Should Obama Make Nice to Business?
An accommodation is key to getting the economy moving again.
From now until Nov. 2, President Obama will walk a tightrope, trying to please his business-bashing base without going so far that he makes an eventual rapprochement impossible. That’s hardly surprising ahead of a crucial election, but what happens afterward?
Here’s hoping Obama offers an olive branch to the business community and follows it up with meaningful action. For starters he should appoint a highly respected CEO to replace National Economic Council Director Larry Summers, who’s leaving at the end of the year. Summers’ replacement will be part of the inner circle, with daily access to the president. Any of the business execs being mentioned -- former Xerox CEO Anne Mulcahy, Honeywell CEO David Cote, Google CEO Eric Schmidt -- would be a good choice, and there are lots of other strong possibilities.
Business desperately needs a “go-to” person close to Obama, someone who understands the needs of companies and shares their perspective. It won’t ease all the tensions or solve all the problems -- far from it -- but it’s an important first step. Atmospherics do matter. And if the business advocate chosen is effective, it could have a real impact on policy.
There’s no shortage of things that Obama might do for business. He can stop with the bashing, for one. He can work to overhaul the messed-up corporate tax structure that makes international competition harder. And he can put some muscle behind his talk of free trade.
That’s not to accept all of businesses’ complaints about Obama or blame him entirely for the bad feelings. Obama will never give business the kind of preferred status it had under George W. Bush, but that didn’t work out so well for the economy, either. And the fact is, business hasn’t done that badly under Obama. The economic recovery may be hit and miss, but business has gotten most of the hits. Company profits are up 28% since Obama took office, and share prices have climbed even more. And business seems to forget that Obama has actually provided a number of business tax breaks.
Administration officials have their own gripes. They accuse business of backing the stimulus and the bailouts, including for the auto industry, and then running for the hills when those policies became controversial.
They have a hard time, too, accepting gripes over the Wall Street regulatory bill. Did anyone really think the government would or could do nothing after the 2008 crisis? And if the legislation left too many details to be filled in by regulators, that’s in large part because Obama blocked Democrats in Congress from writing tough provisions into the law.
But name-calling doesn’t get the country where it needs to be. As a result of the higher profits, businesses are sitting on $2 trillion in cash, ready to invest at a moment’s notice. But the catch-22 of this recovery is that businesses won’t hire until consumers start buying their products, and consumers won’t spend until businesses start hiring. The key is confidence, and the tense relationship between the White House and the business community undercuts confidence.
The ball is in Obama’s court. He has to go first. That means listening to business executives and showing a willingness to meet them partway. Many of his initiatives -- education reform comes to mind -- can be starting points for building a more trusting relationship.
But the business community has to work with Obama, too. It can’t expect a return to the Bush era -- Democrats are never going to desert organized labor, for example -- and it can’t count on a Republican-controlled House doing it much good. In fact, that will just bring more complications. Gridlock is usually good for business, but not this time. With a vast number of regulations coming to fill in the blanks of the health and financial laws -- to say nothing of climate change and workplace safety -- gridlock will only increase the uncertainty about what will happen next. And as everyone knows, business hates uncertainty.
Both sides have to be willing to compromise, and while that’s impossible with many other disputes, it’s not the case here. Businessmen and businesswomen have a reputation for being practical and achieving results, and Obama needs results just as much. And in this case, both sides have the same goal -- a vibrant and growing economy.