The President has yet to lay out many specifics for his economic plan, but he has already made plenty of enemies. In a speech delivered today at an Amazon (AMZN) fulfillment center in Chattanooga, President Obama outlined a plan — billed as a "grand bargain" for the middle class — which would lay the groundwork for new, sustainable jobs.
Obama is offering what he's calling "new incentives to manufacturers," but it's largely the same corporate engineering the Republicans have rejected in the past.
His headline figure calls for a reduction of the top corporate tax rate from 35% to 28% but the President says this cut would need to be "revenue neutral." That means lowering the tax rate to 28% would require closing loopholes to cover the expense. While taking out things like deductions for corporate salaries exceeding $1million would certainly be popular they won't cover the difference.
One week after his disappointingly ambiguous economic speech at Knox College, the President is still hammering the same stump speech applause lines that were already tired last week. "Congress should pass my 'Fix-It-First' plan to put people to work immediately on our most urgent repairs, like the 100,000 bridges that are old enough to qualify for Medicare."
The line got applause at Knox College and again today, but the Republicans aren't biting. A spokesperson for Representative John Boehner had already shot down the core of Obama's "grand bargain" before the speech had even been delivered, arguing that it would leave "small businesses and American families behind."
Jeff Saut, chief investment strategist at Raymond James, says Washington is getting "less dysfunctional" than it has been in the past, but that's not good enough. There are huge sums of money sitting in overseas bank accounts just waiting to come back — it's just a matter of lowering the highest repatriation rates in the world before we see it.
"Before it's all said and done, we are going to get the repatriation of the $2+ trillion dollars that resides offshore at a lower tax rate. I just think it's a matter of time," Saut says in the attached clip. If it's going to happen eventually, bringing the money home needs to happen now.Right now the repatriation rate is 35%, among the highest in the industrialized world. To see money coming back in from overseas would require a cutting the level to something closer to 20%. The President gestured at fixing this problem in the past, most notably during the State of the Union but has yet to follow through on the idea.
There's a reason the President spoke from an Amazon fulfillment center. Yesterday Amazon announced that it would be hiring an additional 7,000 workers. With that move, the world's largest online retailer joins companies like Ford (F), Boeing (BA) and Honda (HMC) in choosing to bring middle-class jobs back to U.S. shores.
When the White House and Republicans get serious about bringing money home, it will mark the start of the revival of the middle class. Until then, we're just spinning our wheels on the Obama tour.
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