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Obama’s ‘Grand Bargain’ Tax Plan Is Hard Sell to GOP

Lawmakers regarded President Barack Obama’s latest attempt to engage them on an economic proposal as largely irrelevant Tuesday, with neither Democrats nor Republicans viewing it as an actual step forward toward breaking their ongoing budget impasse.

Obama delivered an address in Chattanooga, Tenn., outlining a broad framework “for the middle class” that, among other provisions, would include corporate tax changes, infrastructure projects and an increase in the minimum wage. The package, which the White House touted as a “grand bargain,” included a few items the GOP supports in isolation — closing tax loopholes to lower tax rates, for example. The offer was intended to be an olive branch to the GOP, because it didn’t include any tax increases.

But Republicans either shrugged off or slammed the White House proposal, saying it could undercut talks on either a larger budget framework or a comprehensive tax rewrite.

And they don’t think Obama is serious about working with them, anyway.

“I don’t think they’ve been acting in good faith. I really don’t, in the sense of really trying to bring both sides together,” Sen. Orrin G. Hatch, R-Utah, said Tuesday.

“I think they’re hoping that there will be some maverick Republicans who will ignore the basic Republican doctrines and do this with them with all the Democrats,” the top Republican on the Senate Finance Committee continued. “It’s clear they want a very liberal approach toward everything, especially tax reform.”

Hatch said he hoped the administration would give Senate Finance Chairman Max Baucus, D-Mont., “some breathing room” on the tax code. Baucus has been traveling the country with House Ways and Means Chairman Dave Camp, R-Mich., to make the case for a tax policy overhaul, but any chances for a comprehensive rewrite seem unlikely this Congress.

And Obama’s push to make changes to corporate taxes only is certainly a far cry from the blank-slate approach Baucus and Camp have been trying to take toward the tax code.

Republican reaction to Obama’s speech — much of it coming before the remarks were even delivered — was unified at a leadership level.

Some recent allies of Obama seemed split on what the White House was attempting by moving forward with its own plan, considering Obama has been wooing a select few Senate Republicans over the past few months with White House meetings and casual dinners.

Sens. Lindsey Graham of South Carolina and John McCain of Arizona, for example, have partnered with Democrats recently on issues like immigration and nominations. But neither one seemed particularly jazzed about the tax plan.

“As I say, I’ve always been in favor in closing loopholes, for the last 20 years I have been. … If it increases revenue or decreases revenue, or what. They are egregious, they are outrageous and they’re ripoffs, and they should be closed, just like sugar subsidies ought to be done away with,” McCain said, calling tax loopholes a key “example of corruption here in Washington.”

“But I do not believe that a stimulus package is appropriate,” McCain continued. “We saw that in 2009, and it did nothing. … I don’t judge other people on what they do, but I am against earmark projects no matter who does them or no matter what the reason is.”

Graham was by far the most supportive member approached Tuesday for this report, saying he believed the outline put forth by the president is “helpful,” even if it does not address the issue of entitlement changes, which he said would need to be included in any economic plan.

“I am one of the Republicans who wants to get to the table, and it doesn’t bother me at all,” Graham said of whether Obama’s speech might upset GOP members trying to negotiate with the White House.

“I support infrastructure spending as part of any deal, reducing the corporate tax rate is good but the big piece left out is entitlement reform,” Graham said. “I think what the president is talking about is helpful. … Having the conversation about restructuring the tax code, infrastructure, is moving in the right direction, but the big challenge for us is what do you do about long-term entitlements.”

House Republican leadership joined Senate leadership in dismissing Obama’s proposal. The point both leadership teams made is that the GOP would like changes to the corporate tax code to be paired with individual tax code adjustments. They argue that not restructuring the individual tax code would be burdensome to small-business owners who file as individuals.

That led to the usual partisan back-and-forth. Senate Majority Leader Harry Reid, D-Nev., used some of the negative response from the Republican side to attack the party for opposing Democratic policies.

“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 told reporters after his weekly lunch. “President Obama proposed a thoughtful approach to tax reform, corporate tax reform, policies that Republicans have said should be done. Because Obama came out with it, they’re opposed to it.”

Reid got a bit short when asked whether Senate Republicans negotiating with Obama was a positive thing.

“Let them do whatever they want to do. Talk to the president. My office is always open. I’m anxious to do anything,” Reid said.

Not everyone was optimistic. But Graham seemed to be.

“Once you try and fail at something 50 times, the 51st time gets easier,” the South Carolina Republican said. “We’re beginning to learn what’s possible politically and what’s not.”

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