Obama's 'grand bargain' twist: Let's focus on jobs, not the deficit

President Obama's 'grand bargain' offers Republicans corporate tax reform in exchange for GOP support for more public spending.

President Obama laid down a challenge to Republicans Tuesday, saying the nation needs a “grand bargain” on jobs more than it needs a grand bargain to reduce federal deficits.

“For much of the past two years, Washington has taken its eye off the ball when it comes to the middle class,” Mr. Obama said in a speech to workers in Chattanooga, Tenn. “What we need is a serious, steady, long-term American strategy that reverses the long erosion of middle-class security.”

Obama called for business-friendly reform of corporate taxes, matched by other job-creation measures from infrastructure spending to investing in community colleges.

His proposal comes with a political catch, however.

The president framed his bargain as trading something Republicans like (corporate tax reform) for something Democrats like (public investments that can help the middle class). But for Republicans who don’t like the details of Obama’s corporate tax proposal, it may not feel as if he’s throwing them much of a bone.

Rep. Paul Ryan (R) of Wisconsin, who chairs the House Budget Committee, was quick to weigh in with criticism after Obama finished his Tennessee speech.

“President Obama said he's interested in tax reform for corporations – but not for families or small businesses. Once again, the president is playing favorites,” he said in a commentary on the USA Today website.

Chairman Ryan also alleged that Obama “wants to funnel money to his green-energy cronies,” while hindering the creation of jobs elsewhere in the energy industry.

At the same time, the White House can legitimately claim that many of Obama’s ideas aren’t purely partisan, but garner some significant support from business leaders and policy experts from both political parties. 

Obama’s goals of investing in infrastructure, boosting workforce skills, and setting up regional centers to encourage innovative manufacturing all have some bipartisan interest, White House economic adviser Gene Sperling said Tuesday in a conference call with reporters.

And although the two parties differ on the optimal approach to corporate tax reform, there’s potential space for compromise, if both sides are willing to negotiate. Both parties, for example, favor lowering the nominal tax rate on corporate profits.

Obama’s appeal to focus on jobs and the middle class isn’t a new theme, but he’s been reviving this emphasis as unemployment remains high, as a new round of debates on the federal budget looms, and as the White House has been struggling to lay controversies such as an IRS scandal to rest.

Speaking to workers at online retailer Amazon.com, he complained of “endless parade of distractions,” and said the economy would be stronger if politicians were less worried about deficits and more focused on jobs – including job cuts that have been occurring in government.

“Our deficits are falling at the fastest rate in 60 years,” Obama said.

He won applause at one point when he put policy matters aside to describe why jobs matter.

“In America, we’ve never just defined having a job as having a paycheck,” he told the Amazon workers. “A job is a source of pride and dignity, the way you support your family, the proof that you’re doing the right thing and meeting your responsibilities and contributing to the fabric of your community.”

Beyond the details of the bargain he proposed Tuesday, Obama is calling for new foreign-trade deals to boost US exports, and for a higher minimum wage.

Republicans in Congress have long espoused a jobs agenda of their own, including tax simplification, energy production, rolling back regulation, and education reform. They, like Obama, want to see exports expand via free-trade deals.

Obamacare remains a point of bitter contention. Repealing the Affordable Care Act is a top item on the Republican to-do list – House Republicans have voted to repeal Obamacare some 40 times, a vote going nowhere in the Democrat-controlled Senate – while Obama on Tuesday ridiculed that idea, saying it “isn’t a jobs plan.”