WASHINGTON - President Obama on Tuesday offered what he billed as a new "grand bargain" proposal that would combine a cut in corporate tax rates sought by many Republicans with a jobs-creating program that would spend more money on roads and bridges around the country.
"If we're going to give businesses a better deal, we're also going to give workers a better deal, too," Obama said, speaking at a warehouse in Chattanooga, Tenn. "I'm willing to work with Republicans on reforming our corporate tax code, 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."
Republican leaders scoffed at the idea immediately, saying it offers them no concession at all. The GOP position has been that money generated by tax reform should be rolled back into the system to further lower tax rates. They have opposed any reform plan that would add to spending.
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White House officials, however, have suggested they think the new idea might appeal to at least some moderate Republicans in the Senate, although they have less hope in the Republican-controlled House.
In unveiling the strategy at an Amazon distribution center, Obama tacitly acknowledged what lawmakers have assumed for months - that the old "grand bargain" talks are dead. Those negotiations, aimed at reducing the long-term deficit by combining lower spending on Medicare and Social Security with tax increases, dragged on for months but failed to produce a plan both sides could support.
The White House has always said that the deal offered in those talks remains on the table, but hasn't pushed the idea for many months. The motivation to pursue those talks has declined because the deficit has come down rapidly - too quickly, many economists say - as a result of an improving economy, higher taxes and spending cuts, including the across-the-board sequester that took effect earlier this year.
Now, Obama is making clear his intent to try moving in a different direction, starting with the newly refurbished grand bargain. Aides say Tuesday's announcement is the first of several new ideas Obama will roll out as he prepares for budget negotiations this fall.
The White House and Congress face two major deadlines in coming months: The government's authorization to spend money on many programs will expire at the end of September unless Congress passes the annual appropriations bills before then, which seems unlikely. Later in the fall, the government will once again pass its debt ceiling.
Under Obama's plan, the top corporate rate would be cut from 35 percent to 28 percent for most businesses. Manufacturers would get a preferred rate of 25 percent.
As part of the deal, the government could levy a one-time fee on earnings that multinational corporations have kept overseas. That would generate billions of dollars in revenue, but only for a limited period. Obama's proposal could take some of that money and use it to fund infrastructure projects, White House economic adviser Gene Sperling said.
Obama did not say Tuesday how much he wants. But in his State of the Union address earlier this year, the president named a $50 billion figure, with $40 billion aimed at the highways, bridges, transit systems and airports in the most urgent need of repair.
