Obama's Woes Are Emboldening Lobbyists

In his first few months in office, President Barack Obama benefited from a giant halo effect, thanks to his sky-high approval ratings. That's history now, given the surprising public push-back over the President's quest to overhaul the U.S. health-care system.

Now, some business groups emboldened by the hit to Obama's popularity over health care hope to roll back other parts of the Administration's economic policy agenda. In fact, business lobbyists are putting the final touches on fall strategies aimed at blunting Obama initiatives on taxes, energy policy, and financial reform. Obama's troubles "change the game," says Jade West, head of government affairs for the National Association of Wholesaler-Distributors. "It makes it much easier for those of us fighting for more restrained government and tax policies."

The Administration believes much of the opposition is the result of a misunderstanding over what's truly in Congress' various health-care proposals—and the White House is confident it can overcome that. Still, many voters seem alarmed by soaring deficits and government overreach. "The public feels Obama has spent too much and entrenched the role of big government," says Gregory R. Valliere, chief policy strategist for broker Soleil Securities. Larry Summers, Obama's chief economic adviser, dismisses those concerns and says the White House is optimistic that it will pass a health-care bill. "Success begets success, and that will create momentum."

It had better, for Obama's effort to quickly pass a cap-and-trade bill to limit carbon emissions may be in trouble. Many manufacturers and utilities argue that the costs would weigh too heavily on the still-weak economy—a particularly strong argument in coal-heavy Southern and Midwestern states represented by conservative Democrats. Those lawmakers already face a popular backlash on health care and aren't eager to back another program their constituents don't like. As a result, formal debate on the cap-and-trade has been nudged back until later in the fall.

Shocking Scenario Aside from health care, Obama's team also hopes to score wins on financial sector reform. Yet business lobbyists are fighting mightily to derail the White House's proposal for a Consumer Financial Product Agency aimed at boosting protections against predatory lending. Over the August recess, the U.S. Chamber of Commerce held a series of conference calls with local chapters across the country, arguing that the agency's proposed mandate is so broad it would apply to any small business that extends credit to its customers.

In recent days the powerful business lobby has begun running ads claiming that even a local butcher who lets his customers pay at the end of the month could be roped in. "People were shocked" by the ads, says David Hirschmann, president and CEO of the chamber's Center for Capital Markets Competitiveness. Suddenly, he adds, half the heads of local chambers feel targeted. For his part, Summers says such arguments can't be taken seriously.

Even so, these kinds of tactics could prove highly effective politically. Hirschmann says the campaign has generated 17,000 letters to congressional offices. The message may not be quite as scary as "ObamaCare will kill your grandma," but it may be enough to shift the debate. Such are the changing political dynamics confronting the White House.

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