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Obama: Tax Bill Will Pass, Possibly With Changes

President Barack Obama is predicting congressional approval of the tax-cutting compromise he has reached with Republican leaders, but he's not ruling out that unhappy congressional Democrats will make some changes in the mammoth legislation.

In an interview with NPR News released Friday, Mr. Obama said that despite a rebellion by many Democrats against his tax deal, it will pass because "nobody - Democrat or Republican - wants to see people's paychecks smaller on Jan. 1 because Congress didn't act."

The pact would extend expiring tax rates for all income levels, and renew long-term jobless benefits. It would also trim employees' Social Security taxes for one year, and raise the estate tax floor from $3.5 million to $5 million.

Democrats have objected that it is too generous to the rich. CBS New White House correspondent Bill Plante reports 54 defiant Democratic Hosue members say they won't support the current deal the White House reached with the Republican leadership.

House Democrats voted in a closed-door meeting Thursday not to bring the package to a floor vote without changes scaling back tax breaks for the rich.

Asked about those objections, President Obama said there will be talks between House and Senate leaders about the package's final details.

"Keep in mind, we didn't actually write a bill. We put forward a framework. I'm confident that the framework is going to look like the one that we put forward," he said.

He said he was confident that differences over the bill would be resolved by the end of the month.

Supporters say the framework would help accelerate a sluggish recovery from recession.

"This bill is not perfect, but it provides the economic boost middle-class families and small businesses in Nevada and across America need," said Senate Majority Leader Harry Reid, D-Nev. "Middle-class families and small businesses will see their taxes go down."

Last week Senate Republicans (and a few Democrats) rejected Democratic plans that would extend the Bush-era tax cuts at levels below $250,000 and $1 million, because it did not tower the tax on all of the wealthiest Americans' income.

At the insistence of Republicans, the framework also includes the more generous estate tax provision. That infuriated Democrats already unhappy with President Obama for agreeing to extend tax cuts for the rich.

"If we pass this agreement as written, it says we are going to continue the Bush policy of trickle-down economics for at least two more years, and in my mind, that is absurd," said Sen. Bernie Sanders, a Vermont independent.

"What unfettered greed on their part, to do something that benefits a very, very, very few," said Rep. Peter DeFazio, D-Ore.

Vice President Joe Biden has told Democrats in closed-door meetings this week that they are free to oppose the agreement but it might unravel if they do.

"If it's 'take it or leave it,' we'll leave it," said Rep. Lloyd Doggett, D-Texas, after a closed-door meeting in which rank-and-file Democrats chanted, "Just say no."

In his interview with NPR, President Obama said that he did not like the idea of extending the tax cuts for the wealthiest ("I think they're not a smart thing to do, particularly because we've got to borrow money, essentially, to pay for them"), and does not believe that giving more money to rich would create a single job. "It doesn't, which is why I was opposed to it, and I'm still opposed to it."

But he said Republicans "willing to scotch the entire deal" if they did not get tax cuts for the rich jeopardized everyone else.

"In that circumstance, we've got, basically, a very simple choice: Either I allow two million people who are currently getting unemployment insurance not to get it, wither I allow the recovery that we're on to be endangered - or we make a compromise now, understanding that for the next two years this is going to be a central battle as part of a larger discussion about how do we reform our tax code so that it's fair and how do we make sure that we actually are dealing with the deficit and debt in an intelligent way?"

"Look, the fact of the matter is that, for a decade now we have had the tendency to think that we can keep on having all the services we want and ... can keep cutting taxes as much as we want and that somehow things are going to magically balance out," Mr. Obama told NPR.

"The American people understand that's not the case, and so we're going to have to be responsible about thinking: What are the programs we don't need, that don't contribute to growth, don't contribute to competitiveness . . . aren't contributing to making sure that our kids are learning and able to compete in this 21st century economy - and which things are vital investments that we have to make?

"And that conversation is going to be one that can't just happen in Washington; it's going to happen all across the country. And I'm looking forward to leading that conversation."

Appearing on CBS' "The Early Show" this morning, Democratic National Committee Chairman Tim Kaine said that the issue of a two-year extension of the Bush era tax cuts will be revisited in the midst of the 2012 presidential election - and then, Mr. Obama will be able to campaign against tax breaks for the rich.

"I think the president feels very confident he can make the case during that campaign [what] we shouldn't extend these for the wealthiest," Kaine said. "We'll put that right in the laps of the American public and they can make that decision in 2012."

Despite significant criticism from fellow Democrats, Mr. Obama has said the sweeping measure is necessary to help the struggling economy recover from the worst recession in decades.

Senate GOP leader Mitch McConnell has said he expects most Senate Republicans to support the tax bill. Prominent House Republicans back it, too.

Some Senate Republicans, however, have spoken out against the bill and promised a filibuster, because it would add about $855 billion to the deficit, according to a preliminary congressional estimate.

To win approval in the Senate, negotiators added a few sweeteners to promote ethanol and other forms of alternative energy. Tax provisions designed to increase production of hybrid automobiles, biodiesel fuel, energy-efficient homes, coal and energy-efficient household appliances would be extended through the end of 2011.

Among the energy tax provisions added was an extension through 2011 for the current 45-cent per gallon subsidy for ethanol, at a cost to the Treasury estimated at nearly $5 billion. The issue is of particular interest to lawmakers from Midwestern states with grain crops.

"While this legislation is not as long as we had hoped, it is a commonsense approach that will ensure American ethanol production continues to evolve and new technologies commercialized," said Bob Dinneen, president of the Renewable Fuels Association.

There is no precise timetable for passage in the Senate (especially after House Democrats voted to table the bill for now), but a test vote was set for Monday afternoon that appears likely to demonstrate overwhelming support for the legislation.