In attempts to break the fiscal stalemate lingering in Washington, D.C., U.S. President Barack Obama claims he's ready to do some serious "grand bargaining"...
The president presented his so-called grand bargain plan Tuesday during a trip to an Amazon.com Inc. (Nasdaq: AMZN) distribution center in Chattanooga, TN. The controversial proposal includes cutting the corporate tax rate, long-favored by congressional Republicans, in exchange for stepped-up spending on jobs programs.
"I've come here to offer a framework that might help break through the political logjam in Washington and get some of these proven ideas moving," President Obama said.
The GOP, unmoved, immediately slammed the suggestions and cast doubts about the plan's prospects.
And the "grand bargain" turns into just another speech...
Not in the "Grand Bargain" Kinda Mood
The Obama administration is peddling the offer as a way for Capitol Hill to create jobs and spawn short-term economic growth as hopes for a sweeping deficit reduction deal diminishes.
Even before President Obama's speech, House Republicans were critical of the pitch. Afterwards, some were just laughing at the plan.
For what's supposed to be a compromise, the grand bargain supports a lot of the president's goals.
That's why The Wall Street Journal called it "Obama's 'Grand Bargain' With Obama."
"Republicans want to help families and small business, too," said Michael Steel, House Speaker John Boehner's spokesperson. "This proposal allows President Obama to support President Obama's position on taxes and President Obama's position on spending, while leaving small businesses and American families behind."
House Republican Speaker John Boehner's office even accused the White House of blindsiding lawmakers with the proposal.
The White House countered by saying senior officials attempted on Tuesday to brief Boehner's staff about the offer, but said phone calls went unanswered until Wednesday morning - after the media already had the details.
What is Obama's Grand Bargain, Anyway?
Team Obama maintains the president is not throwing in the towel on a big deficit reduction package. But with no agreement forthcoming, the president is offering a fresh strategy in attempts to make good on his 2012 re-election campaign pledges to help the middle class...
"We should be looking for others avenues of progress, other 'grand bargains' that can be for middle class job growth," White House economist Gene Sperling said in a statement.
Previously, President Obama upheld such business tax reform be coupled with an individual tax overhaul. The new offer drops that demand and calls only for lowering the corporate rate to 28% from 35%. Moreover, manufacturers benefit further with a proposed lower effective tax rate of 25%.
In exchange, the president wants significant spending on job creation platforms. Suggested programs are in manufacturing, infrastructure and community colleges. He didn't name a dollar amount, but in this year's State of the Union address, Obama suggested spending $50 billion to put Americans to work repairing roads, bridges and other construction-type jobs.
"If we don't make these investments and reforms, we might as well throw up the white flag while the rest of the world forges ahead on a global economy," the president said. "And that does nothing to help the middle class."
Officials said the money to pay for the jobs creation would come from a one-time revenue boost from altering depreciation rules or implementing a one-time fee on overseas earnings.
Let's Talk About Corporate Tax Rates
Republican lawmakers have long insisted on linking corporate and individual tax reform. The advantage is that small business owners who use the individual tax code would be offered cuts along with large corporations.
While the GOP is eager for changes to the current structure (last year when President Obama debuted the corporate tax plan Republicans lobbied for steeper business cuts and called for a 25% corporate tax rate) they are not prepared to accept the president's olive branch.
"We've heard that song before," said Sen. John McCain (R-AZ). "Everything should be negotiated, but certainly I'm not in support of it."
The United States has one of the highest corporate tax rates in the world. However, scores of businesses avoid the bulk of the tax bill by taking advantage of myriad deductions, credits and exemptions that President Obama aims to eliminate.
The president is vying to do away with corporate tax benefits like oil and natural gas subsidies, special breaks for the purchase of private jets and certain corporate tax shelters. Additionally, President Obama wants to enforce a minimum tax on foreign earnings, a move vehemently opposed by multinationals and deemed the prickliest provision in the president's plan.
Suggesting the White House isn't likely to negotiate further, President Obama's communication director Jennifer Palmieri said the new "bargain" the president is proposing "isn't supposed to be for the Republicans. It's supposed to be for the middle class."
Speaking of bargains... have you heard about Ben Bernanke's deal with the devil? You should - he sold you out, too. And now if you aren't prepared, your financial future will come crashing down very soon... get informed here.
Related Articles:
- Associated Press:
Obama proposes grand bargain for jobs
- MSNBC:
Obama's grand bargain
Credit: Money Morning - Only the News You Can Profit From http://feeds.moneymorning.com/~r/moneymorning/jOLe/~3/ZTbZEdiBbPI/
