I have to admit, my first reaction to the news that Obama would be proposing this was that it was not the most wretchedly awful thing he had ever proposed. How's that for faint praise?
The basic idea is that we cut the corporate tax rate from 35 percent to 28 percent, with an even lower preferred rate of 25 percent for manufacturers. Now this is not the exact change to the corporate tax code that I would like to see, but it's definitely better than what we had, so I'll say so far so good. But here's where it gets interesting:
Obama wants to impose a new tax on earnings made overseas, as he and other Democrats have long been up in arms about U.S. companies avoiding the corporate tax by sheltering their earnings in other countries. The problem here is that the corporate tax code is largely responsible for this behavior, as it imposes a special tax on repatriated profits. If we did not impose that tax, a lot fewer companies would keep their capital sitting overseas. At any rate, Obama seems to think this and other unspecified "reforms" to the business tax will generate new revenue, which he wants to use not to reduce the deficit, but to plow into $50 billion worth of new infrastructure projects that he thinks will create jobs.
Since when does Obama think cutting a tax will result in more revenue? It will, but since when does he think that?
At any rate, here is the counteroffer I would make if I were running the Republican side on Capitol Hill:
Yes on the corporate tax rate cut. Do it exactly the way Obama says.
No on the new tax on overseas earnings. Get rid of the repatriated profits tax and the "problem" will largely take care of itself.
If Obama wants to spend $50 billion on infrastructure projects, he can learn how to prioritize and take the money from elsewhere in the budget. We're already spending $3.7 trillion a year. If there is not $50 billion Obama can find to cut to make room for these projects he wants, then Obama simply doesn't know how to say no to anything, and someone else needs to be running the country.
I will give Obama credit to this extent: It's a reasonable starting point in negotiations, and conservatives need to understand they are not going to get a "true conservative" piece of legislation as long as Obama is in the White House. I don't have a problem with doing infrastructure work we need, but I do have a problem with only doing it if Congress will allocate more money on top of what's already in the budget. This is a classic Obama tactic: He yelps that we absolutely must spend on this or that, but he refuses to go find the money in the existing budget, insisting that it has to come from additional allocations and blaming Republicans if they won't go along.
He showed us during the sequester fiasco that he is incapable of managing a budget or making decisions. His decision about everything is "spend" (except on the military), and even when all you're asking him to do is accept a reduction in an expected increase in spending, he has a meltdown and acts like the world is coming to an end.
If Republicans respond to his proposal as I've suggested here, his reaction will tell us if he really believes in what he's suggesting, or if he's just trying to set another trap for Republicans so he can blame them for nothing getting done. In fact, he could do the corporate tax cut and the infrastructure work, today, if he would stop playing political games and start taking the task of governing seriously.
