President Barack Obama signaled Monday that he would be willing to compromise with Republicans on extending the Bush tax cuts for the wealthy if an extension of unemployment benefits were included.
“We’ve got to make sure that we’re coming up with a solution even if it’s not 100% of what I want or what the Republicans want,” Obama said during his speech at Forsyth Technical Community College in Winston-Salem, N.C.
Indeed, Obama’s Deputy Press Secretary Bill Burton noted during a Q&A blog posting on the White House’s website as he was aboard Air Force One en route to the Winston-Salem speech, that Obama “is confident that in the next couple of days or so we will find a way to extend tax cuts for middle-class families and do some other things that the President thinks are important in helping to grow the economy and create jobs.” Those negotiations are, of course, “ongoing,” Burton continued. “The test for the President here is to ensure that anything that we do is strengthening the economy and creating jobs.”
Robert Fishbein, VP and corporate counsel in Prudential Financial’s tax practice, says that the buzz on Capitol Hill is that “the Administration and Congress are close to a deal that would involve the lower [Bush] tax rates being extended for some period of time” as well as an extension on unemployment benefits. For planning purposes for clients, he says, “it would be great to know where tax rates are by year-end.” Fishbein says it’s unclear whether a deal on the estate tax would be part of any compromise, however, he says, an Alternative Minimum Tax (AMT) fix will likely be part of “the grand compromise.”
David Kelly, chief market strategist for JPMorgan Funds, says that the likely structure of a deal between the Administration and Congress, being “a temporary extension of the tax cuts for everyone in return for an extension of unemployment benefits, might allow both sides to claim some victory.” Such a compromise, he says, “would be tilted towards more economic stimulus and higher debt, and so should be positive for stocks and negative for Treasuries.”