New White House “Grand Bargain” Proposal Is Neither Yet

The elusive "Grand Bargain" became less grand Tuesday, without any new certainty of ever becoming a bargain.

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Yuri Gripas / REUTERS

President Barack Obama waves as he walks on the South Lawn of the White House in Washington, before his departure to Chattanooga, Tennessee July 30, 2013.

The elusive “Grand Bargain” became less grand Tuesday, without any new certainty of ever becoming a bargain.

White House officials briefed reporters about President Barack Obama’s plans to announce a revived push for a “grand bargain” with House Republicans. But the new bargain they proposed — and aggressively promoted — was not the same as the old bargain.

In an address on the economy in Chattanooga, Tenn., Obama will offer to launch an effort to overhaul the federal corporate tax system if Republicans agree to increased infrastructure spending, White House aides said Tuesday morning. This is a far cry from the outlines of a grand bargain Obama and Speaker of the House John Boehner flirted with nearly two years ago, which included individual tax reform and changes to entitlement programs designed to reduce the deficit. “Our main goal here as not to announce new details as much to make clear the president is putting forward a new kind of grand bargain for middle class jobs,” said Gene Sperling, the director of the National Economic Council.

The Obama proposal is essentially a combination of a corporate tax proposal from last year and the administration’s latest iteration of plans for infrastructure and manufacturing stimulus. Sperling said the White House sought to combine the two proposals together because they would be unlikely to pass separately.

The Obama plan would lower the corporate tax rate to no higher than 28% by eliminating loopholes — including those which incentivize companies to move jobs overseas — with a top rate for manufacturers of 25%. Republicans have proposed a flat rate at 25%. The Obama plan would use one-time revenue to fund infrastructure programs and manufacturing innovation institutes, while the Republican plan would use that revenue to lower future rates.

But unlike the grand bargain of old which included entitlement cuts hated by Democrats, the new proffer doesn’t include any concession to Republicans, who are already lining up to oppose it. Boehner Spokesman Michael Steel rejected the offer outright. “The President has always supported corporate tax reform,” he said in a statement to reporters. “Republicans want to help families and small businesses, too. This proposal allows President Obama to support President Obama’s position on taxes and President Obama’s position on spending, while leaving small businesses and American families behind.”

A House Republican leadership aide added that the GOP has always demanded that corporate tax reform be coupled with reform to the individual system, while the White House maintains the split is a concession to Republicans since the reform for businesses won’t raise revenue in the long term.

Asked about the absence of a negotiating allowance to the GOP, a White House official rejected the notion that Republicans should be given anything. “The bargain isn’t supposed to be for the Republicans,” the official said. “It’s supposed to be a bargain for the middle class.”

Sperling and White House Communications Director Jennifer Palmieri told reporters that Obama’s original grand bargain proposal remains on the table, though both sides concede it has no future as long as Republicans maintain their opposition to any revenue-raising tax reform. That proposal would raise billions annually by eliminating loopholes from the individual tax code. “What the president is really saying today that just because we have not completed progress there and there has been holdup over the revenue on individual [tax cuts] does not mean we should put on pause all other efforts to create middle class jobs,” he said.

But even this pared down grand bargain is going nowhere. Coming a week into the president’s latest economic push, it is instead designed to put Republicans on the defensive with business leaders and the American people going into negotiations on the debt limit and budget this fall.

The White House fact sheet on their proposal is below: