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Business: Barack Obama's Corporate Outreach Not Enough
After Business Leaders sank Millions into the Midterms to defeat Democrats, a chastened Obama administration is seeking reconciliation with the Corporate community.
But after two years of building frustration, the executives say they won’t be won over by another round of private lunches and photo opportunities at the White House.
If President Barack Obama has any hope for a truce with corporate America in time for his 2012 reelection campaign, he needs to drop the name-calling, try to see their point of view better and step up with some specific proposals.
(See: Poll: Non-voters split over Obama)
“No amount of relationship-building is a substitute for policy,” said Johanna Schneider, executive director for external affairs at the Business Roundtable, which was once one of the administration’s most enduring corporate allies.
“We have to see some concrete policies that will help grow business because everyone’s goal is to grow jobs. This isn’t hocus-pocus. There are concrete steps to take for job growth,” she added.
The White House is embarking on a new round of corporate outreach, said Valerie Jarrett, a key White House adviser, who told POLITICO in an interview that she is lining up a fresh round of private, luncheon sessions and that other events could be in the works.
The White House is also mulling over an Obama appearance at the U.S. Chamber of Commerce — even though the group spent about $75 million attacking Democrats and assisting the Republican takeover of the House. (See: Obama plans truce with Chamber)
“Our position moving forward is to find as many opportunities as possible to interact with the business community,” said Jarrett. “The president is very interested in the coming weeks in hearing additional input from the business community.”
The White House’s relationship with the corporate world has always had a sort of Mars-Venus quality to it. Business leaders say Obama simply doesn’t get them and has no one in the White House with corporate experience or who is steeped in the daily challenges of operating in a global economy. It didn’t help when Obama lashed out at “fat cat bankers” on Wall Street at the height of the regulatory reform effort or attacked BP, a onetime White House ally on energy reform, in the midst of the Louisiana oil spill. (See: OMB's Lew confirmed after hold lifted)
The message to other sectors: "You could be next," said one corporate lobbyist.
Some White House officials, in turn, privately express frustration that the business world seems to give Obama no credit for supporting bailouts of Wall Street and the auto industry as well as an economic stimulus bill that likely spared the country a deeper recession. Many CEOs now are enjoying hefty corporate profits and a Dow at healthy levels in part because of Obama’s efforts in steering the economy through the global meltdown, administration officials contend.
But the stakes for Obama couldn’t be higher, economically or politically, in rebuilding relations. Cooperation with the business community is vital for job growth and economic recovery. Expanding trade and cutting the deficit, two other Obama priorities, will require Republican votes — which the business community could deliver.
David Cote, the chief executive officer of Honeywell Corp. and a supporter of the White House policies, said gains can occur with a concerted effort by the administration.
“The administration is being thoughtful about getting input. You will see more outreach,” said Cote, who recently traveled with Obama to Asia to highlight trade and serves on the White House deficit commission. “I find it hard to believe people in the business community will turn a deaf ear to that. I don’t view that as being unrecoverable.”
In September, Obama called for deep investments in infrastructure projects. He also proposed expanding and permanently extending the research and development tax credit and allowing businesses to write off 100 percent of the expenses for new plants and other investments immediately — three items on the business community's wish-list for years.
Other administration officials are also reaching out.
Treasury Secretary Timothy Geithner met privately with Chamber President Tom Donohue during the White House Asia trade trip and appeared before the Chamber’s board a week after the midterms — a striking departure from a White House-Chamber feud that briefly grabbed headlines last year and during those very same elections.
On Dec. 8, Secretary of State Hillary Clinton, Homeland Security Secretary Janet Napolitano and Health and Human Services Secretary Kathleen Sebelius are scheduled to meet with the Business Roundtable, an association that includes the CEOs of the nation’s largest companies.
But there have been some bumps along the way.
Last week, Treasury’s Gene Sperling appeared at a retreat for technology executives. “He expressed a desire to work closely,” said one attendee. “Then, when we brought up the issue of repatriation [the opportunity for corporations to bring overseas earnings back to the U.S. at lower tax rates], he openly showed frustration with us for just bringing the subject up.”
