Following his first news conference in eight months, President Obama met with a dozen CEOs on Wednesday afternoon to signal a new start with a group that has often viewed his administration as hostile to the business community. Attendees included the heads of Pepsi, Xerox, Walmart, Honeywell and American Express, but in a rebuff to Wall Street no major banks were invited.
The outreach effort comes as the Obama administration prepares for negotiations with Congressional Republicans aimed at avoiding the more than $600 billion worth of spending cuts and tax increases set to take effect in 2013 – and the business leaders gathered at the White House reportedly made clear to the president that steering clear of that fiscal cliff would be crucial if he wants to win the support of the business community.
The administration has a rocky history with the business world. Obama’s signature financial reform legislation—Dodd-Frank—caused a deep rift with Wall Street, partly because Elizabeth Warren, who had been targeted to lead the Consumer Financial Protection Bureau, nettled bankers with her direct and blunt style.
During the campaign, the administration’s attacks on Romney’s stewardship of Bain Capital made many leery of Obama. His “you didn’t build that” comment didn’t help mend fences either, and business people felt they were being singled out and demonized.
Three of the participants in Wednesday’s meeting served on Obama’s Council on Jobs and Competitiveness. But Obama had scorned a recommendation by the council, led by General Electric’s Jeff Immelt — another attendee yesterday — to adopt a territorial system that excludes overseas income in the corporate tax reform framework released earlier this year.
Mark Bertolini, CEO of the health insurance company Aetna and a participant in the Wednesday meeting at the White House, told CNBC earlier this month that Obama should handle the fiscal cliff negotiations like a business deal.
“I think what the CEO of our nation needs to do is convene, set the agenda, and say we don't come out of the room until we've got a deal,” Bertolini said.
Corporate America has accepted the possibility of higher personal income taxes, but it has lobbied for an extension of the Bush-era tax rates for a year so that a broader tax overhaul can be discussed without the economy hanging in the balance.
Business leaders have been clamoring for action on the fiscal cliff and urging the president and Congress to delay the tax increases in favor of long-term tax reform. The U.S. Chamber of Commerce sent lawmakers a letter yesterday co-signed by 232 other business groups requesting the continuation.
Republicans also face pressure to uphold the lower income tax rates from conservative groups such as Americans for Prosperity, which has 2.3 million activists on its rolls and mobilized voter turnout during the election.
“We stand united in our opposition to using national security as a guise to raise taxes,” the letter by conservative groups said, “and to Congress going back on its word regarding reducing spending.”
Whether Obama is serious about forging alliances with business or simply playing for the cameras will be evidenced during the cliff negotiations. The next few weeks will determine whether Americans get presents under the tree or a lump of coal in their stockings.