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Obama Offers to Cut Corporate Tax Rate as Part of Jobs Deal Obama Proposes Deal Over Taxes and Jobs
(about 5 hours later)
CHATTANOOGA, Tenn. — President Obama, seeking to break a stalemate with Republicans, announced 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. CHATTANOOGA, Tenn. — President Obama came to a cavernous Amazon distribution center here Tuesday and backed a cut in 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, Mr. 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. The proposal, an effort to break a stalemate with Republicans over budget policy, comes as Mr. Obama and his Congressional opposition are headed toward a showdown in the fall over taxes and spending.
“If folks in Washington really want a ‘grand bargain,’ how about a grand bargain for middle-class jobs?” Mr. 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.” With a sea of cardboard boxes serving as a backdrop, Mr. 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.
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. “If folks in Washington really want a ‘grand bargain,’ how about a grand bargain for middle-class jobs?” Mr. Obama told a crowd of 2,000. “If we’re going to give businesses a better deal,” he added, “we’re going to give workers a better deal, too.”
But only the packaging was new.Mr. 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. It was the president’s first concrete proposal in an economic offensive that he inaugurated last week in Illinois to set his terms for coming budget battles with the Republican-controlled House.
The terms of Mr. 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. But only the packaging was new. The president essentially cobbled together two existing initiatives that have been stalled in Congress: corporate tax changes and his plan to create jobs through education, training, and public works projects.
While Mr. 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. Mr. Obama outlined the terms of his tax plan in early 2012 during the presidential election, when he said the corporate tax rate would be reduced to 28 percent, from 35 percent, with a lower rate of 25 percent for manufacturing firms.
“It’s the opposite of a concession,” said Brendan Buck, a spokesman for House Speaker John A. Boehner. While the president presented the proposal as a concession, Republicans dismissed it more acidly than usual. “It’s the opposite of a concession,” said Brendan Buck, a spokesman for Speaker John A. Boehner of Ohio.
For two years, Republicans have rejected most of Mr. 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. In the Republicans’ view, Mr. Obama’s offer was less of a “grand bargain” than an effort to extract a new fiscal stimulus program with money from a corporate tax cut that would end up, for accounting reasons, initially generating billions of dollars of revenue for the government.
The White House did not disclose the size of the jobs program, but in his last State of the Union address, Mr. Obama promoted a $50 billion plan to put people to work repairing roads and bridges. Administration officials said that the proposal, like past tax overhauls, would raise additional revenue on a one-time basis that could offset new spending. That money, the officials said, could be used to finance the investment in jobs.
White House officials said Mr. 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. The revenue would result during the transition to a revised code — for example, as companies choose to pay taxes that they might otherwise have deferred to later years, because they judge the coming changes less advantageous in some respects.
Republicans, however, have shunned any tax reform that is not “revenue neutral,” meaning it does not add or subtract to the federal budget deficit. They insisted on Tuesday that Mr. Obama had made a similar pledge last March. For two years, Republicans have rejected most of Mr. Obama’s initiatives to create jobs, in part because, to avoid increasing the budget deficit, he has paired those ideas with proposals to repeal or reduce tax breaks for wealthy individuals and corporations, especially oil companies.
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. By presenting the tax-rate cut as a stand-alone proposal, the White House hoped to make it more appealing to Republicans — or, failing that, to depict them as obstructionists. Both Republicans and the administration have said that an overhaul of the corporate code should be “revenue neutral,” meaning it does not add to or subtract from the annual budget deficit.
Those funds, the officials said, could be used to finance the investment in jobs. Longer-term, they insisted, Mr. Obama still supported tax reform that would be revenue-neutral. The White House and Republicans also clashed over Mr. Obama’s contention that he was making a concession by calling for an overhaul of the corporate tax code separate from one for individual taxes. In truth, analysts said, both the White House and Republicans have been increasingly open to separating the two, although neither likes to advertise it.
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 American businesses. However, numerous tax breaks unique to the United States allow many corporations to significantly reduce or even wipe out their tax liabilities. In February 2012, Timothy F. Geithner, then the Treasury secretary, said the administration’s plan was devised so that the corporate tax code could be overhauled separately.
The White House and Republicans also clashed over Mr. Obama’s contention that decoupling corporate and individual taxes was a concession. Mr. Buck said Republicans have long sought to link the two, in part because so many small businesses are taxes as individuals. Even the White House’s rollout of Mr. Obama’s proposal in Chattanooga became an excuse for finger-pointing. White House officials said they briefed Democratic and Republican lawmakers on Monday evening and tried to reach out to Mr. Boehner’s aides. But Mr. Buck said the Republican leadership learned of the initiative from the news media.
In truth, say analysts, both the White House and the Republicans have been increasingly open to separating the two, though neither likes to advertise it. In 2012 Mr. Geithner said the corporate tax plan that Treasury had worked on for two years was designed so that one could cut corporate taxes alone. The choice of Amazon was meant to illustrate Mr. Obama’s theme of a job revival in America. The company recently announced plans to hire 5,000 more workers at 17 fulfillment centers, 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.
Even the White House’s rollout became an excuse for finger-pointing. The White House spokesman, Jay Carney, said administration officials briefed Democratic and Republican lawmakers on Monday evening. But Mr. Buck said the Republican leadership learned of the initiative from the news media.
Many of the lines in Mr. Obama’s speech echoed his remarks in Illinois last week, giving it the cadence of a campaign speech with the fulsome detail of a State of the Union address.
Mr. Obama also delivered a veiled dig at the Keystone XL pipeline. While he did not name it, he said a certain “oil pipeline” would generate only 50 permanent jobs in the United States. The State Department has not yet decided whether to approve it, and Mr. Obama has sounded increasingly skeptical.
The choice of Amazon was meant to illustrate Mr. Obama’s theme of a job revival in the United States. The company recently announced 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.
On his tour of the plant, Mr. Obama stopped at stations where workers were sorting and packing bottles of Metamucil and bags of pistachio nuts. “I’ve got a bunch of orders in there,” the president said, gesturing to a bin filled with boxes.On his tour of the plant, Mr. Obama stopped at stations where workers were sorting and packing bottles of Metamucil and bags of pistachio nuts. “I’ve got a bunch of orders in there,” the president said, gesturing to a bin filled with boxes.
Mr. 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. Mr. Obama’s appearance here also raised the hackles of independent booksellers, who blame Amazon, with its deep discounting and massive selection, for putting bookstores out of business.
The American Booksellers Association argued in a letter to Mr. Obama that Amazon’s gains have come at the expense of small businesses. “We are disheartened to see Amazon touted as a ‘jobs creator’ and its warehouse facility used as a backdrop for an important jobs speech, when, frankly, the exact opposite is true,” the American Booksellers Association said in a letter to Mr. Obama.
“We are disheartened to see Amazon touted as a ‘jobs creator’ and its warehouse facility used as a backdrop for an important jobs speech, when, frankly, the exact opposite is true,” the letter said.

Mark Landler reported from Chattanooga, and Jackie Calmes from Washington. Julie Bosman contributed reporting from New York.

Julie Bosman contributed reporting from New York.