CBS News chief White House correspondent Chip Reid reports Republicans had been insisting they be extended for everybody, including the wealthy, but now the door has been cracked open to compromise.
On CBS' "Face the Nation" Sunday, House Minority Leader John Boehner, R-Ohio, said he would support extending tax cuts for the middle class even if those for the wealthy were allowed to expire.
"If the only option I have is to vote for some of those tax reductions. I'll vote for them," Boehner told Bob Schieffer.
Boehner added that he still believed letting the tax breaks for the wealthy expire was "bad policy" in terms of rebuilding the economy.
"The president argued pretty vociferously that we ought to extend the tax cuts that affect the middle class in this economy right now - that's what the president believes," Gibbs told "Early Show" anchor Harry Smith this morning. "I hope that Congressman Boehner's comments suggest a willingness to agree to the president's position.
"We ought not use the middle class as a political football; we ought to extend those tax cuts for the middle class, we ought to do it fairly quickly, give them certainty and make sure they know they will get help in tough economic times," Gibbs said.
"Let's be clear, Harry: the tax cuts for the upper end, the wealthy, mostly millionaires, that's a $700 billion proposition the next ten years. The president does not believe that we should be borrowing $700 billion, most likely from overseas, to extend tax cuts for folks, quite frankly, that weren't asking for them and don't particularly need them."
On Sunday Boehner bristled at accusations made by President Obama that Republicans were holding tax cuts for the middle class hostage in order to maintain them for the top 3% of earners.
"I want to do something for all Americans who pay taxes," Boehner said.
Reid says that if Boehner and the Republicans are forced to compromise, that would be a big victory for President Obama, who insists the cuts should be extended only for couples making less than $250,000 a year and individuals making less than $200,000.
Anyone making more than would see their taxes rise.
"There's no question we've got to get our economy even more strengthened than what we're seeing now," Gibbs said, when asked how the debate over whether or not to let the lower tax rates lapse would lead to increased employment.
"We've seen eight straight months of job creation but, look, for the middle class this economic recession didn't start two years ago, or two-and-a-half years ago. It's been going on for ten years. They've watched their wages decrease. They've wondered how they're going to pay bills and send their kids to college. The president believes for the middle class it's not time to raise their taxes, it's time to cut their taxes."
"Boehner also said, basically, why not just bring the budget back to about 2008 [spending] levels and you wouldn't even have to be having that conversation,'" said Smith. "Any way possible to shrink the government down to 2008 size and move on from there?"
"Well, look, the president has proposed freezing non-security discretionary spending for the next three years," Gibbs said. "But understand the argument John Boehner makes: John Boehner wants to cut spending in one breath and then without breathing, quite frankly, he wants to borrow $700 billion - paid for by the middle class - to give tax breaks to millionaires. The average tax break for that millionaire is $100,000. That's not what we should be doing. That's doesn't make any economic sense and it certainly lacks common sense."