White House Concedes on Upper Income Tax Cuts

FILE: Obama Senior Advisor David Axelrod departing the White House on Oct. 30 to spend the weekend campaigning for Democratic candidates. (Reuters)

President Obama senior adviser David Axelrod insisted Thursday that comments he made to an online publication conceding to an extension of tax cuts for all income levels are no different from remarks by the president over the weekend.

Axelrod, who confirmed to Fox News comments he made to The Huffington Post, suggested that the administration is ready to accept an across-the-board continuation of current tax rates, marking a turnaround from the White House's pre-midterm election stance on impending tax increases.

"We have to deal with the world as we find it," he said. However, Axelrod made clear to Fox News the White House is not conceding a permanent extension for the top 2 percent of earners.

The president's top adviser also acknowledged that separating different categories of tax cuts now is politically unrealistic and procedurally difficult.

"We don't want that tax increase to go forward for the middle class ... But plainly, what we can't do is permanently extend these high income taxes," he told the online publication.

The current tax rates laid out by Congress in 2001 under the guidance of then-President George W. Bush included a sunset of 10 years, meaning rates are expected to rise on all income levels in 2011. However, economists and most lawmakers agree that raising tax rates during a recession will only prolong the pain of a fitful economy.

The White House pushed back on The Huffington Post story by arguing the president has been signaling a temporary extension of the tax cuts for higher income earners. Aides say the president was pretty clear in his weekly radio and Internet address that there would be an extension of all the tax cuts, but the country cannot afford making the tax cuts permanent for those making more than $250,000 per year.

Officials said Axelrod is saying essentially the same thing.

Over the weekend, the president said in his weekly address that he wants to have "an extended discussion" with lawmakers -- scheduled for Nov. 18 -- on ways to reduce deficits and spending.

He did not say he would support an extension of current rates to upper income earners.

"I recognize that both parties are going to have to work together and compromise to get something done here. But I want to make my priorities clear from the start. One: middle class families need permanent tax relief. And two: I believe we can't afford to borrow and spend another $700 billion on permanent tax cuts for millionaires and billionaires," he said.

White House spokeswoman Jen Psaki on Thursday maintained that extending rates for the middle class families is the president's priority, and "he is open to compromise to get that done."

"He has also expressed concern about the cost of making the highest income tax cuts permanent and is looking forward to discussing this and other issues with bipartisan congressional leaders next week," Psaki said.

Michael Steel, a spokesman for House Republican leader John Boehner said the congressman is pleased Axelrod agrees on the need to extend rates for all brackets.

"Republicans made a pledge to America to permanently stop all of the tax hikes scheduled for January 1st. We're glad to see that the president's most trusted adviser now agrees with this course of action, and hope he and the president will show leadership by convincing Speaker Pelosi to stop these tax hikes permanently in the upcoming lame duck session," Steel told Fox News.

Fox News' Mike Emanuel contributed to this report.