News

Obama to propose ‘grand bargain’ on taxes, infrastructure

Obama to propose ‘grand bargain’ on taxes, infrastructure

President Barack Obama will propose a "grand bargain for middle-class jobs." Photo: Associated Press

WASHINGTON (Reuters) – President Barack Obama will propose a “grand bargain for middle-class jobs” on Tuesday that would cut the U.S. corporate tax rate and use billions in revenues generated by a business tax overhaul to fund projects aimed at creating jobs.

His goal, to be outlined in a speech at an Amazon.com Inc facility in Chattanooga, Tennessee, is to break through congressional gridlock by trying to find a formula that satisfies both Republicans and Democrats.

Efforts to reach a bipartisan “grand bargain” on deficit reduction have been at an impasse for months. Senior administration officials say Obama is not giving up on a big deficit-cutting package, but given that no agreement appears on the horizon so far, he is offering a new idea to try to follow through on his 2012 re-election campaign promises to help the middle class.

“As part of his efforts to focus Washington on the middle class, today in Tennessee the president will call on Washington to work on a grand bargain focused on middle-class jobs by pairing reform of the business tax code with a significant investment in middle-class jobs,” Obama senior adviser Dan Pfeiffer said.

Obama wants to cut the corporate tax rate of 35 percent down to 28 percent and give manufacturers a preferred rate of 25 percent. He also wants a minimum tax on foreign earnings as a tool against corporate tax evasion and increased use of tax havens.

The new twist is that in exchange for his support for a corporate tax reduction, he wants money generated by the tax overhaul to be used on a mix of proposals such as funding infrastructure projects like repairing roads and bridges, improving education at community colleges, and promoting manufacturing, senior administration officials said.

Obama’s proposal would generate a one-time source of revenue, for example, by reforming depreciation or putting a fee on accumulated foreign earnings.

Officials gave no specific figure on how much money would be raised. But Obama in his State of the Union speech in February called for $50 billion for infrastructure spending.

The White House is hopeful that the idea will gain some traction in the U.S. Congress because Republicans want corporate tax reform and Democrats want spending for infrastructure. This offers something for both sides, administration officials said.

Officials said they recognize, however, that the climate is difficult in Congress with Republicans adamantly refusing anything that is seen as increasing spending and Democrats in no mood to cut taxes and get nothing for it.

Obama’s speech in Chattanooga is the latest in a series of speeches aimed at making good on his promises to boost the U.S. economy in ways that helps the middle class. And he is looking to breathe new life into his second term, which has so far found successes to be fleeting.

Recent Headlines

in Music

Glen Matlock denies new Sex Pistols reunion

John Lydon, right, and Glen Matlock of The Sex Pistols perform at the Roxy in West Hollywood, Calif., on Thursday, Oct. 25, 2007.

Sex Pistols star Glen Matlock dashes fans' hopes of another reunion by insisting he hasn't had any contact with John Lydon in five years.

in Weird

Chaos erupts at Comic-Con Zombie Walk

People dressed and made up as zombies take part in a traditional Zombie Walk in Prague, Czech Republic, Saturday, May 24, 2014.

An elderly woman was hit by a car during a Zombie Walk after "zombies" attacked a car attempting to flee the scene.

in Weird

Bare burger burglars caught on security camera in Florida

A group of three men wearing only underwear are seen in the kitchen of Doc's Beach House restaurant in Bonita Springs, Florida in this July 20, 2014 handout taken from security camera video released by the Lee County Sheriff's Office.

Three bare burglars burgle beef. Only in Florida is that not a tongue twister but the latest true crime.

in Viral Videos

Baby elephant meets a cat

Elephant Meets Cat

Maybe this elephant is more of a dog lover?

in Weird

Spider-Man charged with punching police officer

A costumed Spider-Man character attends the Be Amazing Volunteer Day held in the Queens borough of New York, Friday, April 25, 2014.

A street performer dressed as Spider-Man in New York City's Times Square was arrested after punching a police officer.