You've probably heard: The Obama administration is trying to drive business out of business.
The U.S. Chamber of Commerce complains that Obama has "vilified industries" while destroying jobs. Former General Electric CEO Jack Welch says Obama has an "anti-business bias" that enables him to wreck business opportunities with a single utterance. Fox News runs regular "war on business" segments highlighting government strangulation of free enterprise. Obama's crusade against corporate America is a regular feature of Republican campaign ads.
Somewhat overlooked are these small factoids:
Obama has overseen corporate bailouts started under the Bush administration that have funneled $600 billion of taxpayer money into banks and automakers.
The Federal Reserve under Obama has inflated the stock market well above its natural level, to the great relief of the investor class.
The Fed has also kept interest rates at record lows, which punishes Main Street savers but benefits big businesses that have access to some of the cheapest money ever.
The much-derided stimulus plan kept the recession from being a lot worse, which saved many businesses on the edge and helped keep others healthy.
Obama has quietly let union-backed "card check" legislation, which would strengthen unions, drift down the Democrats' priority list.
Obama's unstated weak-dollar policy is helping keep America's export sector humming.
Assessing Obama's true attitude toward business is obviously somewhat subjective, and on other matters, like regulation, he has clearly raised the burden on companies. But a couple of bottom-line facts suggest that big business has flourished under Obama, especially considering the financial swoon that was underway when he took office. On the day Obama was sworn in, for example, the S&P 500 stock index opened at a miserable 849. It's now around 1180. That's nearly a 40 percent surge in less than two years.
Corporate profits have risen for six straight quarters and hit $1.6 trillion in the second quarter of 2010, the most recent reporting period. That's 60 percent higher than in the 4th quarter of 2008, before Obama took office. Corporations are sitting on a record $1 trillion in cash, which they've been able to raise on account of improved business conditions, low interest rates, a credit sector that's been revived entirely through government intervention, and bailed-out banks that are once again happy to lend to their corporate customers.
If this is anti-business behavior, corporate America would welcome a lot more of it.
It's true that Obama has criticized "fat-cat bankers" and other business leaders. Big surprise. Since the bailouts began in the fall of 2008, Americans have felt that government policies have favored big business over ordinary folks, and Obama's rhetoric has played to that. A Pew Research poll from July, for example, found that 74 percent of people believe government policies have helped the banks and 70 percent think they've helped large corporations. Only 27 percent feel government policies have helped the middle class. Those people don't seem to think Obama has been anti-business. Obama's anti-business rhetoric, in fact, has been something of a smokescreen meant to disguise the unpopular handouts he's actually given to corporate America.
Business leaders know this, but they also know that Obama and the Democrats are vulnerable to anti-business charges for a lot of other reasons. Healthcare and financial reform look as if they'll require mountains of new paperwork, while the benefits to business are unclear or far in the future. Obama has no prominent businesspeople in his cabinet, so he lacks forceful allies with C-suite credibility. Government efforts to help small business over the last two years have been lackluster and largely unsuccessful. And Obama is still pushing for energy and immigration reform, even though they failed in the recent Congress, will probably fail in the next one, and are largely viewed as heaping more regulatory burdens on business. On that, Obama seems to have a tin ear.
The irony is that pro-business groups like the Chamber of Commerce are effectively painting Obama as anti-business, even as his policies aid corporate America. It's reminiscent of Bill Clinton's problem with the military in the 1990s. Clinton had weak national-security credentials when he was elected in 1992, and talked about using the post-Cold War "peace dividend" to divert military spending to other priorities. It never happened. Critics exploited Clinton's evasion of the draft and other vulnerabilities to argue that he was weak on defense, and to prove otherwise, Clinton kept defense spending stable despite the disappearance of the Soviet threat and far less need for troops and weapons. In the same way, Obama's critics have backed him into a corner and forced him to prove that he's not anti-business.
It's a booby-trapped game that Obama probably can't win, if he sticks to his current course. With so many middle-class people still hurting from the recession, Obama can't crow about bank bailouts, a stock-market windfall, or lavish corporate profits, even though these do help the larger economy and could eventually translate into more jobs. If he proposed corporate tax cuts or other measures to placate the business lobby, he'd further alienate whatever is left of his liberal base. And even if he gives up on energy and immigration reform, that won't amount to anything proactive.
If Obama really wants to prove his critics wrong, he could propose tax reforms that help individuals and small businesses first, and big business indirectly. He could recruit some corporate heads to join his administration or become ambassadors for his policies, the way former Fed chairman Paul Volcker backed his financial reforms. Perhaps most importantly, he could acknowledge the regulatory burden that government places on business and announce a moratorium on new regulations, until the economy is healthy again. The question for Obama is whether he wants to be a stealthy, inconsistent ally of business, or an overt, reliable one.