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As Negotiators Search for Deal, Obama Says No Permanent Tax Rates for Upper-Income Earners

  • Monday: U.S. President Obama looks through a microscope as he tours Bio Tech Facilities at Forsyth Technical Community College in Winston-Salem, N.C.Reuters

  • President Obama and first lady Michelle Obama are applauded by recipients of the 2010 Kennedy Center Honors at the Kennedy Center in Washington Dec. 5. (AP Photo)

President Obama was scheduled to meet with Democratic congressional members on Monday after returning from a technical college in North Carolina where he argued that the United States can't afford to keep tax rates for high-income earners and urged U.S. investment in education and innovation.

The meeting to be held at the White House will be used to "discuss progress being made on the ongoing discussions on the middle class tax cuts and other key measures to support our economy," according to a White House official.

Hours before the talk, Obama repeated his opposition to a permanent extension of tax cuts for top income earners, but suggested that a deal could be reached with Republicans if it included an extension of unemployment benefits for another year. That suggestion is not sitting well with liberal members of his caucus.

The solution may not be "100 percent what I want or 100 percent what the Republicans want," he said.

"Republicans want to make permanent the tax cuts for the wealthiest Americans. I have argued that we can't afford it right now," Obama said to applause. "But what I've also said is we've got to find consensus here because a middle class tax hike would be very tough, not only on working families, but also be a drag on our economy at this moment."

He added: "There's no reason that ordinary Americans should see their taxes go up next year. We should also extend unemployment insurance for workers who've lost their jobs through no fault of their own. That is a priority."

The president spoke as negotiators on Capitol Hill try to find an impasse to the gridlock formed after Republicans over the weekend voted down an extension only for the middle- and lower-incomes followed by some Democrats demanding a party-wide holdout on extending current tax rates for couples making more than $250,000. 

Tax rates approved 10 years ago are set to expire on Jan. 1 unless Congress takes action during the lame-duck session. One source said a deal is not near done. In fact, negotiators don't have the gift wrap for this holiday gift, much less a bow to put on it.

Obama also insisted that any deal include a renewal of other tax breaks that were part of the 2009 stimulus bill. A White House official said without them, taxes will go up on 95 percent of Americans. Some of the expiring provisions include a tax credit for lower- and middle-class wage earners, even if they don't make enough to pay federal income taxes, breaks to offset college tuition and breaks for companies that hire the unemployed.

"The most important contest we face as a nation is not between Democrats and Republicans but between America and our economic competitors around the world," the official said. 

Sources told Fox News on Sunday that Obama is trying to "sell" liberals in the House on his potential acceptance of tax rates across the board and for the wealthy, potentially marrying the cuts to jobless benefits, and he wants a deal done this week. A senior House aide told Fox News to expect things "to accelerate quickly on Monday."

But liberals don't appear ready to negotiate quite yet. Rep. Anthony Weiner, D-N.Y., said he was disturbed that it appeared the president was willing to negotiate so quickly with Republicans.

"Middle-class Americans need someone to fight for them. They see this deal as punting on third down. It seems the president is not seeing the value of being on offense," Weiner said in a statement. 

Democrats "should be standing up for the middle class and extending unemployment insurance for out-of-work Americans. If Republicans want to add to our deficit and defend the interests of billionaires, make them stand up in Congress and tell that to the public loud and clear," he said.

Calling Saturday's vote to extend rates only for the middle-class a "showboat," Sen. John Cornyn, R-Texas, told Fox News on Monday he hopes a compromise is still in reach. 

"I hope now that that's all over with, that there will be some resolution of this," Cornyn said. "Because the last thing we need to do is raise taxes during a fragile economic recovery. ... There isn't a deal yet, but I'm for making it as long as we can." 

In North Carolina, where he visited the Bio Tech Facilities at Forsyth Technical Community College in Winston-Salem, the president also spoke about additional investment in emerging technologies that will keep the U.S. competitive. 

Obama said private-public cooperation is needed to make the U.S. more competitive so that it doesn't lose out in another "Sputnik" moment in which a foreign country shows up U.S. skills. In 1957, the Soviet Union launched the first earth-orbiting satellite -- a major advancement in the space race that led to major U.S. investment and the moon landing in 1969.

"We want to be a nation that simply buys and consumes products from other countries, we want to create and sell products all over the world that are stamped with three simple words, 'Made in America.' That's our goal," he said.

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