Obama signs $858 billion tax-cut compromise into law

WASHINGTON - (AP) - President Barack Obama signed into law Fridaya massive tax package that frayed his relations with liberals,caused him to abandon a pledge not to extend tax cuts to the richand heralded a new balance of power in Washington. Dramatic both as an economic and a political accomplishment, theagreement sets the stage for Obama's new relationship withRepublicans having taken a majority in the House and narrowed theDemocracts majority in the Senate. With the benefits of the package expiring in two years, the lawalso places taxes at the center of the political debate ahead ofthe 2012 U.S. presidential elections. Displaying a new style of compromise, Obama invited Democratsand Republicans alike to the White House for the signing of thebill the will cost $858 billion over two years and that containsprovisions to address the concerns of both parties. The bill was the result of a deal hashed out just 10 daysearlier in order to avert scheduled Jan. 1 tax increases and renewjobless benefits. To strike the bargain, Obama had to set aside hisvow to extend tax cuts only for the middle class and lower wageearners and enacts an estate tax that is more generous to thewealthy than he initially sought. Failure to pass the bill would have resulted in tax hikes formost Americans as cuts approved under George W. Bush'sadministration were set to expire.

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