Tags: wsj | obama | grand | bargain | not | serious

WSJ: Obama's 'Grand Bargain' Not a Serious Proposal

Image: WSJ: Obama's 'Grand Bargain' Not a Serious Proposal

Tuesday, 30 Jul 2013 10:16 PM

By Todd Beamon

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President Barack Obama's "grand bargain for middle-class jobs" that he proposed on Tuesday "isn't a serious proposal," The Wall Street Journal says.

"And he knows it," the Journal says in an opinion piece published on Tuesday. "It also isn't bipartisan," appealing only to Democrats.

"The real bipartisan reform opportunity would be to get behind the chief Senate and House tax writers, Democrat Max Baucus and Republican Dave Camp," the Journal notes. "They've been holding hearings on tax reform for years, and Mr. Baucus has even invited all senators to send him a list of tax provisions they'd like to retain and why."

Camp is from Michigan, and Baucus represents Montana.

"The rub for Mr. Obama," the Journal says, "is that both men conceive of using whatever money they would raise from closing loopholes to reduce tax rates. This is crucial to getting rates as low as possible, especially given that the statutory U.S. corporate rate of 35 percent [plus state corporate taxes] is the highest in the developed world.

"But it is also crucial to making reform politically possible," the piece continues. "A reform that merely lowers rates a few percentage points has no chance of building enough support to overcome the opposition of companies and interests that will see their tax loopholes closed."

However, "the problem, as ever, is that Mr. Obama simply can't get over his ideological fixation to keep tax rates as high as possible," the Journal notes. "We say 'ideological' because his own advisers concede that a 35 percent rate hurts U.S. business competitiveness.

"Even Japan, the last high-rate holdout among rich countries, is cutting its corporate rate."

The Journal continues: "These columns certainly favor a simpler tax code, but compliance is merely one cost of our tax system. The bigger cost is money owed to the Treasury. Reducing the first while raising the other is not a game-changer for U.S. business or for economic growth."

The opinion piece notes that Obama's proposal applies mainly to the nation's corporate tax system, which is not used by most small companies.

"Most small-business owners file under the rules for individuals, which are not being simplified under this plan and whose tax rates Mr. Obama raised substantially in January," the Journal notes. "Cutting corporate rates without doing so for small businesses will merely increase the opportunities for tax arbitrage."

The Journal piece also attacks Obama's "usual grab bag of spending" options — more high-wage union jobs, more teachers, and more job training, "though the federal government already runs more than 40 job-training programs that don't seem to do much training for real jobs."

Further, Obama "wants more subsidies for biofuels and electric cars — the ideas that worked so well in the first term.

"All of which suggests that the president's speeches aren't really about tax reform or the economy," the Journal concludes. "They're about preparing the political ground for 2014.

"On that score, he adopted once again his charming habit of casting those who disagree with him as motivated purely by political spite.

"No wonder even Democrats want the president out of the room when they try to negotiate on immigration," the piece notes. "He's a deal killer."


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