President Barack Obama will challenge American business leaders today to move their cash from the sidelines to invest in the U.S. as part of what he will call a shared burden to boost the nation’s economy.
Obama will make a case in a speech to the U.S. Chamber of Commerce, which has been among his strongest critics, that he is doing his part to improve the business climate after a free- trade agreement with South Korea, a deal to extend Bush-era tax cuts, and a State of the Union address that proposed more government support for infrastructure and “innovation.”
“If we make America the best place to do business, businesses should make their mark here in America,” Obama said in a Feb. 5 radio address, previewing today’s message to the country’s largest business lobby. “They should set up shop here, and hire our workers, and pay decent wages, and invest in the future of this nation. That’s their obligation.”
Obama, 49, will be delivering that message to a group that went all out to defeat or oppose key parts of signature initiatives of the first two years of his presidency -- the health-care and financial-regulation overhauls -- and spent more than $30 million on the 2010 elections, mostly to back Republicans.
The speech, his first formal address to the chamber, will take place at the group’s headquarters across Lafayette Park in Washington. He’ll march under a two-story-tall “JOBS” sign that has been visible from the White House for the last nine months.
The chamber, which represents companies such as Caterpillar Inc. and Lockheed Martin Corp., has complained that Obama has cost the U.S. economy jobs while pursuing the health and climate legislation it opposed.
Since Republicans took control of the House of Representatives in the elections, Obama has taken steps that have defused tensions and earned praise from corporate critics such as Ivan Seidenberg, chief executive officer of Verizon Communications Inc.
The deal Obama reached with Republicans to extend the tax cuts for two years and the appointment of former JPMorgan & Chase Co. executive William Daley as his chief of staff were cheered by the chamber. So was his commitment to push for the long-stalled trade accord with South Korea.
“You have to give the president his due,” said Thomas Collamore, the chamber’s senior vice president of communications. “Certainly, the atmospherics are different, and that’s all to the better.”
S&P, Corporate Profits
The Standard & Poor’s 500 Index has risen about 7 percent since the tax-cut deal was reached on Dec. 6. Many private forecasters raised their projections for the economy after the compromise, with the median forecast for gross domestic product growth in 2011 at 3.1 percent in January, up from 2.6 percent in December, according to a monthly Bloomberg News survey of economists.
Companies themselves are doing better. While the U.S. unemployment rate has remained at least 9 percent for the longest stretch since monthly data was first compiled in 1948, U.S. corporations by the end of last year’s third quarter saw their profits rebound to a near record and nonfinancial companies held $1.9 trillion in cash on their balance sheets, according to Commerce Department and Federal Reserve data.
The corporate cash is being eyed by Obama for investment to stimulate the economy, by investment bankers for mergers and acquisitions deals, and by shareholders for dividend increases.
Tom Donohue, the chamber’s president, has said uncertainty about new regulations is prompting executives to hold back on hiring. Companies shouldn’t be prodded to take on more American workers, he said.
“The most important thing to tell a company is to return a reasonable return to their investors,” Donohue said on Jan. 11.
The regulatory decisions over the coming year that will determine how the health-care and financial-regulation laws are enforced will be a continuing source of conflict.
And the chamber sent a 10-page list of complaints about other proposed regulations to House Committee on Oversight and Government Reform Chairman Darrell Issa, a California Republican.
The Dec. 29 letter, which is being made public for the first time today, argues that Environmental Protection Agency proposals to crack down on hazards from industrial boilers, lead paint and coal ash are examples of the agency “attempting to modify, re-issue, or re-interpret virtually every controversial environmental regulatory decision of the past decade.”
‘Threaten Energy Resources’
The chamber is also lobbying the new congressional Republican majority to pass legislation to prevent the EPA from adopting proposed rules to limit carbon emissions from power plants and factories under the four-decade-old Clean Air Act. Such a move would “threaten energy resources,” the chamber said in a report released Feb. 1.
The two sides differ over other issues such as infrastructure spending and corporate taxes.
The chamber says it wants changes in rules to boost private investment, not further government spending.
“There is a huge amount of private capital sitting on the sidelines,” and Obama should concentrate on revamping rules to free that up, Collamore said.
Picking up a refrain the chamber has complained about for years, Obama said in his State of the Union speech that U.S. companies “are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change.”
Overhauling the tax structure, however, must be done without raising the deficit, Obama said, a pledge the chamber’s tax counsel, Caroline Harris declines to make.
Even with the recent attempts at rapprochement, the White House doesn’t expect to become too close to the business community. Asked about the relationship at the Bloomberg Breakfast in Washington on Feb. 2, Daley set modest goals.
“All you want from any constituent group like that is respect and a belief that you’re trying to do the right thing,” Daley said. “And if they don’t like your rhetoric or they think you’re picking on them, you know, sometimes you have to pick on them.”