How Obama Can Close the Deal with Business
Gross, Daniel, Newsweek
Byline: Daniel Gross; Gross is economics editor at Yahoo Finance.
In case you hadn't noticed, President Obama has been on a mission to love-bomb corporate America in recent weeks, from cutting a deal to extend Bush-era tax rates to peppering the State of the Union address with paens to private enterprise. But are business leaders buying into the courtship? After all, this is a president who came into office guns blazing about the business world's role in the economic crisis.
The answer, at least among moguls who gathered at the World Economic Forum in Davos: so far, so good--but we want more.
"We clearly felt they were antibusiness," said Jeffrey A. Joerres, the CEO of Manpower Inc., the big employment agency, while taking a break in Davos's "Strategic Partners" lounge as Bill Gates drifted by. "There was a total disregard for the fact that business creates jobs. What I'm hearing now, taken on face value, is what we need. The proof will be in where it goes from here."
So what will it take to close the deal with corner-office types? Backing off further regulation would be a start, say some business leaders. Henry Kravis, the private-equity pioneer, told NEWSWEEK he remains concerned about government micromanaging of the financial industry. "In the financial area, yes, industry made some mistakes and needs some reform, but let's not go to zero tolerance," Kravis said, pausing briefly to greet former U.N. secretary-general Kofi Annan. Similarly, insurance companies are watching the rollout of the regulations that implement Obamacare with a great deal of trepidation.
Lower taxes--perhaps unsurprisingly--are also on the wish list. Though Obama's tax deal left in place lower rates on personal income, capital gains, and dividends, executives argue they need corporate-tax relief to fend off global rivals. Manpower's Joerres, noting that service companies have difficulty racking up big tax deductions, complains that the U.S. corporate-tax rate is higher than the rates in Europe. "My two fiercest competitors are $100 million to $170 million a year better off than me in their country so they can invest in things," he said. "We can't be the highest [taxed] country."
Beyond those and other substantive changes, though, CEOs want still more change in tone from the commander in chief. Obama has already been talking up entrepreneurship. But some say it wouldn't cost him much to speak more highly of large enterprises. Michael Splinter, CEO of microchip-equipment maker Applied Materials, noted that much of the discourse about jobs revolves around virtuous small businesses. "But it's really big businesses that create jobs and a waterfall effect," he said.
This last yearning looms larger than you might think. Put simply, some CEOs want to be stroked--a fact made clear time and again in conversations with the brass at banks, manufacturers, and hedge funds. In the Bush era, they saw a president who celebrated them, catered to them, and let them guide the writing of regulations. And rather than interpret some of Obama's get-tough talk as politically driven, many took the posture as a sign of hostility. …