Obama offers GOP a deal to create middle class jobs

President would cut tax rates for businesses

President Obama detailed  his jobs plan to a crowd of 2,000 at an Amazon distribution center.
President Obama detailed his jobs plan to a crowd of 2,000 at an Amazon distribution center.

CHATTANOOGA, Tenn. — President Obama, seeking to break a stalemate with Republicans, said here Tuesday that he would cut corporate tax rates in return for a pledge from Republicans to invest in more programs to generate middle-class jobs.

Using a sea of cardboard boxes in a cavernous Amazon distribution center as a backdrop, Obama described a “grand bargain” for the middle class that he said would stimulate the economy while giving businesses the lower tax rates they have long sought.

“If folks in Washington really want a ‘grand bargain,’ how about a grand bargain for middle-class jobs?” Obama said to a crowd of 2,000. “If we’re going to give businesses a better deal,” he added later, “we’re going to give workers a better deal, too.”


It was the president’s first concrete proposal in an economic offensive that he inaugurated last week in Galesburg, Ill., with a speech that was meant to set his terms for a debate this fall with the Republican-controlled House over fiscal issues.

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But only the packaging was new. Obama’s speech cobbled together two existing initiatives that have been stalled in Congress: corporate tax reform and his plan to create jobs through education, training, and public works projects.

The terms of Obama’s tax plan were outlined in early 2012 by Timothy F. Geithner, his former Treasury secretary, who said the corporate tax rate would be reduced to 28 percent, from 35 percent, with a lower rate of 25 percent for manufacturing firms.

While Obama presented the proposal as a concession, Republicans dismissed it even more acidly than usual, saying it was less a grand bargain than an effort to extract a new fiscal stimulus program while offering a cut in corporate taxes that would end up raising billions of dollars in new revenue.

“It’s the opposite of a concession,” said Brendan Buck, a spokesman for House Speaker John A. Boehner.


For two years, Republicans have rejected most of Obama’s initiatives to create jobs, in part because the president, to avoid swelling the budget deficit, has paired those ideas with proposals to repeal or reduce tax breaks for wealthy individuals and corporations, especially oil companies — which Republicans steadfastly reject.

The White House did not disclose the size of the jobs program, but in his last State of the Union address, Obama promoted a $50 billion plan to put people to work repairing roads and bridges.

White House officials said Obama has previously made a cut in corporate taxes contingent on raising taxes on wealthy individuals. By presenting the corporate tax cut as a stand-alone proposal, the White House hopes to make it more palatable to Republicans.

Republicans, however, have shunned any tax reform that is not “revenue neutral,” meaning it does not add to or subtract from the federal budget deficit.

They insisted Tuesday that Obama had made a similar pledge last March.


White House officials said the proposal, because it would overhaul the tax code rather than simply cut rates, would raise revenue on a one-time basis by eliminating loopholes and imposing fees on companies with accumulated foreign earnings.

Those funds, the officials said, could be used to finance the investment in jobs. Longer-term, they insisted, Obama still supported tax reform that would be revenue neutral.

Corporations and their Republican allies have long argued, correctly, that the 35 percent corporate tax rate is among the highest in the industrialized world, and have contended that it undercuts the competitiveness of US businesses.

However, numerous tax breaks unique to the United States allow many corporations to significantly reduce or even wipe out their tax liabilities.

The choice of Amazon was meant to illustrate Obama’s theme of a job revival in the United States.

The company recently disclosed plans to hire 5,000 more workers at 17 fulfillment centers around the country, where it packs and ships customer orders.

But the White House came under fire because many Amazon jobs pay only $11 an hour, and the pace of the work in these warehouses has been described as exhausting.

Obama’s appearance here also raised the hackles of independent booksellers, who blame Amazon for driving bookstores out of business. Amazon is the nation’s biggest seller of books, and its deep discounting and massive selection has lured away many customers.

The American Booksellers Association argued in a letter to Obama that Amazon’s gains have come at the expense of small businesses.