How Far will the White House Compromise on the Bush Tax Cuts?

In this photo released by CBS, Senior White House Advisor David Axelrod talks to reporters after his appearance on the CBS talk show "Face the Nation" Sunday, April 19, 2009, in Washington. (AP Photo/CBS, Karin Cooper) ** NO SALES. NO ARCHIVE. MANDATORY CREDIT: FACE THE NATION ** AP

AP

White House Senior Adviser David Axelrod is giving further indication that the White House may be ready to cede ground to Republicans on the issue of extending the Bush tax cuts -- but only to a certain extent.

The tax cuts enacted in the early years of the Bush administration are set to expire at the end of the year if Congress does not act. President Obama has urged Congress to extend the tax cuts for all Americans, except for the top 2 percent of income earners. Letting the tax cuts lapse for the top 2 percent would save the government $700 billion over the next 10 years, the president has repeatedly argued.

However, Republicans are interested in extending all of the tax cuts, and after significant gains in the midterm elections, they are signaling they are not interested in compromising.

"We have to deal with the world as we find it. The world of what it takes to get this done," Axelrod said in an interview with the Huffington Post.

Mr. Obama acknowledged as much on CBS' "60 Minutes" on Sunday.

When asked by "60 Minutes" correspondent Steve Kroft whether he could accept a plan to temporarily extend the Bush tax cuts for the wealthiest Americans for another two years, Mr. Obama said, "I think that when we start getting specific like that there's a basis for a conversation. I think that what that means is that ... we can look at what the budget projections are. We can think about what the economy needs right now, given that it's still weak. And hopefully, we can agree on a set of facts that leads to a compromise."

Axelrod suggested to the Huffington Post that the White House could accept a temporary compromise on the tax cuts for high-income earners in order to ensure that an extension is passed for the middle class. He put his foot down, however, at the suggestion of permanently extending the tax cuts for the wealthiest Americans.

"Plainly, what we can't do is permanently extend these high income taxes," he said.

On CBS' "Face the Nation" on Sunday, Senate Republican Leader Mitch McConnell said he is in favor of permanently extending the tax cuts for all income levels.

"These aren't tax cuts; these are tax increases," he said. "Tax increases in the middle of a recession."

Axelrod reiterated to the Washington Post's Greg Sargent, "Our two strong principles are that we need to extend the tax cuts for the middle class, but we can't afford a permanent extension of the tax cuts for the wealthy."

White House communications director Dan Pfeiffer tried to downplay the Huffington Post article, telling Sargent that the article was "overwritten."

He added, "Nothing has changed from what the president said last week."

However, Michael Steel, a spokesperson for incoming House Majority Leader John Boehner, gave a response to the Huffington Post article that seemed to ignore the nuance in Axelrod's remarks.

"Republicans made a pledge to America to permanently stop all of the tax hikes scheduled for January 1st," he said. "We're glad to see that the president's most trusted adviser now agrees with this course of action, and hope he and the president will show leadership by convincing Speaker Pelosi to stop these tax hikes permanently in the upcoming lame duck session."

Watch President Obama talk about creating a "basis for conversation" on the Bush tax cuts on "60 Minutes":



Stephanie Condon is a political reporter for CBSNews.com. You can read more of her posts here. Follow Hotsheet on Facebook and Twitter.

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