WASHINGTON -- President Obama on Tuesday plans to propose a new “grand bargain” that would couple an overhaul of the corporate tax code with investments in road and other construction projects around the country.
In a speech in Chattanooga, Tenn., Obama will suggest a new route through the current congressional gridlock that he believes would spur job creation and boost the economic recovery, aides say.
Congressional Republicans gave the idea a chilly reception.
The unveiling of the new proposal marks the end of the old “grand bargain” talks between Obama and the Republicans, which were aimed at reducing the government's long-term deficit by combining lower spending on Medicare and Social Security with some tax increases. Those talks dragged on for months but failed to produce a plan both sides could support.
Obama aides never declared those talks dead but haven't pushed them for months. In the meantime, the deficit has come down rapidly -- too quickly many economists say -- because of an improving economy, higher taxes and spending cuts, including the across-the-board sequester that took effect earlier this year.
Now the White House is declaring its intent to move down a different road. Aides bill the announcement as the first of several new ideas Obama will unveil in preparation for budget negotiations this fall.
In advance of Tuesday’s speech, advisors did not say how much money Obama wants to see dedicated to infrastructure projects. In his State of the Union address earlier this year, the president named a $50-billion figure for improving roads and bridges and other construction projects -- all aimed at putting Americans to work.
But even with the dimensions of the new plan unknown, the idea landed with a thud on Capitol Hill as word spread Tuesday morning.
House Republicans have long opposed a tax overhaul that changes the code for corporations but not for individuals. Owners of small businesses who use the individual tax code would be at a disadvantage if only the corporate tax rate were cut, they say.
The GOP has also insisted that corporate tax reform be “revenue neutral,” not raising money for job creation or any other goal, said Brendan Buck, press secretary for House Speaker John A. Boehner (R-Ohio).
“After offering us two things he knows we oppose, the president is asking for additional stimulus spending which, as you know, we also oppose,” Buck said in an email on Tuesday.
“So the president is taking his idea of tax reform, making it worse, and then demanding ransom of more stimulus spending to get it.”
“Some bargain,” he said.
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