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Wall
Street Journal
Obama's
'Grand Bargain' With Obama
He proposes tax reform with higher
taxes and not much reform.
In
Chattanooga on Tuesday, the
latest stop on his economic inequality tour, President Obama made
himself an
offer he couldn't refuse. If Congressional Republicans agree to a
corporate tax
increase, he said, then he'll agree to spend more money on his favorite
public-works projects. If Republicans bargain hard, will he also offer
an
expansion of ObamaCare as a sweetener?
We
know this sounds like an
exaggeration, but that's the essence of what the President proposed as
what he
called a new "grand bargain." Mr. Obama will agree to reform the
corporate tax code—a GOP priority and one even the President claims to
support—but
only if the reform raises more revenue and only if he is allowed to
spend that
windfall on his priorities.
A
White House press release
clarified that the President would also like to raise taxes on
individuals, not
just businesses, while allowing federal spending to rise still higher.
But
showing they retain a sense of humor in the West Wing, the press
release
suggests that the President is willing to forgo this tax increase for
now
because he wants to "work with Republicans."
This
isn't a serious proposal, and
he knows it. It also isn't bipartisan, since he is offering a
compromise with
appeal to the ideological spectrum running from Elizabeth Warren to
Chuck
Schumer. Perhaps these are the only Members of Congress whom Treasury
Secretary
Jack Lew has in his iPhone.
The
real bipartisan reform
opportunity would be to get behind the chief Senate and House tax
writers,
Democrat Max Baucus and Republican Dave Camp. 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.
The
rub for Mr. Obama 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% (plus
state
corporate taxes) is the highest in the developed world...
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