Is Obama Anti-Business?

The big push from the White House is that President Obama is actually pro-business. Here is a typical piece from Newsweek's Ezra Klein. Klein himself made the news a couple of weeks ago when it came out that he had created the newsgroup JournoList which, among other things, allowed liberal journalists and Obama staffers to coordinate campaign strategies. Keeping that in mind, Klein's piece hits all of the White House's talking points.

Would that all presidents were this anti-business: according to the St. Louis Federal Reserve, corporate profits hit $1.37 trillion in the first quarter—an all-time high. Businesses are sitting on about $2 trillion in cash reserves. Business spending jumped 20 percent last quarter, and is up by 13 percent against 2009. The Obama administration has dropped taxes for small businesses and big ones alike. Maybe the president could be anti-me for a while. I could use the money.

 

The reality is that America's supposedly anti-business president has led an extremely pro-business recovery. The corporate community has recovered first, and best. The populist tone that conservative magazines and business groups decry is partly in reaction to this: as corporate America's position is getting better and better, the recovery is looking shakier and shakier. Unemployment is high. Housing looks perilously close to a double dip. Job growth is weak. And corporate America, for all its profits, isn't hiring. The 71,000 jobs the private sector added in July aren't sufficient to keep up with population growth, much less cut into the ranks of the unemployed.

He goes on to quote This Time Is Different, Carmen Reinhart and Kenneth Rogoffto to prove that the recovery is right on schedule. He also asserts that businesses are lined up at the gate ready to start hiring, all they need is more government stimulus and thing will really take off.

All of this is White House spin. What that Klein's piece lacks are any examples of pro-business policies that Obama has championed. In contrast, it is easy to find examples of him being anti-business. Early on he stoked anger at corporate bonuses then informed the heads of several big Wall Street firms that he was all that stood between them and the mob. He also informed them that he "owned" anyone who accepted TARP funds.

He appointed a "pay czar" to review corporate compensation packages. The scope of this office has always been fuzzy and may include companies outside of the TARP program.

He nationalized student loans because the idea that businesses were making money from student loans offended him.

He scolded a bank for having its annual meeting at Los Vegas, implying that the government would be watching other businesses to be sure that they were spending their money in a responsible way. This killed Los Vegas's convention business as companies that were never anywhere near TARP funds moved their conventions, sometimes at considerable cost.

He bypassed bankruptcy laws in reorganizing General Motors in favor of unions. Anyone who objected was vilified.

When asked if he had talked with the CEO of BP a month after the oil spill began, he said that he had no intention of talking with him, implying CEOs always lie so there was no point in talking with them.

During the 2008 campaign he was openly scornful of McCain's proposal to cut the corporate tax rate which is currently the highest in the developed world. He also invented the concept of Wall Street vs. Main Street.

Obamacare fines small businesses if their employees' health care costs are above a certain percentage of their income. It also requires companies to keep detailed records of all transactions and turn in a 1099 form showing any company that is does more than $600/year business with.

Then there is the total lack of anyone with business experience in Obama's cabinet.

Look at this telling passage from the official Obama web site about his wife:

After a few years, Michelle realized that corporate law was not her calling. So she left to give back to the city she loves and to help others serve their communities. She worked for City Hall, becoming the assistant commissioner of planning and development.

Leaving corporate law to become a bureaucrat does not inspire me.

We still have no idea what effects the recently-passed financial reform bill will have. Despite its length, it is mainly an authorization for bureaucrats to write new regulations. Cap and Trade has been scaled back but will still be legislation allowing the government to pick winners and losers.

Previously millage standards have been set by Congress. Under Obama, the EPA claimed authority over CO2 emissions allowing Obama to issue new, tougher, standards without Congress. This will push up the cost of new cars and cut sales.

The White House points out that corporate profits are up 65% from two years ago. Klein gives this as $1.37 trillion in the first quarter. Neither mentions that this is mainly due to imports. Klein also mentions the enormous cash reserves that businesses are sitting on. Rather than a sign of strength, this is a sign of uncertainty. Businesses are not sure what Obama will do to them next.

The fact is that no president who has used the words "fat cat bankers" will ever be perceived as pro-business. It doesn't help that he employs a double-standard, criticizing bankers for being paid too much when he takes vacations in Bar Harbor, Maine and sends his wife and daughter (and an army of Secret Service agents) to a luxury resort in Spain.

Obama has a real problem here. He dislikes business but the economy will not recover unless businesses feel confident to start expanding again. Instead there is a high degree of uncertainty as various industries try to figure out what the Obama administration will do to them next.