CNN Wire Staff
The White House was fighting Tuesday to persuade Democrats to support a compromise on taxes that President Barack Obama and Republican leaders have reached.
The overall compromise will cost between $600 and $800 billion over two years, according to CNN estimates.
At the heart of the deal: an extension of the Bush-era tax cuts for two more years, which would keep income tax rates at their current levels for everyone, as Republicans have advocated. Obama and other Democrats had argued that tax rates should stay the same for most people but rise for people earning more than $200,000 a year and families making $250,000 or more a year.
The deal Obama and Republicans have struck also includes a one-year cut in payroll taxes, from 6.2% to 4.2% on a worker's first $106,800 of wages. If implemented, it would mean that someone earning $50,000 a year would pay $1,000 less in Social Security contributions next year. Someone earning $100,000 would pay $2,000 less. The payroll tax rate would go back up to 6.2% in 2012.
Agreeing to extend the Bush-era tax cuts for the wealthiest Americans represented a major concession for Obama. In a concession to Democrats, Republican negotiators agreed to leave in place for 13 months the option to file for extended federal unemployment benefits. That will not, however, affect how long someone can collect unemployment benefits - the maximum will remain 99 weeks in states hardest hit by job loss.
"It's not perfect," Obama said in revealing the compromise, but "we cannot play politics at a time when the American people are looking for us to solve problems."
Several Democrats have said they have reservations about the deal. One reason: It would cost hundreds of billions of dollars.
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