iOS app Android app More

White House To Business: Can't We Be Friends?

First Posted: 11/04/10 10:00 AM ET Updated: 05/25/11 07:10 PM ET

Obama

WASHINGTON - It seemed like the beginning of a beautiful friendship -- or at the very least a functional relationship.

In March 2009, with the United States on the brink of recession and the stock market at 12-year lows, President Barack Obama met with the Business Roundtable, an association of chief executives from top U.S. firms. The two sides said they would work together to rescue the economy and signaled openness to tackling long-term problems like tax reform and deficit reduction.

Obama hailed the "entrepreneurial spirit" of the CEOs and said his goal was "not to disparage wealth but to expand its reach; not to stifle the market," but to help spur innovation.

Harold McGraw III, chief executive of the McGraw-Hill Companies and the Roundtable's chairman, was equally effusive. "There's a misperception, I think, in some people's minds that the relationship between business and the Obama administration is like, well, oil and vinegar," he said. "From our standpoint, that couldn't be farther from the truth."

Eighteen months later, oil and vinegar would be among the more polite ways to describe the state of the White House's relationship with the business community.

In a speech last summer, the Roundtable's chairman, Verizon chief executive Ivan Seidenberg, accused the administration and Democrats of creating a hostile environment for business. "By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses," Seidenberg said.

Business groups contend this uncertainty has led firms to keep $1.8 trillion in cash on the sidelines -- money they might otherwise use to invest and hire.

After taking what he called a "shellacking" in midterm elections, Obama acknowledged missteps in his dealings with the business community, and said he was ready to listen hard and take action.

"There's no doubt that ... when you had the financial crisis on Wall Street, the bonus controversies, the battle around healthcare, battle around financial reform, and then you had BP, you just had a successive set of issues in which I think business took the message that, well, 'Gosh, it seems like we may be always painted as the bad guy,'" Obama told a news conference on Wednesday.

He said he had specific plans to reach out to business. "There's been a lot of strong interaction behind the scenes. But I think setting the right tone publicly is going to be important and could end up making a difference at the margins in terms of how businesses make investment decisions."

White House aides say several ideas are under consideration. One is to hold a "summit" on jobs and the economy in either late December or early January, led by Obama and including leaders of both parties as well as top business leaders.

In the meantime, the president will also make a highly visible gesture toward corporate America when he sets off on a 10-day trip to Asia this week. On his first stop in Mumbai, he will address a U.S.-India business summit that will include a delegation of more than 200 U.S. chief executives -- everyone from Boeing Co's Jim McNerney and Honeywell International Inc's David Cote to General Electric Co's Jeffrey Immelt.

His presence there could help the companies seal billions of dollars in deals. Part of the agenda is a meeting between Obama and the U.S. CEOs.

A big priority on the Asia trip will be ironing out remaining issues with Seoul on the U.S.-Korea free trade pact, something business has been clamoring for since the start of the administration.

There will be further outreach, though officials say much will depend on whether the newly strengthened Republicans are willing to work with the administration.

"The perception that the business community and the administration aren't getting along is not productive for either side or for the economy and we see real opportunity for common ground on a number of policies," said Austan Goolsbee, a longtime Obama aide who was recently promoted to become chairman of the White House Council of Economic Advisers.

Goolsbee said a big unknown is: "Is the Republican party going to remain in a stance of 'If the president is for it, we oppose it?'"

After Tuesday's election, Obama was faced with the prospect of legislative gridlock. Republicans pushed Democrats decisively from power in the House of Representatives and strengthened their ranks in the Senate as voters vented frustration over the economy.

Now that the election is over, one idea that could gain traction is a payroll tax holiday to give consumers and businesses some extra cash. Obama had considered proposing it before the election but rejected it because of its cost. There is some openness at the White House to it now but much would depend on whether it seemed likely to gain bipartisan support.

Obama aides say they were frustrated that the economic package the administration offered in September -- including tax breaks for companies and beefed-up infrastructure spending -- received little to no backing from Republicans in Congress. They hope to enlist business support in reviving these ideas.

But mending the frayed relationship may need to come first.

