President Obama is holding a press conference in moments, amid signs that his deal with Republicans on the Bush tax cuts is falling apart. Joe Biden visited the Hill to try and save the policy, but Democrats and allies from across the political spectrum are opposed. Mary Landrieu, of all people, called the deal “almost morally corrupt” and termed it “the Obama-McConnell plan.” The Congressional Progressive Caucus want a “no strings attached” policy with UI and the tax cuts on the first $250,000 of income extended. The AFL-CIO just released a strongly worded denunciation opposing the policy. This is from President Richard Trumka:

The tax cut deal rewards Republican obstructionism by giving the wealthy the tax breaks they demanded. It throws away precious resources needed for investments in jobs and our economy on upper income tax cuts that will do very little to propel economic growth—setting up excuses for the deficit hypocrites to argue for even more cuts to programs serving working families. It lards the tax cuts for the top 2 percent with an indefensible cut in the estate tax – giving yet another bonus to the super-rich. Taken together, this package locks in the growing income inequality that has plagued our country for at least another two years – and quite possibly much longer.

It is unconscionable that the price of support for struggling middle class families and workers who have been unable to find jobs for months and months and months is yet more giveaways for our country’s wealthiest families. Millions of jobless workers have lived in fear for months while Senate Republicans had the gall to use their hardships as political leverage for the benefit of the rich.

The gains for the middle class and jobless workers in the deal come at too high a price.

Democrats are simply unwilling to give up at the moment on letting the high-end tax cuts expire, regardless of the modest gains that could come from the other elements of the deal. It is in this environment that Obama will speak in a few minutes.

…The National Journal reports that the Senate will move first on any bill.

…OK, this has begun. Obama: My top priority is to do what’s right for the American people, jobs and growth. Can’t let people see paychecks shrink on January 1 because of political games in Washington. I’m keeping the promise made in the campaign (!) that taxes wouldn’t go up for middle-class families. Because of temporary extension of high-end tax cuts, which I oppose, this includes tax cuts from stimulus – tuition tax credit, business investment tax credit, payroll tax cut in 2011. This isn’t an abstract debate. This is real money for real people. Will make a real difference in job creation and economic growth. Good deal for the American people. Some wanted a protracted political fight, even with tax cuts expiring. I understand the desire for a fight. I’ve been opposed to high-end tax cuts for years. I will fight the high-end tax cuts in two years. We’ll keep having this battle. But I’m not here to play games with American people or the economy.

Long political fight may be good politics but bad deal for American people. Taking questions…

Ben Feller: You’ve always said you’re opposed to high-end tax cuts. But why should American people believe that you will let them go later?

Obama: This isn’t politics of the moment. We can’t get my preferred option through Senate. If we do nothing, on January 1 the average family would see taxes go up $3,000. And 2 million would see their unemployment insurance go. I could keep fighting, and next year there will be more Republicans in the Senate, and as a consequence 2 million people won’t be able to pay their bills, and middle-class people will have a tax increase, or I’ll secure the UI and middle-class tax cuts and continue to fight and make the point that the Republican position is wrong. American people already agree with me. Polls show now that it’s a bad idea to give tax cuts for the wealthy. I have not been able to budge Republicans. There are a whole bunch of people being hurt and the economy will be damaged. If I have to choose between political battle and hurting those folks, or helping these people and fighting this over next two years, I’ll choose the latter.

Question: Will this lower unemployment by 2012?

Obama: This is not as significant a boost to the recovery as the Recovery Act. We were close to a Depression. That’s behind us now. We have the economy growing, company profits up, some job growth in private sector, but not growing fast enough to drive down unemployment rate. This package provides an additional boost, more significant than forecasters expected. Some suggested we may see faster growth and job growth because of this package. Unemployment insurance probably has biggest impact. Payroll tax cut will help. That is the main criteria by which I made this decision. I speak especially to my fellow Democrats now: the most important jobs program is a growing economy. Biggest anti-poverty program is to grow the economy. That’s why, when I look at our options, for us to have another 3-4-5 months of uncertainty, that would have a direct impact on unemployed and working families seeing smaller paychecks. In terms of macroeconomics, that also would have been damaging.

Obama: On GOP side, this is their holy grail. Their central economic doctrine. Unless we had 60 in the Senate it would be hard to move forward. I would like to have seen a vote before the election, to crystallize the difference between the parties. I think Democrats have better ideas. American people agree. But I haven’t persuaded Mitch McConnell and JOhn Boehner. So I have to look at the best thing to do given that reality.

Question: Will unemployment rate go down?

Obama: My expectation is that the unemployment rate will go down. How fast? A lot of economists struggling with that question. I’m not making a prediction. This package will help strengthen the recovery.

