Obama presses lawmakers to strike new deal on taxes, spending on jobs

President Obama pressed GOP lawmakers on Tuesday to strike a deal that would lower corporate tax rates in exchange for boosting spending on jobs and infrastructure programs. 

The White House cast the new plan as a “grand bargain for the middle class,” as well as a new way to ease the partisan gridlock expected to intensify this fall with battles over funding the government and raising the debt ceiling. 

{mosads}“If we’re going to break free of the same old arguments, where I propose an idea and Republicans say no just because it’s my idea, let me try offering something that serious people in both parties should be able to support,” Obama said at an Amazon.com warehouse in Chattanooga, Tenn., where he outlined his new offer: “A deal that simplifies the tax code for our businesses and creates good jobs with good wages for the middle-class folks who work at those businesses.”

GOP lawmakers, however, said the president was offering a bargain without any concessions and had essentially reneged on his past positions. 

They stressed that the White House had, until recently, said that overhauling how businesses pay taxes should not raise fresh revenues, and chided Obama for shifting to the left on one of the few areas where Democrats and Republicans have found common ground. 

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The plan, Senate Minority Leader Mitch McConnell (R-Ky.) insisted, was “an unmistakable signal that the president has backed away from his campaign-era promise to corporate America that tax reform would be revenue-neutral to them.”

GOP senators and aides also said the new White House plan raises serious questions about the chances for tax reform — especially after Senate Majority Leader Harry Reid (D-Nev.) had already said last week that the $975 billion in additional revenues included in the Senate budget should be the starting point for tax reform negotiations.

“Sometimes it just seems that this administration never misses an opportunity to miss an opportunity to grow this economy,” Sen. Pat Toomey (R-Pa.) told reporters on Tuesday. 

“This is part of the reason we have the slowest economic recovery since the Great Depression,” Toomey added. “We don’t need more tax increases.” 

Obama’s new plan recycles several of his previous proposals on corporate tax reform. 

The White House plan to lower the corporate tax rate from 35 percent — among the highest in the developed world — to 28 percent was first rolled out by Treasury in 2012, as was the idea of pushing the effective rate to 25 percent for manufacturers. 

The White House is also proposing to allow small businesses to write off as much as $1 million in investments, and calling on Congress to sign off on new infrastructure spending, aid to community colleges and investment in manufacturing hubs.

To pay for the new spending, Obama proposed a one-time “transition fee” on the hundreds of billions of dollars that companies are currently holding or earning overseas.

“The point is, if Washington spent as much time and energy these past two years figuring out how to grow the economy and the middle class as it spent manufacturing crises in pursuit of a cut-at-all-costs approach to deficits, we’d be much better off,” Obama said in Chattanooga.

The White House did not detail exactly how the one-time transition fee would be structured, or how much new spending it sought. House Ways and Means Committee Chairman Dave Camp (R-Mich.) has proposed a tax on offshore income as part of a plan to shift to a tax system that shields most of the income that corporations keep abroad from U.S. taxation.

Obama’s new plan focuses on several areas — such as simplifying the tax code, infrastructure, jobs and education — that are popular with voters, at least in the abstract. 

But Republicans, who have long said that the individual and corporate tax systems needed to be rewritten at the same time, didn’t sound worried that opposing the president’s plan would cause them trouble politically. 

“We’ll listen to what he has to say. I don’t think anybody is throwing anything out entirely,” said Sen. John Thune (R-S.D.). “But there are a couple of principles that are pretty important to most of our members.”

Those principles, Thune said, included revenue-neutrality and not picking winners and losers within the business community. GOP lawmakers and officials added Tuesday that the new White House proposal proved once more that Republicans were the party in the corner of small businesses. 

Many small businesses — so-called pass-throughs — pay taxes through the individual code, Republicans stressed, and would be left behind in a corporate-only reform. Republicans have also said that the White House’s decision to delay the employer mandate, a crucial part of the president’s healthcare reform law, was another case of Democrats picking big business over small. 

Finance Committee Chairman Max Baucus (D-Mont.) has pressed — along with Camp — for a comprehensive revamp of the tax code. 

The two chairmen reiterated that stance in a joint statement on Tuesday, even as Baucus stressed that Obama’s public endorsement of tax reform was a key step forward. Other Republicans, meanwhile, suggested that Obama, Reid and top Democrats were merely undercutting Baucus. 

“The chairman has done his level best to get us moving ahead on tax reform,” Sen. Orrin Hatch (Utah), the top Republican on the Finance panel, told reporters. “And, then, the president comes on and says we’re going to give big corporations … plenty of benefits and forgets the 80 percent of companies that are pass-through companies.”

Obama’s new proposal comes as Washington is bracing for a pair of upcoming budget battles, with the Treasury Department projecting that the debt ceiling will likely need to be raised in the fall. 

The federal government will shut down on Oct. 1 if Congress fails to pass a funding bill. But more than a dozen Republicans in the Senate have said they will block a continuing resolution to fund the government if it includes money for the healthcare law.

With all that in mind — and with many in his own party pessimistic about the chances for tax reform — Sen. Rob Portman (R-Ohio) said it was way too early to give up hope for a comprehensive solution.

“I’m still positive. I think you have to be,” Portman said Tuesday. “It’s one of the few areas where I see, at least in private discussions, a building consensus.”

— Published at 6:01 p.m. and updated at 9:02 p.m.