Barack Obama to Sign Package Extending Tax Breaks for the Rich
THE GUARDIAN: Passage of bill reflects weakness of both the presidency and the Democratic party after Republican wins in November elections

Barack Obama was forced to sign the bill despite admitting that he opposed some of its provisions. Photograph: The Guardian
The US president, Barack Obama, will today sign into law measures approved by Congress extending tax cuts introduced by George Bush amid Democratic complaints that the breaks favour the rich.

Despite objections from many of Obama's fellow Democrats, the House of Representatives passed the $858bn (£548bn) package of renewed tax cuts last night. The package, which also extended benefits for the long-term unemployed for 13 months, was passed by 277 votes to 148. On Wednesday the Senate passed it by an overwhelming 83-15 margin.

Passage of the bill reflects the relative weakness of both the presidency and the Democratic party after the Republican sweep in November's congressional elections, giving them a majority in the House and big inroads into the Democratic majority in the Senate.

Obama has been forced to bend to the resurgent Republicans, his current position on taxes contrasting sharply with his stance earlier this year when he and his fellow Democrats fought against renewing tax reductions for the wealthiest Americans – those with household incomes above $250,000 – while supporting continued cuts for middle-class taxpayers. >>> Mark Tran | Friday, December 17, 2010

Barack Obama Gives Way to Republicans Over Bush Tax Cuts
THE GUARDIAN: Allies say president 'blackmailed' into extending tax cut for wealthier Americans which may cost $4tn in lost revenue

Barack Obama talks with the Republican whip Eric Cantor after a meeting with bipartisan congressional leadership. Photograph: The Guardian
Barack Obama is bowing to Republican demands to extend a deep tax cut for wealthier Americans, to the fury of some of the president's allies who say he has succumbed to "blackmail".

In a bruising political battle that appears to set the tone for Obama's dealings with the Republicans in Congress following their victories in last month's midterm elections, the president had sought to extend a tax cut for middle-class Americans introduced by the Bush administration seven years ago which expires at the end of this month. But he wanted to see a return to pre-cut rates for households with an income above $250,000 a year, on the grounds that wealthier Americans could afford to pay more. The move would generate trillions of dollars for the financially-strapped treasury over the next decade.

The Democratic leadership believed that provided the middle class was looked after, the Republicans would find it difficult to justify tax cuts for the wealthy. The House of Representatives, still controlled by Democrats until the new Congress is sworn in next month, passed Obama's plan by a clear majority last week. But Republicans blocked the legislation in the Senate at the weekend and said they would rather see everyone's taxes rise than agree to scrapping the cuts for the wealthy.

Some Democrats called on Obama to stand firm and let the Republicans carry the blame for the inevitable middle-class backlash. But leading Democrats say the president is backing down and has agreed to extend tax cuts for everyone. In return, the White House appears to have extracted an agreement to extend benefits for the long-term unemployed. >>> Chris McGreal in Washington | Tuesday, December 07, 2010