Obama Proposes to Extend Bush Tax Cuts Excluding Top Earners

But what about security for the other 3% of businesses? asks Chris Bergin, president of Tax Analysts. "I suppose this is smart politics: give me what I want now and we'll have a discussion and hopefully you'll never get what you want later," Bergin told AdvisorOne in an interview. "Our President has learned that the tax system in Washington is now an apparatus for creating winners and losers."

Creating certainty for 97% of the small businesses is creating "security for some and not others, which is not security at all," Bergin says. "I don't know how the President can talk about security when our tax code is dominated by expiring provisions."

What happens to the payroll tax cut that expires come January? Bergin asks. "I'm sure that's one thing [the President] calculates when he says he's lowered taxes for the middle class." How about the Alternative Minimum Tax (AMT) that will end and "gobble up the middle class" unless there's a temporary patch.

Sen. Orrin Hatch, R-Utah, ranking member of the Senate Finance Committee, said after Obama's comments that instead of "trying to pick a needless fight," the President should recognize that there's a bipartisan consensus to prevent all the tax increases that are set to hit on January 1, 2013, by extending all the tax relief a full year during which time comprehensive tax reform should take place.

"It's hard to miss that it's a Presidential election year. But, as last week's jobs numbers show, too much is at stake for the President to be playing politics with our economy," Hatch said in a statement. "Instead of trying to pick a needless fight with Congress, the President should recognize that there is a growing bipartisan consensus to prevent all the tax hikes from hitting every tax-paying American on January 1 that could push our economy back into a full-blown recession."

But Senate Majority Leader Harry Reid, D-Nev., said that he agrees with President Obama that the middle income tax cuts should take effect "immediately," as it will "protect middle-class families and allow us to reduce our deficit in a responsible manner."

Democrats and Republicans, Reid said in a statement, "should be able to agree that protecting the middle class is the most important priority, so Republicans should stop holding these middle-class tax cuts hostage to extract more reckless giveaways for millionaires and billionaires."

Reid said he would be discussing "the next steps" on the middle class tax cut in the Senate in the coming days. "Republicans have claimed they want to reduce our deficit; in the weeks ahead, they will have a chance to do so by joining Democrats to vote to extend tax cuts for all middle class American families on the first $250,000 of their income."