US President Barack Obama talks to employees after he tours the Amazon Fulfillment Center in Chattanooga, Tennessee, July 30, 2013. (REUTERS/Larry Downing)
President Obama introduced yet another plan to create jobs and pump the sagging economy yesterday, pitched as a “grand bargain” between Republicans and Democrats (or more accurately, Democrats and the business community). It’s perhaps not a terrible plan considering the current political atmosphere. But taking one step back, Obama’s offer is a deeply revealing snapshot of a dynamic that’s become deeply skewed and perhaps hopelessly corrupted.
Obama’s bargain is this: on the one hand, Congress should enact revenue-neutral corporate tax reform, in which the corporate tax rate is lowered from 35 percent to “no higher than” 28 percent, while broadening the corporate tax base by closing loopholes and exemptions. There would also be a repatriation holiday for overseas profits—meaning that corporations would pay an as-yet unspecified “levy”, and could then bring home the $1.3 trillion they have parked overseas without subjecting it to the normal corporate tax rate.
In exchange, the revenues from that repatriation levy, along with some initial, one-time revenue from changing the corporate tax code, would fund a variety of worthwhile initiatives aimed at job creation—from an infrastructure bank to funding for community colleges and creating ten “manufacturing institute hubs” nationwide.
One might look at look at this and see a lot of good: Obama is redefining “grand bargain” in a way that doesn’t include austerity measures and reduced social insurance programs. Meanwhile he’s trying to entice his opponents in Congress to do something, anything, to help the country’s severe unemployment crisis. (Brian Beutler sees this as an offer to an emerging bipartisan governing coalition in the Senate, and I’d add it is also designed as an enticement for the corporate community that predominantly funds GOP politicians: “look at all the goodies you can get if the ideologues get out of the way.”)
But is this what the country has come to? Consider the context, and it’s stunning.
Unemployment is still at crisis levels, and is recovering more slowly than during any previous recession. In fact, throughout the recovery more unemployed workers have been leaving the labor force than have found work. Eighty percent of US adults struggle with joblessness, near-poverty or reliance on welfare for at least part of their lives and half of the US population is currently considered poor or low-income.