Obama's fiscal proposals panned

WASHINGTON:

President Barack Obama, seeking to break Washington's fiscal stalemate, is proposing cutting corporate tax rates in exchange for more spending on jobs programmes. But his offer was immediately panned by congressional Republicans, casting doubts about its prospects.

The White House painted the new offer as a way for Washington to create jobs and generate short-term economic growth, even as hopes for a grand deficit reduction deal fade. Obama was to announce his proposals Tuesday during a trip to an Amazon.com distribution center in Chattanooga, Tennessee.

"We should be looking for other avenues of progress, other 'grand bargains' that can be for middle-class job growth," White House economist Gene Sperling said.

The president has previously insisted such business tax reform be coupled with an individual tax overhaul. His new offer drops that demand and calls only for lowering the corporate rate from 35 per cent to 28 per cent, with an even lower effective tax rate of 25 per cent for manufacturers.