Early grand bargain gridlock takes shape in the Senate

Giuseppe Macri | Tech Editor

WASHINGTON — The Senate battle over a “grand bargain” on taxes began hours after President Obama’s Tuesday speech calling on Congress to overcome gridlock and find a bipartisan solution before another looming fiscal deadline.

After meeting with congressional Republicans on tax reform Monday, the president’s Tuesday speech in Chattanooga, Tenn., outlined a plan to cut and reform the corporate tax rate in order to fund infrastructure projects that would increase middle-class jobs.

Hours afterward, Senate Republicans wasted no time expressing their criticism of the proposal, stating the plan would only benefit the largest 20 percent of corporations, leaving the remaining 80 percent of companies to flounder in what Republicans describe as a “non-competitive” tax rate, making it difficult to hire.

“In this divided government you have the Democrats pretty much lined up behind the White House believing that what America needs is more regulations, not less,” Senate Republican Minority Leader Mitch McConnell said. “And so that’s just not an environment that sends a message to the private sector that we need to get going again.”

Republicans believe any tax reform should be revenue neutral — meaning it should close and simplify tax loopholes without increasing government revenue.

“Sometimes it just seems that this administration never misses an opportunity to miss an opportunity to grow this economy,” Pennsylvania Republican Sen. Pat Toomey said Tuesday, describing a meeting between Senate Republicans and the president.

“I thought we might be able to make some progress on that. I’m losing confidence that we can when Sen. Reid insists tax reform has to start at about $1 trillion dollars of tax increases,” Toomey said.

Democratic Majority Leader Harry Reid responded by quoting statements from both Speaker of the House John Boehner and Minority Leader McConnell, in which both expressed their support for reforming the corporate tax code.

“Somebody should go back and read to them their press clippings. Today we saw proof that Republicans judge policies by one simple sad rule; if the president wants it, or proposed it, they oppose it,” Reid said.

“What President Obama’s doing is actually what the American people want — for both sides to give a little and forge a common sense agreement that creates jobs and supports a middle class,” Reid continued. “I’m not sure I’m confident they read it — if they had done that, they couldn’t have responded negatively so quickly.”

According to Reid, Democrats favor a common-sense, balanced approach to tax reform much like the grand bargain Obama and Boehner tried to reach over the last two years — cutting spending while “having those that can afford it, pay more.”

“For a compromise to be possible, Republicans are going to have to overcome their fear of the tea party,” Reid said.

It was tea party pressure in the House that forced Boehner to withdraw from the grand bargain table in 2011, prompting a last-minute, temporary deal that resulted in the first-ever downgrade of the U.S. credit rating from its former AAA status.

Since then, subsequent budget battles have become increasingly precarious, with the country narrowly avoiding the “fiscal cliff” at the beginning of this year, but succumbing to sequestration cuts after Congress was unable to agree on a solution before March.

The early gridlock forming up over only one facet of tax and spending reform is a dangerous omen as Congress faces two looming fiscal deadlines this fall — another debt ceiling fight that could send the country into default without a deal, and a government shutdown on Sept. 30 without an agreement on spending.

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Tags : barack obama harry reid john boehner mitch mcconnell
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