In Tennessee today the president is expected to lay out what many reporters are calling a new “grand bargain” offer to Congress (the White House itself, in the handout I was forwarded by email, just calls it a “bargain”), presumably to grease an agreement over raising the debt limit and keeping the federal government sufficiently appropriated to operate.
In place of (a) an “entitlement reform” for “higher taxes” bargain, or a (b) “tax reform” bargain that lowers individual and corporate rates but generates dollars for deficit reduction, this mini-jumbo proposal is much narrower. It would involve a rate-lowering-loophole-closing corporate tax overhaul that would generate net revenues to be devoted to “job-creation” activities, presumably the infrastructure investments the president’s been talking about recently.
Matt Yglesias comments that the proposal “trades” two items that would be good for the economy in isolation, and thus would be doubly positive in combination. (He also warns, however, that business enthusiasm for “corporate tax reform” is misleading, since individual corporations are hoping for lower rates while holding onto the loopholes that benefit them.) Digby’s mildly positive reaction probably reflects the prevailing progressive view that anything that gets revenues into job-creation activities without messing with the social safety net is fine, so long as it’s not a first step towards a grander bargain that includes Social Security and Medicare.
But it’s hard to imagine this proposal is going to get much traction with Republicans, who (a) are committed to a kind of “tax reform” that lowers individuals rates on the wealthy, and (b) have made it about as clear as is possible that “tax reform” that generates net revenue for anything other than rate cuts is unacceptable. If they are unwilling to accept a deal that devotes net revenues to deficit reduction, presumably a Good Thing, why would they accept one that shifts resources into domestic spending, presumably a very bad thing?
There’s already talk on Twitter than the whole point to Obama’s proposal is to make offers the GOP is sure to reject in order to strengthen his reputation for reasonableness going into the fall fiscal battles. I’m not sure cynicism should be attributed to the White House for advancing proposals Republicans ought to entertain if they weren’t on an endless ideological bender. But I wouldn’t get too excited about prospects for renewed bipartisan bargain-hunting in Washington any time soon.