WASHINGTON (AP) — President Barack Obama, seeking to break Washington’s fiscal stalemate, is proposing cutting corporate tax rates in exchange for more spending on jobs programs. But his offer was immediately panned by congressional Republicans, casting doubts about its prospects.
The White House painted the new offer as a way for Washington to create jobs and generate short-term economic growth even as hopes for a grand deficit reduction deal fade. Obama was to announce his proposals Tuesday during a trip to an Amazon.com distribution center in Chattanooga, Tenn.
“We should be looking for other avenues of progress, other ‘grand bargains’ that can be for middle class job growth,” White House economist Gene Sperling said.
The president has previously insisted such business tax reform be coupled with an individual tax overhaul. His new offer drops that demand and calls only for lowering the corporate rate from 35 percent to 28 percent, with an even lower effective tax rate of 25 percent for manufacturers.
Obama wants those rate changes to be coupled with significant spending on some sort of job creation program, such as manufacturing, infrastructure or community colleges.
Congressional Republicans have also long insisted on tying corporate and individual tax reform so that small business owners who use the individual tax code would be offered cuts along with large corporations. But they oppose using the revenue generated from changes in the corporate tax structure for government spending programs.
“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, a spokesman for House Speaker John Boehner.
Senate Minority Leader Mitch McConnell, R-Ky., said Obama’s plan could hurt small businesses that file taxes as individuals. He called on the president to reconsider his proposals and consult with Congress before moving any further.
But signaling that the White House may not be in the mood to compromise further, Obama communications director Jennifer Palmieri said the new “bargain” the president is proposing, “isn’t supposed to be for the Republicans. It’s supposed to be a bargain for the middle class.”