(Reuters) - Senior U.S. lawmakers said on Sunday they were optimistic about striking a deal to extend Bush-era tax cuts for all taxpayers and continue emergency jobless aid for millions of long-term unemployed Americans.

President Barack Obama and other Democratic leaders want to extend the cuts only for low- and middle-income Americans, arguing that the tax breaks for the wealthy would add $700 billion to budget deficits over the next 10 years.

Republicans, who made big gains in the Nov. 2 congressional elections, want rates unchanged for all taxpayers. They say the uncertainty over taxes discourages investment and hurts job growth as the economy recovers from the worst recession since the Great Depression.

"Most folks believe the recipe (of a deal) would include at least an extension of unemployment benefits for those who are unemployed and an extension of all of the tax rates for all Americans for some period of time," Republican Senator Jon Kyl said in an interview on CBS's "Face the Nation" program.

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