I think the administration and its allies in Congress are misplaying this (again). They don't seem to understand how to take a stand and turn the political argument in their favor:
White House Gives In On Bush Tax Cuts: President Barack Obama's top adviser suggested to The Huffington Post late Wednesday that the administration is ready to accept an across-the-board continuation of steep Bush-era tax cuts, including those for the wealthiest taxpayers.
That appears to be the only way, said David Axelrod, that middle-class taxpayers can keep their tax cuts... "We have to deal with the world as we find it," Axelrod said... "The world of what it takes to get this done."
"There are concerns," he added, that Congress will continue to kick the can down the road in the future by passing temporary extensions for the wealthy time and time again. "But I don't want to trade away security for the middle class in order to make that point." ...
Also dealing "with the world as we find it," Axelrod declined repeatedly to comment on any of the controversial debt-reduction measures suggested by the chairs of the president's own commission -- even those, such as raising the Social Security retirement age, that go against Obama campaign pledges and strike at the heart of Democratic constituencies.
He said that the White House would wait until the commission made its final recommendations on Dec. 1 before adding, "the president's commitments haven't changed."...
Obama made it seem as though this is an issue where he won't compromise, but instead of holding the line and hammering Republicans day in and day out to make it clear who is standing in the way of extending middle class tax cuts, he caves. Why should we trust the administration to negotiate on issues such as Social Security when it can't even win this political battle? When Axelrod says "the president's commitments haven't changed," shouldn't he add "though we have to deal with the world as we find it"? Saying the president's commitments haven't changed yet is not a promise they won't change in the future, and Obama's history suggests they very well might.