Obama pushes for tax change to fund infrastructure; Republicans push back

McClatchy Washington BureauJuly 30, 2013 

— President Barack Obama hadn’t yet left the White House on Tuesday to unveil his latest economic pitch when Republicans began tearing it apart.

With a “grand bargain” on taxes and spending long stalled, Obama on Tuesday offered what the White House called a new deal: cutting corporate tax rates while boosting investments in job creation.

Though Obama pitched it as a “framework that might help break through the political logjam in Washington and get some of these proven ideas moving,” it landed with a familiar thud on Capitol Hill, viewed largely as the latest gambit in the ongoing battle between Republicans and Democrats over fiscal and budget matters.

The White House offered the plan as a bid to spur jobs for the middle class. Forget it, said Republicans.

“All I can say is what he said today really doesn’t make much sense,” said Sen. Orrin Hatch of Utah, the top Republican on the tax-writing Senate Finance Committee.

Congress is scheduled to leave Friday for a recess that is to last until Sept. 9. So far, there have been no serious talks between the two parties over how to fund the federal government after Oct. 1, when the new fiscal year begins.

Without an agreement, much of the government would shut down. While few expect that to happen, this week’s political maneuvers are reminders of the deep divisions between the parties – and how difficult it will be to find common ground – at least ahead of the clock running out.

Obama’s plan would lower the corporate tax rate from 35 percent to no more than 28 percent by eliminating loopholes such as those that incentivize companies to send jobs overseas. Manufacturers would pay a rate no higher than 25 percent and Obama would use the one-time revenue for infrastructure and manufacturing innovation institutes that connect businesses, universities and federal agencies.

The plan doesn’t offer any concessions to Republicans, who want corporate tax reform coupled with individual tax reform. White House spokeswoman Jennifer Palmieri told reporters that “the bargain isn’t supposed to be for the Republicans, it’s for the middle class.”

Obama is scheduled to meet separately Wednesday with House of Representatives and Senate Democrats on Capitol Hill, but not Republicans.

“Almost every time they said ‘No’ before they got in the room, whatever the particular issue at that time was,” to Obama proposals, said House Minority Whip Steny Hoyer, D-Md. “His success in meeting with Republicans has been very low and I think he’s probably not very optimistic.”

House Speaker John Boehner’s office and White House staff did quibble over whether the speaker’s office had been alerted before Obama’s latest jobs proposal was released.

“Speaker Boehner,” Hoyer said, “has indicated that he’s not willing, not too interested in talking to the president. I’m not sure who I would talk to on the Republican side right now.”

Republicans were talking, but not necessarily to Democrats. Hours before Obama had left Washington for Chattanooga, Tenn., to pitch his plan, Republicans were lighting up social media with their objections.

Senate Republican leader Mitch McConnell of Kentucky offered pointed views on the Senate floor.

McConnell delivered a mix of sarcasm and sometimes bitter criticism. The Obama plan “doesn’t exactly qualify as news,” he said. “It’s just a further-left version of a widely panned plan he already proposed two years ago – this time, with extra goodies for tax-and-spend liberals.”

In case anyone missed the point, McConnell added, “The plan, which I just learned about last night, lacks meaningful bipartisan input, and the tax hike it includes is going to dampen any boost businesses might otherwise get to help our economy.”

Boehner’s office was just as adamant that the plan was ill-advised. “The president has always supported corporate tax reform. Republicans want to help families and small businesses, too,” said spokesman Michael Steel. “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.”

Republicans were particularly offended that the Obama plan appeared to deviate from the bipartisan effort to rewrite the tax code. Senate Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Committee Chairman Dave Camp, R-Mich., have been aggressively making an effort to examine ways to revamp the law.

Yet Tuesday they were among the most sanguine members of Congress after Obama announced his plan, issuing a joint statement that said they welcomed Obama’s “recognition that our broken, outdated tax code is making it harder for U.S. companies to compete and American families to get ahead.”

Senate Majority Leader Harry Reid, D-Nev., chastised Republicans for criticizing the proposal, saying it was “proof that Republicans judge policies by one simple sad rule: If the president wants it or proposed it, they oppose it.”

Obama made the pitch as part of a series of economic speeches he plans to deliver as part of a White House bid to focus on the economy ahead of the fall budget battle.

“I’m willing to work with Republicans on reforming our corporate tax code,” the president said, “as long as we use the money from transitioning to a simpler tax system for a significant investment in creating middle-class jobs. That’s the deal.”

Email: lclark@mcclatchydc.com; dlightman@mcclatchydc.com; Twitter: @lesleyclark; @lightmandavid

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