Obama Veers Into `Off-Script' Tax-Cuts Debate With His Economic Advisers
Corporate grievances against President Barack Obama intruded into a public meeting of the president and his outside economic advisory board as three members challenged him on regulation and tax policy.
While the topic of yesterday’s White House meeting was supposed to be education, Mark Gallogly, managing partner of the buyout firm Centerbridge Partners LP, pressed Obama on regulatory burdens imposed by his administration.
The door was opened for Gallogly by William Donaldson, head of Donaldson Enterprises Inc. and a former chairman of the Securities and Exchange Commission, and Harvard University economics professor Martin Feldstein, who both served in Republican administrations, when they criticized Obama’s plan to let tax cuts for the wealthiest Americans expire amid a weak recovery.
“This was a fun conversation,” Obama said as he closed out the meeting, drawing laughter from some members of the President’s Economic Recovery Advisory Board. “It went a little off-script, which is good.”
The exchanges reflect tension between the White House and some business leaders that is playing out at a time that the Obama administration’s economic competency is under fire from Republican critics during a congressional election year, and as economic growth slows and the unemployment rate hovers near a 26-year high.
“There’s this concern about the business community’s attitude about the administration,” said Feldstein, 70, who was a chief economic adviser to President Ronald Reagan. “And it’s not just the business community, it’s high-income individuals, entrepreneurs and others.”
Feldstein was echoing remarks by corporate executives. Verizon Communications Inc. Chief Executive Officer Ivan Seidenberg, chairman of the Business Roundtable, an association of senior corporate executives, used a speech in Washington in June to say Obama is creating “an increasingly hostile environment for investment and job creation.”
A September poll of investors and analysts who are Bloomberg subscribers found more than three-quarters of respondents in the U.S. view Obama as anti-business.
Obama is confronting such criticism even as he seeks to limit voter concern that the government is too generous to Wall Street and corporate America. The $700 billion financial industry bailout and the rescues of General Motors Co. and Chrysler Group LLC have fueled public anger.
Executives in Cabinet
Unlike his immediate predecessors, Obama doesn’t have a top-level corporate executive in his Cabinet. Former President George W. Bush’s administration included Vice President Dick Cheney, a former Halliburton Co. chief executive, and Treasury Secretary Henry Paulson, former chairman and CEO of Goldman Sachs Group Inc. A former Goldman co-chairman, Robert Rubin, was President Bill Clinton’s Treasury secretary.
Obama, 49, has sought to counter anti-business perceptions with presidential lunches and dinners for prominent business figures and with public meetings to confer with executives.
“Look, I think we’re continually looking for opportunities to work with business,” White House press secretary Robert Gibbs said yesterday. “We want to make sure that what’s good for Wall Street is good for Main Street.”
Still, Obama couldn’t escape the criticism at a meeting of his own advisory board, held before television cameras in the State Dining Room.
Feldstein told Obama that extending for two years all the tax cuts passed during Bush’s administration would stimulate demand and boost the recovery.
“We’ve been expanding at a slower and slower pace, quarter after quarter,” Feldstein said. “This doesn’t seem to me a time when you want to pull back demand by letting tax rates jump.”
Donaldson, 79, who was SEC chairman under Bush, said the tax debate is adding to business “uncertainty.”
“What I would I suggest to you is that your administration, and particularly you, set forward with a statement that you’re not going to this time increase taxes for anybody and relieve that uncertainty,” Donaldson told the president.
Obama said he’s “unequivocal” about retaining tax cuts for 98 percent of American taxpayers while letting rates rise for individuals making more than $200,000 and married couples with incomes above $250,000.
“I don’t know of any economist, including I think Martin, who would argue that we are more likely to get a bump in aggregate demand from $700 billion of borrowed money going to people like those of us around this table who, I suspect, if we want a flat screen TV can afford one right now and are going out and buying one,” he said.
Obama turned for “some economic help” to Laura D’Andrea Tyson, an economic adviser to Clinton, who defended Obama’s policies. In conversations with corporate executives about ways to aid the recovery, “they’re not talking about their particular income tax bracket,” she said.
Revenue from the higher rates on top earners could be used for projects that are “more demand-generating,” such as an infrastructure bank or a temporary cut in payroll taxes, Tyson said.
Gallogly followed by expressing concern about Obama’s regulatory policies. “When you re-regulate whole sectors of the economy,” he said that “you do create uncertainty.”
Afterward, the president told a small group of reporters that it was a “robust discussion.”
When asked whether he was surprised that the discussion turned to income taxes he said, “sometimes everybody feels like they’ve got to follow up on the two minutes they’ve been allocated.”
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