Psst: Obama's "New Grand Bargain" is None of the Above

Posted: Jul 30, 2013 3:45 PM

The news media has been breathlessly reporting on the president's forthcoming "grand bargain" proposal, which he says will create jobs. Reuters sketches out an outline of Obama's supposed compromise:

Obama wants to cut the corporate tax rate of 35 percent down to 28 percent and give manufacturers a preferred rate of 25 percent. He also wants a minimum tax on foreign earnings as a tool against corporate tax evasion and increased use of tax havens. The new twist is that in exchange for his support for a corporate tax reduction, he wants money generated by the tax overhaul to be used on a mix of proposals such as funding infrastructure projects like repairing roads and bridges, improving education at community colleges, and promoting manufacturing, senior administration officials said.  Obama's proposal would generate a one-time source of revenue, for example, by reforming depreciation or putting a fee on accumulated foreign earnings.

In what conceivable way is Obama requesting more federal spending on infrastructure projects a "new twist"?   That's been his expensive instinct at every single step of his presidency.  One "shovel ready" stimulus package and $825 billion later, the U-3 unemployment rate is still mired at 7.6 percent; the broader U-6 number is stuck in the 14-15 percent range.  Obama inherited an unemployment rate (U-3) of 7.8 percent.  In return for agreeing to Obama policies like rapacious spending and new taxes on foreign earnings, Republicans will receive a corporate tax rate cut -- which is already a stated Obama policy preference.  Flashback to last February:

The proposal calls for lowering the overall corporate tax rate from 35% to 28%, and the effective rate for manufacturing to 25%. The official, who laid out the plan's broad framework for CNN, said the proposal is essential to fixing a system that is "uncompetitive, unfair, and inefficient." The official told CNN the lower rate would be largely funded by eliminating dozens of tax loopholes and subsidies, and broadening the business tax base...

[The plan] explicitly ignores a recommendation of Obama's jobs council, which suggested exempting foreign income from taxation if repatriated to the US.  Obama not only dismissed this idea, he did the opposite, introducing a new minimum US tax on international corporations' foreign earnings.

See?  White House officials really weren't kidding when they told reporters that Obama's latest jobs tour would feature zero new ideas.   The president's big "bargain" asks Republicans to accept one controversial Obama idea in exchange for another, less controversial Obama idea.  What a deal.  Last time around, the price Republicans were importuned to pay in order to secure corporate tax rate cuts was to drop opposition to tax hikes on "the rich."  Obama eventually secured the latter as part of the fiscal cliff deal, so why tie corporate tax reform to another big government demand now?  Shouldn't Obama be eager to embrace one of his own policies, which was recommended by both his (ignored) fiscal commission and (disbanded) job council?  Republicans won't go along with the "new minimum tax" nonsense, but there's bipartisan agreement that America's corporate tax rate -- the highest in the developed world -- should be lowered.  Holding that good idea hostage to yet more wasteful spending within another doomed "jobs" program is destructive.  Not that any of this matters anyway.  Here's how seriously both sides are taking the president's new public relations gambit (Brendan Buck is Boehner's spokesman):

You didn't call us!  Did too!  Sigh.  The Washington Post flatly predicts the deal is "not going anywhere."  But that won't stop Obama from talking about it ad nauseam in tedious, predictable speeches.  In advance of one such effort in Chattanooga, Tennessee today, a local newspaper welcomed the president with a blistering editorial entitled, "take your jobs plan and shove it:"

President Obama, Welcome to Chattanooga, one of hundreds of cities throughout this great nation struggling to succeed in spite of your foolish policies that limit job creation, stifle economic growth and suffocate the entrepreneurial spirit. Forgive us if you are not greeted with the same level of Southern hospitality that our area usually bestows on its distinguished guests. You see, we understand you are in town to share your umpteenth different job creation plan during your time in office. If it works as well as your other job creation programs, then thanks, but no thanks. We’d prefer you keep it to yourself.

Parting thought: Obama is still twiddling his thumbs over a widely-supported, non-imaginary jobs plan that would create tens of thousands of American jobs at no cost to taxpayers.  The administration has endlessly intoned that the country "can't wait" to throw more public money at infrastructure projects.  Obama can, however, place an indefinite hold on a huge, privately-funded infrastructure project.  Job-seekers would benefit if he stopped blocking the Keystone pipeline, and the hysterical objections to which have been studied for years and addressed.  Republicans shouldn't even consider any "deal" until the president drops his ideological obstruction of this project.