MAKING UP IS HARD TO DO

During the mid-term Congressional campaigns, an open feud broke out between the White House and the Chamber of Commerce as a result of the business lobby's voluble fund-raising to defeat Democratic candidates.

The president got in his shots, too. At a rally in Philadelphia, Obama suggested that foreign funds had made their way into the Chamber's campaign coffers -- an accusation that the business group and many in the media viewed as unfounded. Chamber of Commerce President Thomas Donohue fumed that the attack was an attempt to "demonize" the 100-year-old trade association.

Many chief executives, even those who have been supportive of the administration, saw the tussle with the Chamber as a broadside against business.

Then there was the rift with the National Federation of Independent Business, a major small-business lobby which has joined a lawsuit challenging the constitutionality of Obama's healthcare law.

NFIB member Ralph Beebe, president of Highland Engineering Inc. in Howell, Michigan, was part of a group of small-business owners who visited the White House a year ago where he grilled the president about the tax cut debate. He said he came away feeling that he had gotten the "brush-off" when he raised his concerns that taxes on businesses were too high.

Like many NFIB members, Beebe is up in arms over Obama's desire to see the tax cuts on upper-income Americans lapse. He argues that the hike will hit small business owners, many of whom are taxed under individual tax rates. The White House counters that the vast majority of small business owners would not see their taxes go up.

Susan Eckerly, a senior lobbyist at the NFIB, describes the trade association's ties with the White House as "more of an acquaintance than a real relationship."

"Unlike in a true friendship, when you have a two-way conversation, we seem to have a one-way conversation where we tell them how they could help small business and they listen politely and then do something else," she said.

She acknowledges, though, that joining 20 state attorneys general in challenging the new healthcare laws hasn't really helped matters. "That probably has been a bit of a conversation stopper as well," Eckerly said.

Top White House aide Valerie Jarrett, the administration's main emissary to the business community, said the tone by some trade associations became "high-pitched" during the campaign. But she added: "We are confident that we can all come back to the table and be constructive."

She listed exports and education initiatives as areas where the administration and business can work together.

Allies of the administration take particular umbrage at accusations that Obama's agenda is overly intrusive. At the height of the financial crisis, many prominent liberal economists urged an administration takeover of the big banks. Obama and Treasury Secretary Timothy Geithner rejected that step and managed to restore calm to the markets through far less interventionist methods.

Business has benefited "greatly" from the action the president took to stabilize the economy and financial system, Jarrett said. "If businesses didn't have access to capital, they wouldn't be able to expand and grow," she said. "The president's support for the financial institutions and the steps he took to steady them so they could lend again is critically important to the business community."

CEO OUTREACH

Obama, who has long criticized the influence of lobbyists in Washington, has tended to put more emphasis on outreach to individual executives rather than trade associations.

Billionaire investor Warren Buffett, Google chief executive Eric Schmidt, GE's Immelt and former Xerox CEO Anne Mulcahy -- whose name was dropped as a possible replacement for outgoing economic adviser Larry Summers -- are just a few of the business people whose counsel the White House has sought out.

Boeing's McNerney was named earlier this year to lead the President's Export Council and GE's Immelt serves on an outside advisory panel on the economy led by former Federal Reserve Chairman Paul Volcker.

"They have corporate CEOs in and out of the place with great frequency," said Bruce Josten, chief lobbyist for the Chamber of Commerce. "I have absolutely no doubt that they do that."

But, he added, "They are not having coffee klatches morning, noon or night with the business organizations in this town whose job responsibility is paid for voluntarily with dues money by the companies of America, small, medium and big."

The Obama administration maintains a much more cordial relationship with the Business Roundtable, which does not have a political fund-raising arm.

Jarrett, Goolsbee and Michael Froman, a top adviser on international economics, met with the Roundtable's executive committee a month ago. The discussion touched on trade, among other issues.

The meeting was part of a below-the-radar charm offensive the administration has undertaken over the last several months, even as it publicly sparred with the Chamber.

The administration has been "quietly reaching out and trying to rebuild some bridges," said one Wall Street money manager and Obama supporter. He said the outreach had included top aides as well as Obama himself.

READ MORE

FOLLOW HUFFPOST BUSINESS
Subscribe to the HuffPost Money newsletter!
Filed by Ryan McCarthy  |