Obama to propose "grand bargain" for jobs to GOP

Updated 8:40 a.m. ET

In the fourth speech he's delivering to lay out his vision for America's economic future, President Obama in Chattanooga, Tenn., Tuesday will offer a new "grand bargain" to Republicans in an effort to break the impasse over the deficit and help move things along as Congress faces looming budget deadlines. The proposal: Cutting corporate tax rates in exchange for job investments, the White House confirmed to CBS News.

"As part of his efforts to focus Washington on the middle class ... the president will call on Washington to work on a grand bargain focused on middle-class jobs by pairing reform of the business tax code with a significant investment in middle-class jobs," Obama senior adviser Dan Pfeiffer told the Associated Press.

Senior administration officials described the corporate tax proposal to the Associated Press as the first new economic idea Mr. Obama plans to offer in the coming months, as Congress faces looming budget deadlines this fall.

No price tag on the proposal has been offered up yet - that would come through talks with Congress - however, the administration officials told the AP that money to pay for the jobs creation part of the proposal would come from a one-time revenue boost from measures such as changing depreciation rules or having a one-time fee on earnings held overseas.

House Republicans are likely to consider this a non-starter, however. House Ways and Means Committee Chairman Dave Camp, R-Mich., has repeatedly said that corporate tax reform should not be done without individual tax reform, something the president isn't proposing. In addition, Republicans point out, many small business owners don't file corporate taxes - they file as individuals - therefore any revenue adjustment that is implemented to pay for the jobs investment could hurt them.

"The President has always supported corporate tax reform. Republicans want to help families and small businesses, too. This proposal allows President Obama to support President Obama's position on taxes and President Obama's position on spending, while leaving small businesses and American families behind," said Michael Steel, spokesman for House Speaker John Boehner, R-Ohio.

Amazon's Chattanooga warehouse, which is the size of about 27 football fields.
CBS News/Darrall Johnson

In Chattanooga, Mr. Obama will deliver his remarks at a warehouse that could very well represent the future for U.S. retail workers: an Amazon fulfillment center.

Amazon announced on Monday that it's adding 7,000 jobs in 13 states to staff warehouses where customer orders are filled. The company's adding 5,000 full-time jobs in its "fulfillment network," which entail packing and shipping customer orders, as well as 2,000 jobs -- a mix of full-time, part-time and season -- in customer service.

At a time when companies are hesitating to hire new workers or make long-term investments in spite of strong earnings, Amazon is bucking the trend. In fact, it reported second-quarter losses in part because of its heavy investments in distribution centers.

Amazon currently employs around 20,000 full-time employees in its fulfillment centers, but as e-commerce grows -- online retail is expected to reach $370 billion by 2017 -- it's easy to imagine that more and more Americans will soon be working in warehouses like the one Mr. Obama is visiting in Chattanooga, Tenn.

It may not be exactly the vision of middle-class prosperity that Mr. Obama has laid out -- investigative reports in past years have found uncomfortable working conditions for Amazon employees making $11 to $12 an hour. Still, Amazon contends it offers wages on average 30 percent higher than jobs at traditional retail stores and that the jobs come with health care and company stock awards.

On Monday, White House spokesman Josh Earnest said the president wants to encourage the kind of investments that Amazon is making.

"If we can put in place policies that will encourage companies to invest in America, to bring back jobs from overseas; that if we can invest in the kind of infrastructure that's required to allow companies to get products to market more quickly or to their customers more quickly, that's certainly something that we want to encourage," he said.

"The Amazon facility in Chattanooga is a perfect example of the company that is investing in American workers and creating good, high-wage jobs," White House deputy press secretary Amy Brundage told the Chattanooga Times Free Press Friday.

"What the president wants to do is to highlight Amazon and the Chattanooga facility as an example of a company that is spurring job growth and keeping our country competitive."

One group that disagrees with the idea that Amazon is "spurring job growth" is the American Booksellers Association (ABA), which is upset with the president's visit to Chattanooga.

The CEO and board of directors of the association, which represents independent booksellers, called Mr. Obama's trip "greatly misguided" and accused Amazon of driving bookstores out of business and killing jobs.

"While Amazon may make news by touting the creation of some 7,000 new warehouse jobs (many of which are seasonal), what is woefully underreported is the number of jobs its practices have cost the economy," ABA CEO Oren Teicher and the group's board of directors wrote in a letter to the president Monday.

"[W]e are disheartened to see Amazon touted as a 'jobs creator' and its warehouse facility used as a backdrop for an important jobs speech, when, frankly, the exact opposite is true," the letter continued.

Meanwhile, one public policy issue that could directly impact hiring by online retailers is the collection of online sales taxes. Amazon is one of several large businesses backing the the Marketplace Fairness Act, a bill that would give state governments the ability to collect Internet sales taxes from businesses headquartered outside of their respective state borders -- taxes that are technically already owed.

Most of the bill's backers are brick-and-mortar stores that say out-of-state online retailers have an unfair advantage over them, since they're not required to collect the sales tax owed on the products they sell, even if the state requests it. Amazon initially opposed the legislation, which already passed in the Senate and now sits in the House. Now, however, as it opens distribution centers in several states, it supports the measure.

Comments