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Tax Cut Deal Reveals Obama 2.0

President Obama announces a tentative deal on extending the Bush-era tax cuts. CBS

Anyone waiting to see how the midterm election would change the course of the Obama Presidency, look no further than yesterday. The president started his day with a call for a bipartisan approach on infrastructure and education initiatives, hoping to rally American to a new "Sputnik moment," and ended with a truly bipartisan agreement on taxes.

With a temporary extension of all the Bush tax cuts, 13 months of additional unemployment insurance, a renewed 35 percent estate tax, and a two-percent payroll tax cut, the plan has something for everyone to love and most to find something to hate.

In announcing the plan, President Obama said it wasn't perfect and there were things in it that even he didn't like, but he said it's an "essential step" in economic recovery.

"I believe this bipartisan plan is the right thing to do. It's the right thing to do for jobs. It's the right thing to do for the middle class. It's the right thing to do for business. And Its' the right thing to do for the economy," he said.

A senior administration official went even further. "This is an excellent deal.... If we get -- this framework, if we can get this finalized, is a huge step forward. It includes a lot of really big provisions that help create jobs, grow the economy, things that a few weeks ago no one would have thought you could possibly get done because of the staunch Republican opposition to them. We think we're very close to making real progress that will be very good for the economy and the middle class," the official said.

Today's talk in Washington is that big "IF" - if the deal gets done. House Democrats, and many Liberals, have grumbled that they wanted more fight from the White House. They wanted to punish the Republicans by making them take the blame for taxes going up, because they stood in the way of a middle class tax cut extension.

The Democrats, hoping to prevent any extension in tax cuts for the wealthiest Americans, thought they could win that fight. The White House, which had staked out the position of not wanting to permanently extend the upper income tax cuts, clearly thought it couldn't win and wasn't going to risk losing what it saw as a dangerous game of chicken.

"I'm not willing to let working families across this country become collateral damage for political warfare here in Washington," said the president.

House Democrats may have seen the election results as a referendum on the president being too willing to compromise from his liberal beliefs, while the White House clearly saw it the other way - the election showed that the American people wanted real results, not political posturing, and more bipartisanship and compromise to get things done.

"So, sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do," said Mr. Obama, clearly taking on his detractors on Capitol Hill.

After votes to cap the tax cut extensions failed on a bipartisan basis this weekend in the Senate, the administration knew it had to act. It could not let any taxes go up for fear that any road bump in the economic recovery would solely rest on the president's shoulders.

"These tax cuts expire everybody's taxes go up. And that's a twofold problem. The economy buckles. And the president's likely to get more of the blame than anybody else," said CBS News political analyst John Dickerson.

Now, the White House can take credit for not only preventing a tax increase, but for instituting a new, real, powerful tax CUT for all Americans. One he and the Democrats can take credit for. Last week's votes in Congress were only on extending a set of 2001 and 2003 tax cuts. Any votes on extending unemployment insurance, a payroll tax holiday, or the estate tax would have been longer more drawn-out fights. Now, this deal being certainty to the American people, something that's the White House, and Democrats can take credit for. This newly robust package could also do more for economic growth than the votes in Congress to prevent a tax hike would have done.

Economist Mark Zandi says the new cut, along with continued stimulus will spur the economy. "The proposed temporary tax cuts and spending increases provide a very substantial boost to the economy in 2011... real GDP growth will accelerate to 4%, job gains will pick-up to 2.8 million, and the unemployment rate will decline to close to 8.5% by year's end," he said.

That's music to the ears of the White House and should be to House Democrats. While they may be upset at parts of the deal, in the end, a stronger economy and new tax cuts - created on THEIR watch - will only help the president's and their electoral chances in the next election.

And this tax cut deal clearly shows the president willing to compromise to achieve results - what the White House thinks people want--showing how the post mid-term White House appears to be operating.

Obama Announces Tentative Pact on Bush Tax Cuts
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For Obama, Championing Compromise May Be Lonely
Obama: Deal with GOP on Tax Cuts
Tax Cuts For All Americans?
GOP Win on Taxes Leaves Some Dems Fuming
Obama Faces Liberal Revolt over Tax Cut Deal

Robert Hendin is a CBS News White House producer. You can read more of his posts in Hotsheet here. You can also follow him on Twitter here.
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