but “we cannot play politics at a time when the American people are looking for us to solve problems.”
House Republican Leader John Boehner’s office hailed the announcement.
“Itâ€™s encouraging that the White House is now willing to stop all of the job-killing tax hikes scheduled for January 1,” Boehner spokesman Mike Steel said. “We look forward to discussing this proposal with House Republican members and the American people.”
But some members of Congress cautioned that it’s not a done deal yet. Obama already is facing resistance from more liberal members of his party, who say the White House shouldn’t give ground.
Democrats have generally argued that the tax cuts should not be extended for the wealthiest 2 percent, while Republicans argue that the cuts should be extended for all taxpayers.
“We oppose acceding to Republican demands to extend the Bush tax cuts to millionaires and billionaires,” Rep. Peter Welch, D-Vt., said in a letter to Speaker Nancy Pelosi. Obama “should not back down. Nor should we.”
The renewal of the estate tax also could be tough to swallow for liberal Democrats, who have argued for the higher pre-Bush rate.
Annd Senate Majority Leader Harry Reid’s office released a statement saying only that Reid “plans on discussing it with his caucus tomorrow.”
Sources tell Fox News that a payroll tax reduction, if approved, would take the place of the Obama-backed “Making Work Pay” tax credit that gave up to $400 to individuals and $800 to couples through the economic stimulus package. Obama had pressed for an extension of the tax credit, but Republicans objected.