Obama and Business: A Second Chance to Get It Right
Business + Economy

Obama and Business: A Second Chance to Get It Right

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Ray A. Rothrock is a veteran venture capitalist with impeccable business credentials and more than 25 years of experience financing new businesses and creating jobs. He specializes in security, energy and nanotechnology projects.Like many prominent business executives, Rothrock has had his differences with the Obama administration – particularly, what he describes as  “layer after layer after layer of red tape” that makes it  more difficult and expensive  for small companies to qualify for government grants and credit.

“My mission as an investor and director in these companies is to lower the friction,” Rothrock, 57, a partner with the Venrock venture capital firm, told The Fiscal Times this week. “And many times government raises the friction – sometimes for good reasons, sometimes not for good reasons.”

As Obama prepares for a second term after his solid victory over Republican challenger Mitt Romney, Rothrock is urging the president to bring aboard more experienced business leaders who can help the government navigate through what’s expected to be another four challenging years. But unlike other critics who lob verbal grenades at the White House, Rothrock says he would eagerly join the administration.

“The administration needs to be a little more open and receptive,” he said. “I think every administration – and I’m not picking on Obama – they all need to be a little more open” to new and different approaches.

Executives like Rothrock say the president has a chance to fully restore the economy and correct a fundamental weakness in his administration: its strained relationship with the business community. Obama, Treasury Secretary Tim Geithner, and White House advisers have often reached out to top corporate chieftains, but their labor has yet to deliver significant results.

While the federal bureaucracy is laced with officials with business backgrounds, including Jeffrey  Zients, acting director of the Office of Management and Budget, and White House Chief of Staff Jack Lew, none of the top-tier cabinet members – including the secretaries of State,  Treasury, Commerce,  Labor, Health and Human Services  and Housing and Urban Development – hail from the corporate sector. 

Mitt Romney, the founder of Bain Capital, scoffed during the presidential campaign at Obama’s plan to create a secretary of business. “I don’t think adding a new chair in his cabinet will help add millions of jobs on Main Street,” the Republican said.
The president insists he has been pro-business, but he has alienated many on Wall Street and Main Street who initially supported his efforts.  The president’s sniping at Wall Street executives as “fat cats”   who were uncaring about the middle class didn’t go down well.

Jack Hidary, chairman of Gemstone Capital Advisors and a co-author of the Obama administration’s early “cash for clunkers” program, says the administration “had a number of bumps along the road” that might have been avoided with more experienced business leaders on board. A case in point: the Energy Department’s mishandling of costly alternative energy loan guarantees that provided Solyndra, the well-connected California solar panel firm, with $535 million in backing shortly before it went bankrupt.

Hidary said it’s time for business leaders to“develop a thicker skin” and get over their resentment toward the president and for both sides to “take the opportunity to work together.”

“The president’s cabinet will be emptier than Mother Hubbard’s cupboard in a few months,” Hidary said. “There’s so much turnover that’s about to happen . . . It’s a great opportunity to bring the business community in.”

Indeed, Secretary of State Hillary Rodham Clinton, Defense Secretary Leon Panetta, Treasury Secretary Geithner,  Transportation Secretary Ray LaHood, and Energy Secretary Steven Chu are expected to depart at the end of the year or shortly thereafter, while Commerce is currently being run by acting secretary Rebecca Blank, a PhD economist.

John Bryson, Obama’s last Commerce Secretary, abruptly resigned in early June after nine months on the job, saying the seizure he suffered that led to two San Gabriel Valley hit-and-run accidents could be a distraction on the job. Bryson, the former chairman and CEO of Edison International, the parent company of Southern California Edison, was the only cabinet member with practical business experience, but he never really had a chance to forge a close relationship with the president. 

Esther C. Lee, a senior policy advisor to former Commerce Secretary Gary Locke – now Obama’s ambassador to China – insists “there is no lack of business expertise and experience within the administration – but [it’s] beneath the senior cabinet level.” For example, Todd Park, U.S. Chief Technology Officer, was the co-founder of two successful health information technology companies.

Acting OMB chief Zients worked for Mercer Management Consulting and Bain & Co., and then became COO of DGB Enterprises, a holding company for the Advisory Board Company, Corporate Executive Board and Atlantic Media Company. And Karen Mills, administrator of the Small Business Administration, has extensive experience in managing and investing in small businesses.

“But  we can still  use more people with business experience in the administration, given that our top issues this next term will be jobs and the economy and things like the fiscal cliff,” added Lee, now a private marketing strategist at Burson-Marsteller.

The White House Council on Jobs and Competitiveness included the CEOs of many prominent companies, such as General Electric, Boeing, and Intel, yet the administration challenged the aviation company Boeing on labor issues and rejected the council’s recommendation to introduce a territorial tax system.

When Valerie Jarrett, who heads White House relations with corporate America, spoke at a POLITICO awards dinner earlier this year, she talked more enthusiastically about a visit by pop songstress Lady Gaga than her outreach to executives who employ millions of people.  A senior official of a major defense contractor complained recently that administration aides could be rude and combative during meetings at the White House.

But since the election, the president has gone out of his way to reach out to business leaders and executives as part of an intensive lobbying effort to strengthen his hand in negotiating a deal with the Republicans to avoid a fiscal cliff of major tax increases and spending cuts at the end of the year. Last weekend en route to Asia, he spoke by phone with JPMorgan Chase’s Jamie Dimon, billionaire investor Warren Buffett, Apple’s Tim Cook, and Boeing’s Jim McNerney.

Dimon has been a harsh critic of the tougher rules imposed on the financial services industry after the 2007-2009 financial meltdown and recession, but last month he endorsed Obama’s goal of raising taxes on top earners as part of a comprehensive budget and tax deal with Congress.

The gesture suggested that Obama’s diplomacy might begin to payoff. After JPMorgan Chase got hit earlier this year with a multi-billion dollar trading loss that sparked a congressional inquiry, the president portrayed Dimon in a flattering light.

“JPMorgan is one of the best managed banks there is,” Obama told ABC’s “The View.” “Jamie Dimon, the head of it, is one of the smartest bankers we’ve got.”

The Fiscal Times’ Josh Boak contributed to this report