President Obama just announced a tentative deal with Republicans on extending the sweeping tax cuts signed by President George W. Bush nearly a decade ago.

The deal extends all the tax cuts for two years, including those on upper-income Americans that Obama wanted to end. As a result, the debate over the tax cuts will have to be joined again during the 2012 presidential campaign.

Obama won a 13-month extension of unemployment insurance, a reduction in employee payroll taxes next year, and the continuation of a variety of tax credits aimed at lower- and middle-income Americans.

The payroll tax cut would save a worker with $40,000 in income $800 next year. For someone making $100,000, the tax break would be $2,000.

The payroll tax cut and unemployment insurance extension should provide at least $176 billion in economic stimulus next year, the White House said.

Republicans won a cut in the estate tax to 35% and a higher $5 million exemption on assets.

"There are things in here that I don't like," Obama said. But he said refusing to compromise would create a stalemate, which he called "a chilling prospect for the American people."

"We have arrived at a framework of a bipartisan agreement," Obama said. "For the next two years, every American family will keep their tax cuts."

The outlines of the deal emerged from the White House and Republicans in Congress after Obama met with congressional Democrats late this afternoon. Those Democrats stressed that the deal isn't final until they run it by their colleagues, probably on Tuesday.

Here are details of the emerging deal:

Extends unemployment insurance for 13 months. Two million workers in December, and 7 million over the next year, would have lost benefits otherwise.

Provides a one-year, 2 percentage point reduction in employees' Social Security payroll taxes, lowering the rate from 6.2% to 4.2%, at a cost of $120 billion.

Keeps the Earned Income Tax Credit and American Opportunity Tax Credit increases from last year's economic stimulus law, for another $40 billion in tax cuts for families and students.

Allows businesses to write off 100% of their capital purchases next year.

Sets the estate tax at 35% for two years, with a $5 million exemption on assets that's higher than last year's $3.5 million. The rate came down under Bush's policy from 55% before 2001 to 45% in 2009 before expiring this year. It was set to return at 55% next year.

Protects millions of taxpayers from seeing their taxes raised in 2010 and 2011 under the Alternative Minimum Tax.

Republicans in Congress endorsed the tentative deal. Rep. Dave Camp, R-Mich., who will chair the House Ways and Means Committee next year, said it "will allow us to extend all current tax rates and give economic recovery and job creation a chance. The failure to reach and pass an agreement preventing a tax hike would have been devastating for families, especially those who are still looking for work."

Senate Republican leader Mitch McConnell said: "I appreciate the determined efforts of the president and vice president in working with Republicans on a bipartisan plan to prevent a tax hike on any American and in creating incentives for economic growth. Their efforts reflect a growing bipartisan belief that a new direction is needed if we are to revive the economy and help put millions of Americans back to work."

Democrats weren't as effusive. Senate Democratic leader Harry Reid's office issued a curt, one-sentence statement from spokesman Jim Manley. "Now that the president has outlined his proposal, Senator Reid plans on discussing it with his caucus tomorrow," Manley said.

Obama stressed that he didn't like two elements of the deal -- the temporary extension of tax cuts for upper-income Americans, which he said would have cost $700 billion if stretched for the entire next decade, and making the estate tax exemption more generous for the same time period.

In two years, he said, "It will become apparent that we can't afford these tax cuts any longer." The White House said it expects a vigorous debate about that during the 2012 presidential election.

Obama said he favored compromise over gridlock because the latter "would have raised taxes by $3,000 for a typical American family."

While Democrats and Republicans do battle in Washington, he said, "These are not abstract fights for the families that are impacted."

(Posted by Richard Wolf)