Thursday, February 10, 2011

Obama's new fruitcake strategy for businesses

Business Times - 11 Feb 2011

It's doubtful his pro-business rhetoric and proposed policies will make much difference


US President Barack Obama and America's business executives may have had their differences over the plans to reform the healthcare insurance and the financial regulatory systems. But there is certainly one issue over which they agree. It's all about jobs!

Indeed, the very big sign hanging on the front of the US Chamber of Commerce building across Lafayette Square in Washington, DC, not far from the White House, says it all - and in huge letters: 'JOBS'.

And considering the main theme of Mr Obama's address to the members of the Chamber of Commerce this week, there is no doubt that he would have liked to hang exactly the same sign in front of the White House.

Shared commitment

While the heads of the Chamber of Commerce tend to subscribe to the pro-business agenda of the Republican Party - in fact, some of them provided financial support for the campaign of Republican candidates during last year's midterm elections - the business community and the White House do share a commitment to speed up economic activity.

This, in turn, would create incentives for the private sector to hire more workers. In a way, reducing the high-rate of unemployment would be a clear sign that both the White House and corporate America are doing well.

'I'm here in the interest of being more neighbourly,' Mr Obama told members of the Chamber of Commerce on Monday after walking the block to the chamber's headquarters from the White House.

'If we had brought over a fruitcake when I first moved in, we would have gotten off to a better start,' he admitted.

'But I'm going to make up for it,' he stressed, proposing a set of new policies that should create incentives for businesses to make new investments and hire new workers, including cutting corporate taxes, building new roads and bridges, and fostering innovation.

'If there is a reason you don't believe that this is the time to get off the sidelines - to hire and to invest - I want to know about it,' Mr Obama added. 'I want to fix it.'

Mr Obama's much-anticipated address before the Chamber of Commerce - symbolising that the two sides were ready to 'make peace' - has been part of the more centrist and business-oriented political and economic strategy that the White House has been promoting since the electoral setback the Democrats had suffered last November.

Using words such as 'investment', 'competitiveness' and 'innovation' in his recent public addresses, Mr Obama has been calling for more cooperation between government and business as part of an effort to rebuild American infrastructure, re-energise the drive for scientific research and create new global markets for US exports - a process that would help create new and well-paying jobs for Americans.

Some critics on the political left would argue that Mr Obama is beginning to sound like former president Ronald Reagan - Mr Obama even called for removing 'outdated and unnecessary regulations' - and other Republican presidents who believed that, in the words of president Calvin Coolidge, the business of America is business.

Indeed, Mr Obama's address before the American business executives suggested that he seemed to share the spirit of Coolidge. 'In addition to making government more affordable, we're also making it more effective and customer-friendly,' Mr Obama said.

'We're trying to run the government a little bit more like you run your businesses, with better technology and faster services,' he said.

In the coming months, his administration 'will develop a proposal to merge, consolidate and reorganise the federal government in a way that best serves the goal of a more competitive America', he told his new corporate buddies.

Referring to Jeff Immelt of General Electric whom Mr Obama had nominated as the head of a new council of business leaders and economic advisers, the president told the executives: 'I am confident that we can win the competition for new jobs and industries' and that 'I know you love this country and want America to succeed just as badly as I do'.

But Mr Obama is no Reagan, and the Democrats remains opposed to the free-market agenda of the Republicans, that includes reducing taxes on the wealthy, getting rid of the minimum wage, cutting back regulations on Wall Street and weakening the power of labour unions.

Political ceasefire

So there is no doubt that many of the business executives who attended Mr Obama's address on Monday will probably vote for his rival, the Republican presidential candidate, in 2012.

The political ceasefire - not a peace agreement - between the White House and the Chamber of Commerce will probably provide for an environment more conducive for legislative deals between the Obama administration and the Republican Congressional leaders on some policy issues, such as the proposed trade deals with South Korea and other economies.

But the main reason that American companies are not hiring now reflects the continuing uncertainty among business executives over the long-term health of the US and the global economies, as well as major structural problems that have to do with the need to improve the skills of American workers. From that perspective, it's doubtful that Mr Obama's pro-business rhetoric and his proposed policies are going to make much difference.

Bringing a fruitcake is not going to be enough.

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