Obama defends tax cut compromise with Republicans

WASHINGTON (AP):

President Barack Obama said on Tuesday he had to compromise on tax cuts for the wealthy because Republicans were holding middle class Americans hostage.

At a short-notice news conference, Obama repeated his deep philosophical opposition to portions of the deal he struck with the opposition party, which extended Bush-era tax cuts for two years.

Republicans had wanted the cuts made permanent.

The deal provided the first big test of how Obama will work out compromises with Republicans after their landslide victory in last month's election. Republicans will take control of the House of Representatives next month and narrow the Democratic majority in the Senate.

Despite his distaste for the deal, Obama called on fellow Democrats in Congress to join him by passing the measure even though it goes back on a promise he had made as a candidate and throughout the first two years of his presidency.

Obama said he could have continued fighting the Republicans and that "might have been good politically, but it would have been a bad deal for the American economy" and the American people.

Broadly put, Obama caved in to Republican demands that tax cuts for wealthy Americans - households earning more than $250,000 a year - be extended beyond their expiration at the end of the year.

Tax rates for American families earning less than $250,000 annually also are set to expire at year's end, but Republicans were blocking a Democratic attempt to extend those cuts unless higher wage earners also were granted a lower rate.

Obama said he had no choice now because he did not have the votes in Congress. For Republicans, he said, "this is their holy grail, these tax cuts for the wealthy."