President Barack Obama, closing in on a deal with Republicans to extend tax cuts, said on Monday he might not get "100 percent of what I want" but compromise was necessary to head off a rate increase for the middle class.

In a speech at a community college in North Carolina, Obama hinted at a possible agreement that would at least temporarily extend Bush-era tax cuts for wealthier Americans -- as Republicans want -- rather than strictly for families making less than $250,000, as he and his Democrats preferred.

"I have argued that we can't afford it right now, but what I've also said is we've got to find consensus here, because a middle-class tax hike would be very tough not only on working families but would be a drag on our economy right now," he said.

The tax cuts are due to expire at the end of the year and rates for many Americans will increase in January unless Congress takes action before it adjourns later this month.

Liberal supporters accuse Obama of being willing to compromise in the tax battle in a bid to find common ground with Republicans, who have been emboldened by big gains in the November 2 congressional elections.

New York Times columnist Paul Krugman argued in a column on Monday that Obama should simply let taxes rise for all Americans rather than agreeing to let tax cuts continue for the wealthy.

Obama cast the debate in terms of making sure the middle class did not see their taxes increase, saying the economic recovery "simply is not happening fast enough" and the challenge was to accelerate job creation and economic growth.

"We've got to make sure that we're coming up with a solution, even if it's not 100 percent of what I want or what the Republicans want," he said.

Obama is insisting that unemployment insurance be extended for those out of work as part of any tax deal, a provision on which Republicans might be willing to compromise. The two sides are debating whether the tax-cut extension should be for one, two or three years.

VISIT TO SWING STATE

White House spokesman Bill Burton said earlier on Monday that Democratic and Republican negotiators were making progress as they continued to negotiate a compromise on the tax cuts and long-term jobless aid.

"The president is confident that, within the next couple of days or so, we will find a way to extend tax cuts for middle-class families and do some other things that the president thinks are important in helping grow the economy and create jobs," Burton said.

Unemployment payments, which had already been extended by Congress for to up to 99 weeks from a traditional 26 weeks, expire this month for 2 million Americans whose benefits have now run out.

Democrats want the payments extended for another year, and also want to make tax cuts permanent for families who make less than $250,00 a year, or $200,000 for individuals.

Republicans argue tax cuts must be made permanent for everyone to avoid sapping spending while the economy is still weak. They also say Congress should have a plan to pay for the estimated $65 billion cost of extending jobless aid, in order to avoid adding to the country's high and rising debts.

Senior U.S. lawmakers said on Sunday they were optimistic about the prospect of a deal to extend the tax cuts and continue the emergency jobless aid.

In his visit to North Carolina, a swing state he won in his 2008 presidential election victory, Obama also said education and retraining for new jobs as well as innovation and infrastructure would be key to the economic recovery.

He cast the issue in terms of a "Sputnik" moment, saying the country needed the same drive to tackle its economic rebirth that it used in the 1950s and 1960s when responding to the Soviet launch of the Sputnik satellite.