Wednesday, July 31, 2013

 

Republicans "rip" Obama proposal to trade tax cut for more stimulus.

President Obama riled Republicans on Tuesday as he floated a jobs-policy "grand bargain" that would trade a corporate tax cut for more stimulus-style spending -- a move Republicans said was hardly a compromise.

"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," said Michael Steel, spokesman for House Speaker John Boehner.


Obama used a trip to an Amazon.com distribution center in Chattanooga, Tenn., on Tuesday to propose what aides called a "grand bargain for middle-class jobs." It is part of the president's most recent pivot back to the economy, which Obama is trying to punctuate with a series of jobs-themed speeches and visits.

"I'm just going to keep on throwing ideas out there," Obama told a crowd of supporters, challenging Republicans to offer counterproposals.

Obama long has called for a cut in corporate tax rates, but previously insisted such business tax reform be coupled with an individual tax overhaul.

He's dropping the latter demand and now says he wants the corporate tax rate cut to be coupled with a significant investment on some sort of job creation program, such as manufacturing, infrastructure or community colleges.

"I want to use some of the money that we save by closing these loopholes to create more good construction jobs," the president said.

But Republicans cast the proposal as just another avenue for more Obama-preferred spending.
Plus Senate Republican Leader Mitch McConnell suggested the move could suck the wind out of an effort by a bipartisan duo on Capitol Hill to push for broad-based tax reform this year.

McConnell, on the floor said the proposal "represents a serious blow to one of the best chances for true bipartisan action in Washington."

He called it a "rebuke" to Senate Finance Committee Chairman Max Baucus, D-Mont., who along with House Ways and Means Committee Chairman Dave Camp, R-Mich., is trying to build support nationally for a massive tax code overhaul.

Camp and Baucus, though, released a statement Tuesday afternoon saying they "welcome the president's recognition that our broken, outdated tax code is making it harder for U.S. companies to compete and American families to get ahead."  

Senior administration officials described the corporate tax proposal as the first new economic idea Obama plans to offer in the coming months, with budget deadlines looming in the fall.

Administration officials wouldn't put a price tag on the proposal or say how much would be a "significant" investment in jobs since the dollar figures would be part of negotiations with Congress.

But in an example from this year's State of the Union address, Obama proposed $50 billion to put Americans to work repairing roads and bridges and other construction jobs.

A "fact sheet" put out by the White House on Tuesday morning called for new spending on infrastructure, new efforts to leverage private funds for the same purpose, the creation of "manufacturing innovation institutes" and more funding for community colleges and training.

The officials said money to pay for the jobs creation ideas would come from a one-time revenue boost from measures such as changing depreciation rules or having a one-time fee on earnings held overseas.

"As part of his efforts to focus Washington on the middle class, today in Tennessee the president will call on Washington to work on a grand bargain focused on middle-class jobs by pairing reform of the business tax code with a significant investment in middle-class jobs," Obama senior adviser Dan Pfeiffer said.

Obama spokes at an Amazon fulfillment center in Chattanooga, one of more than a dozen warehouses operated by the world's largest online retailer, which announced Monday that it would increase hiring.

The company said it would add 7,000 new jobs, including 5,000 more at U.S. distribution centers that currently employ about 20,000 workers who pack and ship customer orders. Amazon.com Inc. has been spending heavily on order fulfillment to help its business grow.

Obama toured the packing floor of the Chattanooga warehouse, which opened in September 2011. It is one of the company's largest and newest facilities, with more than 1 million square feet -- the size of more than 28 football fields full of merchandise.

The plant was the source of tax controversy when it opened; Amazon originally was granted an indefinite waiver on collecting sales tax in a deal to bring two distribution centers to Tennessee.

The state's retailers were outraged that they were put at a competitive disadvantage, and Amazon has agreed to start collecting Tennessee sales tax next year.

The White House said Obama wasn't visiting Amazon because of the company's position on taxes, but because it's an example of a successful American business growing and creating more jobs.

Obama proposed last year to overhaul corporate taxes by lowering rates from the current 35 percent to 28 percent, with an even lower effective tax rate of 25 percent for manufacturers.

The U.S. has one of the highest corporate tax rates in the world, but many businesses avoid the full cost by taking advantage of deductions, credits and exemptions that Obama wants to eliminate.

Obama wants to do away with corporate tax benefits like oil and natural gas industry subsidies, special breaks for the purchase of private jets and certain corporate tax shelters. He also wants to impose a minimum tax on foreign earnings, a move opposed by multinational corporations and perhaps the most contentious provision in the president's plan.
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