President Obama’s first attempt at a “Grand Bargain” was, from a progressive perspective, a genuinely horrible idea. The proposal, which was tilted heavily in Republicans’ favor, trading some new tax revenue for massive entitlement cuts. Fortunately for liberals, House Majority Leader Eric Cantor (R-Va.) said any plan that calls for any GOP concessions must be rejected.
The White House tried again with another offer on a big deficit-reduction package earlier this year, with the president prepared to accept Medicare reforms and even “chained CPI” in Social Security in exchange for Republican concessions on taxes. Again, the GOP wasn’t interested.
With this in mind, as Obama brings a new offer to the table, it’s probably best to keep expectations in check.
President Obama, in a bid to break a stalemate with the Republican-controlled House, will announce Tuesday that he will agree to cut corporate tax rates in return for a commitment from Republicans to invest in middle-class jobs.
Using a cavernous Amazon distribution center in Chattanooga, Tenn., as his backdrop, Mr. Obama will describe a “grand bargain” on jobs that White House officials say will stimulate the economy, as well as give businesses the lower tax rates they have long sought. It will be the first new proposal of his economic offensive.
As regular readers may recall, the president has discussed corporate tax reforms before. The problem with the status quo is that it doesn’t work especially well — the corporate tax rate is 35%, but thanks to a series of loopholes and tax giveaways, plenty of corporations pay a rate much lower than that (and some end up paying nothing at all). The resulting structure is a mess that features high rates, but low revenue.
But Obama’s previous interest in corporate tax reforms were a little different than this new pitch — the administration has previously talked about tying lower corporate rates to a larger package of systemic reforms, but today the president is proposing a different kind of offer. Republicans can get the lower corporate rates they want, while Democrats get the investments in job creation they want.
The private sector will likely find this offer especially appealing, since it would benefit on both ends — corporations would get a tax break plus the benefit of investments in infrastructure and domestic manufacturing.
But congressional Republicans, true to form, are already denouncing the offer.
But Republicans were quick to dismiss the proposal, saying it was less a “bargain” than an effort to extract a major new fiscal stimulus program while offering a cut in corporate taxes that was designed to raise billions of dollars in additional revenue. “It’s the opposite of a concession,” said Brendan Buck, a spokesman for House Speaker John A. Boehner. The Speaker’s office added that they don’t want more investments in job creation; they want more tax breaks. Of course, if recent trends are any indication, the White House no longer cares what Boehner’s office is whining about on any given day. Rather, Obama apparently thinks the real action is in the Senate, where he thinks he can strike governing deals with Sen. John McCain (R-Ariz.) and his allies, that, at least in theory, isolate the House GOP and pressure the far-right House majority to do something. So, the salient question isn’t how quickly the Speaker turns down yet another compromise offer, but rather, what compromise-minded Senate Republicans think of Obama’s proposed deal.
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