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Axelrod: No big changes to tax deal

By the CNN Wire Staff
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Will tax extensions pass?
  • President Obama's senior adviser says compromise was necessary
  • David Axelrod expects the tax deal to win approval from Congress
  • CBO says the tax package will add almost $900 billion to the deficit

Washington (CNN) -- President Barack Obama's senior adviser ruled out any major changes to the tax package negotiated with Republicans, saying Sunday that it is time to move forward on a compromise that includes elements distasteful to each side.

In an interview on CNN's "State of the Union," David Axelrod said the focus must be on what is best for the country right now, rather than scoring political points or settling political scores.

"You can focus on what you don't like and ... cut your nose off to spite your face, and that would be the wrong thing to do," Axlerod said, adding that he expected Congress to approve the deal because "everyone understands what it means to the economy if we don't get this done."

Axelrod appeared on the CNN program and other Sunday talk shows in the latest salvo by the Obama administration in a battle for public and political support for the plan that combines extended tax cuts from the Bush era with extended unemployment benefits, tax breaks and the payroll tax holiday intended to bolster a sluggish recovery from economic recession.

House Democrats declared last week that they opposed the package because it would extend the lower Bush-era tax rates for millionaires. They support the stance Obama has championed for years -- extending the current lower tax rates only for those earning up to $200,000 a year, or families earning $250,000, while letting rates for higher incomes return to 1990s levels.

However, Senate Republicans have refused to accept any difference in tax treatment for the wealthy, demanding that all current rates be extended. Last week, they blocked Democratic measures in the Senate to limit the extended tax cuts to income levels below $1 million a year.

With the tax cuts expiring at the end of the year, and Republicans able to block any legislation in the Senate, Obama and Democrats face a fast-approaching deadline to reach a deal or see tax bills increase for everyone.

Asked about the possibility of dropping provisions opposed by liberal Democrats, such as extending Bush-era tax cuts for the wealthy, Axelrod said the main components of the deal with Republicans must remain in place.

"This is what has been negotiated. This is what the Republican Party in the Senate accepted," Axelrod said.

He acknowledged the deal includes provisions "that many are aggrieved about," and that critics on both sides of the political spectrum were "howling."

"This is what compromise is about," Axelrod said, adding: "We have to move forward."

Obama has been talking with members of Congress about the compromise package to urge their support, Axelrod said. The president emphasizes that the package contains "an enormous amount of good" that "will help their constituents," he said.

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Axelrod called the Republican filibuster against limiting extended tax cuts to working-class Americans "egregious," but said it was more important now to provide certainty on tax bills and unemployment benefits in the face of a still-recovering economy.

Obama, who campaigned against extended tax cuts for the wealthy, still opposes that policy, but he needed to ensure that tax rates for working-class Americans stays the same next year, Axelrod said.

In addition, he said, the extended unemployment benefits, payroll tax holiday and extensions of other tax breaks represented major concessions from Republicans.

The Congressional Budget Office said last week that the tax deal would add $893 billion to the federal deficit over the next five years. The bulk of the deficit increase comes from loss of revenue -- $756 billion.

According to the non-partisan CBO, the 13-month extension of unemployment benefits adds less than $57 billion to the deficit. The highest-priced item is the extension of the Bush-era tax cuts, which will add more than $400 billion to the deficit, followed by the payroll tax holiday at about $225 billion.

CNN's Tom Cohen contributed to this story.