Obama: GOP threatened 'collateral damage' if wealthy didn't get tax cuts

President Barack Obama defended his tax cut compromise with Republicans at a press conference on Tuesday, saying the deal was necessary to prevent the American people from being harmed.

Asked if he was "flip flopping" on the issue of extending tax cuts for the wealthy, which he vowed to let expire, President Obama responded that "this has to do with what can we get done right now."

"We can't get my preferred option though the Senate right now," he said. "As a consequence, as of January 1st, the average family is going to see their taxes go up about $3000. At the end of this month, about 2 million people are going to lose their jobless benefits."

Budget estimates predict the tax cut extension will add over $700 billion to the national debt.

"Now if there was not collateral damage, if this was just a matter of my politics, or being able to persuade the American people to my side, then I would just stick to my guns," President Obama said. "Because the fact of the matter is, the American people already agree with me. There are polls showing right now that the American people for the most part think it's a bad idea to provide tax cuts to the wealthy."

But he said the extension of the middle class tax cuts were being held hostage by the Republican Party, whose "single most important thing they have to fight for" was tax cuts for the wealthiest Americans, which he described as the Republicans' "holy grail."

"I've said before that I felt that the middle-class tax cuts were being held hostage to the high-end tax cuts," President Obama said. "I think it's tempting not to negotiate with hostage takers -- unless the hostage gets harmed. Then, people will question the wisdom of that strategy."

"In this case, the hostage was the American people, and I was not willing to see them get harmed," he said.

President Obama agreed to extend the tax breaks for the wealthiest Americans for two years, but said he continues to oppose the tax cuts and plans to fight their extension again in two years.

As part of the tax cut compromise, Republicans agreed to extend unemployment benefits at their current level for 13 months. The deal also includes a two year extension of the Child Tax Credit, Earned Income Tax Credit, and the American Opportunity Tax Credit, which were mostly opposed by Republicans.

Last week, Republicans blocked a bill to extend unemployment benefits for nearly two million job-seeking Americans.

If no benefit extension is passed, an additional several hundred thousand unemployed workers are expected to lose their benefits every month thereafter.

Democrats have expressed anger at the president for compromising with the Republicans.

"Senate Republicans have successfully used the fragile economic security of our middle class and the hardship of millions of jobless Americans as bargaining chips to secure tax breaks for the very wealthiest among us," Sen. Tom Harkin (D-IA) said.

This video is from CNN's Newsroom, broadcast Dec. 7, 2010.

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