Chuck Todd: Dems say you’re rewarding Republican obstruction. Why should they?

Obama: I thought middle class tax cuts were held hostage. It’s tempting not to negotiate with hostage takers. Unless the hostage gets harmed. I was not willing to see the American people get harmed. This is not abstract. Taxes would go up for middle class families. Unemployed would see their insurance run out. I could have enjoyed the battle with Republicans over the next month or two. I have not failed to persuade the American people. Polls on our side. Problem is that Republicans feel this is the most important thing that they have to fight for as a party. And they have a stronger position next year than they do currently, with bigger numbers. If the deal was a permanent tax break in exchange for these short-term things, that would have been unacceptable. That would have been a $700 billion hole in the deficit. This deal makes the high-end tax cuts temporary. That gives us the time to have this political battle.

Chuck Todd: Are you telegraphing how to have Republicans beat you? They stand strong and they win?

Obama: I don’t think so. This is a unique circumstance. Tens of millions would be immediately damaged. Last two years, I was being called too stubborn. I don’t make judgments based on conventional wisdom. I do what’s right for the country. I will be happy to see Republicans test whether or not I’m itching for a fight on a range of issues. They’ll see that I am. I just don’t want to see American public hurt. And they’re giving up a lot too. Earned Income tax credit, child tax credit, tuition tax credit, they’re opposed to that. I want to have that battle. But don’t harm the American people.

Scott Horsely: You were willing to walk away from the Korea deal?

Obama: If we didn’t get Korea deal done by January 1, millions of people wouldn’t have lost their unemployment. But by the way, we did get a better deal done on the Korea deal supported by the auto companies and labor. I am happy to be tested over the next several months on negotiating with Republicans.

Horsely: Willing to do a broad tax reform?

Obama: I want American people in a safe place. And then we can have a broad-based discussion about the future. We’ve had two years of emergency. Situation stabilized, but for people out of work it’s an emergency. But we have to have a bigger discussion about how to win global competition. How will we have best education? How will we have best R&D? How will we have best infrastructure? And how will we pay for all of that, with all kinds of deficit problems? That will be a big debate. We have to look at what government programs help, and what doesn’t. And we have to figure out how to pay for that. I don’t think anyone thinks the tax code is fair or efficient. Can’t just borrow from China or Saudis. I don’t know how Republicans will win argument on extending high-end tax cuts, when to offset them you’d have to cut vital services. We’ll have that debate.

Question: Debt limit debate? They have a lot of leverage now. Did you try to include that in negotiations? They could say we won’t agree to debt limit unless WH agrees to deep spending cuts.

Obama: My expectation is this. Nobody, Democrat or Republican, is willing to see full faith and credit of US government collapse. That would be a bad thing. Nobody likes to vote on that. But Boehner will have responsibility to govern when sworn in as Speaker. We will have tough negotiations on budget. But we can arrive as a position that keeps government open, but is prudent when it comes to taxpayer dollars.

Jonathan Weisman: Some question your core values. What specifically are your core values. And what will be different in 2012?

Obama: In 2012, we will have had two years to discuss the budget. Republicans had the benefit of being on the sidelines and pointing fingers. Over next two years, they have to show me what they think they can do. If in fact they want to pay for $700 billion in tax breaks, that’s a lot of money. And the corresponding cuts would be painful. Either they rethink their position or they won’t do well in 2012. As to my core values, I have a bunch of lines in the sand. No permanent Bush tax cuts. No inclusion of other provisions to help grow the economy. This notion that somehow we are willing to compromise too much, reminds me of the debate during health care. This is the public option debate all over again. I get signature health care legislation, but because they didn’t get public option, that somehow that was a sign of weakness. If that’s the standard by which we’re measuring success, then let’s face it, we will get nothing done. People will have the satisfaction of a purist position, but we’ll have no victories for the American people. We can feel sanctimonious and nothing will happen. That can’t be the measure of public service, or what it means to be a Democrat. Not everybody agrees with us. I know that shocks people. NYT or WSJ editorial page does not permeate across the country. Because it’s a big diverse country, in order to get stuff done, you have to compromise. When FDR started Social Security, it was only widows and orphans. Medicare started as a small programs. Under your criteria, each of those were betrayals. This country was founded on compromise. I couldn’t go through the front door in the past. We wouldn’t have a union. We need a North Star there, what’s best for the American people. Sometimes my preferred option, I can’t get done. I have to do what I can get over the long-term. We moved in the direction that I promised. There’s not a single thing that I said I would do that I have either done, or tried to do. Let’s make sure we understand this is a long game. To REpublicans, I’m looking forward to seeing them on the field of battle.