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Obama Wants Upper Income Tax Cuts Ended in 2012, Jarrett Says

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Valerie Jarrett
Valerie Jarrett, senior advisor to U.S. President Barack Obama, speaks during the Women in Finance Symposium at the Treasury Department in Washington, D.C., on March 29, 2010. Photographer: Andrew Harrer/Bloomberg

Dec. 26 (Bloomberg) -- Valerie Jarrett, a senior adviser to President Barack Obama, said the administration will work over the next two years to end tax cuts for the wealthiest Americans that were included in broader tax legislation passed this month.

Obama, in a compromise with Senate Republicans, agreed to a two-year extension of tax reductions for family income above $250,000 coupled with an extension of unemployment benefits. Jarrett said the issue will come up again before the 2012 presidential elections.

“That’s something he is willing to fight for,” she said in an interview taped for broadcast on NBC’s “Meet the Press” today. “He is going to fight very hard when those two-year extensions expire” to end the breaks for top earners.

Vice President Joe Biden said on the same program last week that ending the tax cuts for the wealthy would be a goal in 2012.

Obama has said he didn’t like having to include the tax cuts for families with incomes exceeding $250,000 in the final $858 billion tax legislation and looks forward to a debate about renewing them in two years.

“I don’t think that over the long run we can afford a series of tax breaks for people who are doing very well and don’t need it,” Obama said at a press conference Dec. 23.

Robert Gibbs, the White House press secretary, said Obama made the best deal he could.

“We didn’t have the votes,” Gibbs said on CNN’s “State of the Union.” We could have fought this for a few months. We could have hoped that the polls didn’t blame everybody, as they would have, for people’s taxes going up.”

Facing Re-election

The tax legislation extends through 2012 -- when Obama faces re-election -- all reductions in tax rates on income, capital gains and dividends that were originally enacted in 2001 and 2003. It also continues expanded unemployment insurance benefits through 2011, cuts payroll taxes by 2 percentage points during 2011 and lets businesses write off 100 percent of capital investments.

The agreement prevented tax rates for all income levels from rising on Jan. 1.

The tax package was among a number of administration priorities passed in the final month of the Congressional session, including a nuclear arms-reduction treaty with Russia and an end to the policy barring gays from serving openly in the military.

“We made enormous progress,” Jarrett said. “These are all major accomplishments that were achieved on a bipartisan basis with Congress and the president, both sides of the aisle, working together.”

Jarrett said Republican gains in the November Congressional elections -- which gave the party control of the House of Representatives and narrowed the Democratic majority in the Senate -- will only require bipartisanship next year.

“They now have a responsibility to lead,” she said. “We are going to need bipartisan support to get things done.”

To contact the reporter on this story: Nicholas Johnston in Honolulu at njohnston3@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.

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