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Obama Open to Tax Cut Compromise, With Conditions

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Dec. 4: President Obama gestures during a statement on the US-Korea Free Trade Agreement. Obama said he isn't happy Senate Republicans blocked legislation Saturday that would have extended tax cuts for the middle-class.AP

President Obama told Congressional leaders Saturday that he was open to a compromise on extending the Bush-era tax cuts, but threatened to veto if the deal didn’t include an unemployment extension.

Speaking with Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi, Obama said he would consider permitting a renewal of Bush era tax cuts for all taxpayers, including the wealthy, but that Republicans would be expected to include commitments to some Democratic priorities.

Obama wants an extension of jobless benefits in addition to extensions of the tax cuts that benefit middle class families.

“Without them, taxes would still rise for 95 percent of Americans,” a White House aide told Fox News.

The talk of accommodation came just hours after Senate Republicans thwarted an attempt by Democrats to push through a bill that would have denied continuing tax cuts for the wealthy while permitting them other taxpayers.

Another proposal, which drew opposition from White House officials, would have renewed breaks for all tax filers with incomes of $1 million or less.

President Obama said he was "very disappointed" in the Senate's verdict.

"Those provisions should have passed," he said. "It makes no sense to hold tax cuts for the middle class hostage to permanent tax cuts for the wealthiest 2 percent of Americans especially when those high-income tax cuts would cost an additional $700 billion that we don't have and would add to our deficit."

Senate Minority Leader Mitch McConnell immediately slammed the political maneuvering by Democrats after the votes.

"According to the strange the logic of Democratic leaders in Congress, the best way to show middle class Americans that they care about creating jobs is to slam some of America's top job creators with a massive tax hike," he said on the Senate floor.

"Today's vote was an affront to the millions of Americans who are struggling to find work and a clear signal that Democrats in Congress still haven't got the message from the November elections," he said.

With the Senate vote over, negotiations between the White House and Republicans on a bill to extend the tax cuts at all levels are expected to resume.

Reid said he hoped for an agreement by the middle or end of next week on legislation that would combine an extension of tax cuts with a renewal of expiring jobless benefits.

Fox News’ Mike Emmanuel and The Associated Press contributed to this report.