It’s a complaint heard often from the business community. “Access isn’t the issue. The question is: Where is the delivery?” said one corporate representative who, like others, sought anonymity to speak freely.
Greg Brown, CEO of Motorola and an administration ally, said the White House had to take necessary but politically difficult steps to stabilize the economy. But he also noted, “Now that we are moving from stability to growth, I think there is an acknowledgment that the relationship needs to get closer and we collectively need to find common ground.”
To achieve that, the White House must overcome a hefty wariness in the business community about Obama’s populist bent that exploded into open warfare during the midterms when wealthy individuals and corporations spent more than $200 million trying to defeat Democrats.
“The amount of money they spent was rather stunning,” said an administration official.
One of the most striking break-ups of 2010 was between Obama and the Business Roundtable.
From the start of his administration, Obama framed the coalition of CEOs as the grown-up alternative to the Chamber. In turn, the Roundtable CEOs made a conscious decision to try to work with the White House.
But as final negotiations over health care heated up earlier this year and several of their concerns were left unresolved, frustrated voices dominated the monthly CEO meetings. They grew even louder when the White House turned to Wall Street regulatory reform.
Still, the CEOs voted in February, March, April and May to stay at the table. In June, they gave up.
Why? The infamous consumer watchdog office? The new health care mandates? No, say insiders familiar with internal discussions, the roundtable walked away because of a group of technical fixes to the health care and Wall Street reform laws they sought — and in some cases were assured would be done — that never got done.
For instance, one provision they wanted deleted from the Wall Street bill gives labor leaders and other minority shareholders a chance to change the way corporate boards are formed — viewed as a “poke in the eye” by the Roundtable’s CEOs.
Another removed a tax incentive for providing retiree drug coverage, which roundtable officials warned would increase Medicare costs and force companies that dropped the coverage to publicly restate their earnings because of the lost tax breaks.
When several did, the headlines that followed linking their action to the reform bill prompted a profanity-laced call from former White House chief of staff Rahm Emanuel and threats of hearings on Capitol Hill.
And a third curbed corporate trading of special purpose derivatives, a long-standing revenue-generating mechanism that wasn’t related to the highly speculative trading that led to the economic collapse.
“These weren’t issues that got the president any votes or political leverage,” said one insider to the conversations. “These were issues that demonstrated that this administration doesn’t get it. It’s like talking to your dog.”
The Roundtable’s Schneider conceded that “the tone and tenor of the dialogue wasn’t as collegial as one might have hoped.” But she said the trade group kept up a dialogue with the White House and that several Roundtable CEOs were on Obama’s recent Asia trip, which became “an important relationship-building effort.”
Other executives complain that the White House continually promised a “hard pivot” to job creation and the economy that never fully materialized, at least not in a way that made corporate America feel it could be part of the solution.
“There was no challenge to come work together for a common purpose,” one executive said. “There was never a call for weekly conference calls with the president and demands to go get stuff done. That’s the power he has as president. And instead they kept pushing people away.”
The way Jarrett sees it, the White House was dealt a bad economic hand and had no choice but to move aggressively with legislation that had sweeping and intrusive impacts on the private markets — a course Obama had not necessarily advocated when he launched his presidential bid before the economic meltdown.
As a consequence, the business community had a lot to digest about what exactly the Obama administration meant to them, which created some uncertainty about the course ahead.
Now that the administration is drafting the regulations to implement the reform laws, White House officials said, tensions should ease as business leaders see that they are coordinating to ensure there are no unintended consequences.
Jarrett also said trade, tax reform, deficit reduction and education are all areas where the business community and the White House share common ground and could join ranks for action.
Brown, of Motorola, said it will take “compromise, conviction and courage” for both parties to make the changes necessary to improve the economy and create a robust job environment.
“The fact of the matter is these are tough times, politically charged and very emotional. As a country, there is no easy formula or short cut here. This is tough stuff,” he said.
“We’re coming out of a dark tunnel, and it’s been hard. It’s been hard on everybody, the public and private sector. Now, we need to lock and go.”
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Sources: CNBC, MSNBC, Politico, Google Maps
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