'This Week' Transcript: Tax Deal

AXELROD: Look, Christiane, the nature of compromise is that you have to accept things that you don't like in order to get things that are very important. There are -- this is a good package for the middle class. This is a good package for the economy. In addition to extending middle-class tax cuts that were there, we're going to have a payroll tax cut, we're going to have business tax cuts that are going to spur hiring and growth in 2011.

AMANPOUR: But you also...

AXELROD: So this is an important step forward, and it would be terribly difficult if -- if it didn't.

AMANPOUR: All right. But you're also having to sell something that the president said he would never do during the campaign, tax breaks for the very wealthy, and you've seen...

AXELROD: Well, let me just correct you for a second. What the president said -- what the Republican plan was, was a permanent tax cut for the wealthy, and the president would not have accepted a permanent tax cut for the wealthy. That would have had budget implications into the future that we could not tolerate. It wouldn't have been right; it wouldn't have been fair. It would have been $700 billion that we couldn't afford, that we would have to borrow from China and other countries. He refused to do that.

This is a temporary tax cut. And this was part of a compromise that -- that includes tremendous help for families with children, for people who want to send their kids to college, the Earned Income Tax Credit, the payroll tax. This is going to mean thousands of dollars in pockets of the average American.

AMANPOUR: You say it's not going to be a permanent tax cut, but look into your crystal ball, because certainly there are economists who believe this is the first step to making it permanent. It's a two-year deal. That's going to be right in the middle of when you are going to go back and trying to get this president re-elected. Are you going to have this fight again?

AXELROD: Well, you say there are economists who say that. This is fundamentally a political issue. And in 2012, we're going to have a big debate about -- about this issue.

We do not believe that we can extend these tax cuts for the wealthy permanently, and we're going to fight very hard, and we're going to let the American people, who agree with us on this issue, have a say.

But at the same time, right now, we face a situation where everyone's taxes would go up on January 1st. I think we're going to be in a fundamentally different position in 2012. The economy will be stronger. We'll have gone through a big debate on -- on how we have to -- what we have to cut and give up. I don't think people are going to make that tradeoff in 2012.

AMANPOUR: Do you think that the Democrats in the House should have been brought in on these negotiations? They say they feel, presumably, they have been completely blindsided.

AXELROD: Well, look, these came together -- these discussions came together very quickly. They were prompted by the looming deadline. We felt a sense of urgency.

We brought them in when there was -- to begin that process. It just accelerated very quickly, and we felt that we had to seize the moment, because if we didn't, the American people would pay the price, the economy would pay the price.

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