Ivan Seidenberg, chairman of the Business Roundtable, which is the association of chief executives of many of the largest U.S. corporations, recently criticized President Obama and his administration for "creating an increasingly hostile environment for investment and job creation." (Mr. Seidenberg, whom I know well and greatly admire, is the chief executive of Verizon Communications.)
In what has been described as one of the sharpest breaks ever between 'big business' executives and a White House, Seidenberg cited as major problems non-completion and ratification of the pending Korea, Colombia and Panama free trade agreements (FTAs) and the efforts in the financial reform bill to tighten rules on derivatives trading and give shareholders a greater say in choosing company directors. The Roundtable also wants a U.S. corporate tax structure that 'better promotes the competitiveness of U.S. corporations in the global marketplace', which for it simply means no changes in the tax deferral provisions that have been so rewarding to its multinational members.
The Roundtable was immediately joined in this critique by the Business Council, the group chiefly comprising the nation's major multinational manufacturing companies, and later by the U.S. Chamber of Commerce. Tom Donahue, who runs the Chamber, opined that President Obama is following "a pro-union agenda which is burying U.S. businesses in a new generation of regulations and that Washington's trajectory is creating more uncertainty for businesses that will mean more job destruction."
I couldn't disagree more with all three organizations.
Pretty obviously, their expressed desire for 'government to remove itself from the private sector' is only a slightly veiled demand for (1) more (not less) laissez faire regulation, (2) more (not fewer) individual tax policies that favor the wealthy, (3) unlimited (not regulated) derivatives trading such as almost destroyed the U.S. and global economies, (4) diminished (not enhanced) shareholder rights, and (5) more (not fewer) job-sucking FTAs of the sort that Ross Perot first had the courage to identify when NAFTA was being shoved down the throats of American workers.
Much more important to the administration than these self-serving criticisms from the 'Big Business Three' should be the Washington Post/ABC News poll published last Tuesday that found that 54 percent of respondents disapproved of the President's handling of the economy while only 43 percent approved. Sixty-two percent of respondents thought the country as a whole is going in the wrong direction, while only 29 precent had a positive feeling.
Even though the President's chief spokesman says the administration never worries about polls, it had better be worried about this one, since "It's (more than ever) the economy, stupid!"
In life -- and notably in politics -- your virtues are often made most clear by your opponents. If the Roundtable, Council and Chamber had demanded these things of me as the price of cooperation on the job creation front, then I would have felt that "my work here was finished." But obviously not the Obama White House.
The administration hears these demands and instead it immediately asks, "What can we possibly do to get back into your good graces?" This despite the fact that the administration's tepid jobs and trade initiatives to date can hardly be considered draconian or harsh. (It was, after all, the private sector's irresponsibility in many cases, plus ineffective or missing regulation, that together brought us this damnable Great Recession!)
Even though Obama's political advisor David Axelrod set the perfect tone when he said, "We want to continue to work closely with business, but working closely doesn't mean that we...simply turn away from the kinds of corrective measures that are necessary to prevent disasters from happening again," the Obama administration has now embarked on a widely reported 'charm offensive' to woo back big business's support.
Frankly, we would be much better served if the administration set about creating harmony with the business community by orchestrating clearer -- and more certain -- pathways to a resuscitated economy and a more fully employed workforce.
In past recessions, CEOs eventually created out of their own courage and convictions the certainty, and confidence, they needed to move their companies forward. The Great Recession of 2007 is so "Great", however -- and the task of quickly creating 22 million new jobs so daunting -- that this time it's going to take certainty of the sort that only large-scale Keynesian-type government intervention in sustained job creation can generate. With CEOs in America already spooked about energy reform, financial reform that still has so many underlying regulations unsettled, and globalization run amok (especially our trading with China), they are not otherwise going to start hiring in meaningful amounts and investing the staggering $2 trillion in cash reserves which, in the aggregate, they have accumulated.
If the Obama administration really wants to help businesses of all sizes, then there are a host of policy initiatives, from one end of the economic spectrum to the other, which the White House should embrace and advance through to adoption, all intended to level the global playing field and immediately boost American businesses and jobs.
It seems odd to say this at this late date, but first and foremost the administration needs to acknowledge the sheer magnitude of real unemployment in the country -- it's 29.7 million out-of-work Americans, not 14.6 million, and it's 18.5 percent of total workers, not 9.5 percent -- and it needs to stop saying, as it did again just last week, that it hopes this summer's "infrastructure boomlet" will be effective enough to help achieve the goal of having "saved or created" 3.5 million jobs by the end of this year. There is no such category as "jobs saved," and the only relevant number is the 22 million new jobs we are missing today and need to create in order to have full real employment.
The 'full employment and high individual consumption model' that America adopted after World War II has been completely wiped out by the greatest income inequality since 1928 and by decades of stagnant real incomes for most wage-earners -- as Martin Wolf just identified in the Financial Times, of every $1.00 of real income growth that was generated in the past thirty years, 58 cents went to the top 1 percent of households. In response, one way or another President Obama needs to be the alchemist behind a new grand bargain between true Progressives, who are committed to creating those millions of new jobs and oppose slashing the programs that millions of Americans now depend on more than ever, and Conservatives, who seem to almost always support big business and always favor lower corporate and payroll (and individual) taxes.
Progressives need to concede that a good economic and tax system, with readily apparent certainty, is one that encourages investment, growth and jobs, not one that intrinsically soaks the rich and punishes corporations. Conservatives, in turn, need to concede that additional government revenues need to be raised by taxes that least distort economic decision-making, such as a value-added-tax that at least 139 nations already have, which would more honestly meet the Roundtable's objective of a "U.S. corporate tax structure that better promotes the competitiveness of U.S. corporations in the global marketplace".
In the end, all that matters now -- for businesses and workers alike -- is restoring vibrancy to the middle class, and bringing back to all families and workers the American Dream of equal opportunity and fair employment. A vibrant American middle class growing from the bottom up has always been the very best thing for American business.
- Policy-wise, this means creating jobs and spurring investments here at home, balancing our trade and the effects of globalization, and, over time, materially reducing the federal deficit.
- Tactically, it means, for the Obama administration, no more muddled attempts at triangulation of the sort that leads to op-eds like the one in yesterday's Financial Times entitled "Obama has angered the centre by not disowning the left". There is no large "center" or middle -- rather, there are mostly only "progressives", "conservatives" and, most important right now, almost 30 million effectively unemployed women and men.
Using a pro football analogy, it's past time for the President to rethink his economic game plan, change some of his key players if need be, and call some audibles, lots and lots of audibles, until he finds most of those missing jobs and greatly reduces the plague of persistent income inequality.
Leo Hindery, Jr. is Chairman of the US Economy/Smart Globalization Initiative at the New America Foundation and a member of the Council on Foreign Relations. Currently an investor in media companies, he is the former CEO of Tele-Communications, Inc. (TCI), Liberty Media and their successor AT&T Broadband. He also serves on the Board of the Huffington Post Investigative Fund.
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