The first part of the White House’s “Summer of Barack” series of middle-class economic proposals is coming out today in a speech in Tennessee, and the idea is being framed as a “grand bargain for jobs.” The administration hasn’t fully released the details yet, but what they seem to be aiming for is a modification of the administration’s previous corporate income tax reform proposals. What Obama had previously put on the table was the idea of doing base-broadening, rate-lowering corporate income tax reform as part of a larger tax overhaul that was meant to generate net revenue for the government. The new idea is to detach the two kinds of tax reform, and count on base-broadening rate-lowering reform to produce some one-off revenue that can finance infrastructure jobs.
Without concrete numbers this is a little hard to evaluate on the merits, but since short-term infrastructure spending is a good idea and base-broadening corporate income tax reform is a good idea, it’s hard to see how a mashup of the two would fail to be a good idea.
So a word on politics. A lot of credulous reporting on the issue says that corporate America is eager or even hungry for corporate income tax reform. This is nonsense. Executives at American businesses are eager to see lower taxes on the companies they run. When an executive says he favors base-broadening corporate income tax reform, what he means is that he favors closing deductions that other companies take advantage of in order to lower rates that his company pays. In that sense, each American business favors reform. But there’s no coherent vision of reform that has broad business support. There’s instead vague sympathy for the idea of locking in a low rate that could be achieved in a revenue neutral form by eliminating all deductions, and then adding back in all the broadly supported deductions. But that, again, is just another way of saying that business leaders want lower taxes on businesses. The apparent consensus in favor of reform is a pure abstraction.
But in principle it’s a good idea. And with interest rates low and unemployment high, this is the kind of grand bargain we should be talking about: Finding politically feasible ways to spend more money. Everyone says they’re for corporate income tax reform, and if they really were this would be an idea with legs. In reality, they’re bullshitting but that’s politics for you.
Interestingly, the jobs plan is going to be rolled out at an Amazon fulfillment center which is a great idea for the reasons I laid out yesterday. I’m never sure what the bully-pulpit is worth in unusual contexts, but I think trying to use it to praise businesses that turn their operating surpluses into jobs and investment while shaming companies who stockpile cash is as good an idea as any. Business revenue and savvy cost-control are both great things, but the point of them ought to be to expand and grow and succeed. That’s the Amazon way, but too many companies fall down on the job.