President Barack Obama joined patriotism with economics as he urged U.S. business leaders to “get in the game” in support of their country by spending more cash.
“Now is the time to invest in America,” Obama said in a speech yesterday to the U.S. Chamber of Commerce, arguing that his policies have laid a foundation for business success.
Obama focused on corporate executives’ shared responsibility for the nation’s economic growth, echoing the rhetoric of President John F. Kennedy, who called on Americans to “ask what you can do for your country” during the Cold War.
“As we work with you to make America a better place to do business, I’m hoping that all of you are thinking what you can do for America,” Obama said. “Ask yourselves what you can do to hire more American workers, what you can do to support the American economy and invest in this nation.”
Johanna Schneider, who directs external relations for the Business Roundtable, an association of almost 200 chief executives of global companies, said corporations owe their shareholders a duty to make investment decisions based on economic conditions.
“Jobs will follow demand,” Schneider said. “Unless you see sustained demand for your product or your service, you cannot from a fiduciary standpoint invest in more employees.”
‘I Get It’
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 profits rebound to a near record. Nonfinancial companies held $1.9 trillion in cash on their balance sheets, government data shows.
In remarks to the chamber, which opposed key parts of his signature initiatives over the past two years, Obama said 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.”
“I understand that you’re under incredible pressure to cut costs and keep your margins up,” Obama told the chamber, which represents companies such as Caterpillar Inc. and Lockheed Martin Corp. “I understand the significance of your obligations to your shareholders. I get it.”
The chamber has complained that Obama has cost the U.S. economy jobs while pursuing health-care and climate legislation it opposed. The organization spent more than $30 million on the 2010 congressional elections, mostly to back Republicans.
The speech was his first formal address to the chamber and took place at the group’s headquarters in Washington across Lafayette Park from the White House. Obama walked across the park to make the speech and began by joking “maybe if we had brought over a fruitcake when I first moved in, we would have gotten off to a better start.”
He touched on some of the same themes he struck in his State of the Union address: the need to rebuild and modernize the nation’s transportation and telecommunications systems and take steps that will promote research and innovation in areas such as biotechnology, information technology and clean energy.
“The costs to business from the outdated and inadequate infrastructure we currently have are enormous,” Obama said. “That’s why I want to put more people to work” rebuilding crumbling roads and bridges.
‘Loopholes and Carve-Outs’
At the same time, he said he recognized that government must “cut spending that we just can’t afford.”
He said businesses deserve a revamped tax code and other measures that will help them compete, including balanced regulation. He called on businesses to join him in an effort to change a “burdensome tax code.”
Obama said “various loopholes and carve-outs” distort economic decisions. He drew attention to the way the deduction for interest encourages companies to borrow rather than invest with equity.
“You’ve got too many companies ending up making decisions based on what their tax director says instead of what their engineer designs or what their factories produce,” Obama said. “And that puts our entire economy at a disadvantage.”
Obama said that while he will pursue a review of government rules affecting business, “not every regulation is bad; not every regulation is burdensome on business.”
The benefits of changes on behalf of business must be shared with workers, Obama said.
“We cannot go back to the kind of economy and culture that we saw in the years leading up to the recession, where growth and gains in productivity just didn’t translate into rising incomes and opportunity for the middle class,” he said.
Chamber President Tom Donohue, in an interview with Fox News Channel’s Special Report, said Obama “raises a great challenge but we have to look at it in the context that 95 percent of people in the world that we can sell something to live somewhere else.”
“This is a two-part deal,” Donohue said. “Do it at home, sell it abroad.”
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,” Thomas Collamore, the chamber’s senior vice president of communications, said before the speech. “Certainly, the atmospherics are different, and that’s all to the better.”
The Standard & Poor’s 500 Index has risen about 8 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.