Can someone explain why Obama has to give in on tax cuts for millionaires?

I just read that the White House has hinted it is willing to allow the Bush tax cuts to extend (temporarily, ha ha) for all Americans.  In other words, Obama's going to let millionaires have a tax cut while the budget is deep in the red. 

Why is this dumb?

1. President Obama is supposedly the Democrat.  Democrats are supposed to favor the middle class, not the wealthy.
2. The President and Democrats still control Congress until January.  Why not extend the middle class tax cuts and let the wealthy ones expire?  When the Republicans come back in January and try to re-up for millionaires, they'll have to find offsetting spending cuts.  Good luck!
3. The middle-class only extension is the most popular strategy, according to polls. 
4. Obama's swallowed the Republican line about the deficit, hook, line and sinker.  So why not tell them we can't afford big tax cuts when the budget is in the red?  Helloooo!