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Executive Indecision

Obama and the CEOs: He loves them, he loves them not.

White House senior adviser Valerie Jarrett would like to make one thing exceedingly clear: The Obama administration is not bad for business. No way. No how. Not one little bit. “We are not anti-business,” the president’s chief liaison to the business community stresses to me over the phone one afternoon in late July, an edge of frustration ruffling her usually calm-as-cream voice. “Our goal is to foster an environment where companies invest and innovate and grow and expand their employment base in a way that will be good for the country and good for business.”

Former CEO of the Habitat Company, a Chicago real-estate development and management firm, Jarrett is particularly unmoved by the oft-voiced business complaint that this White House lacks private-sector veterans. “I’ve been the head of a company,” she says. “I’ve sat on publicly held boards.” But managing a national economy is a vastly different proposition, she observes. Reminding me of the bleak economic conditions under which Obama assumed office, she briskly ticks through a number of dramatic steps “boldly and decisively” taken to stop the bleeding and start the healing. Naturally, she allows, there has been some tension surrounding the new “rules of the road”—a favorite Obamaland catchphrase—being put in place to prevent future meltdowns. But, “from day one,” Jarrett asserts, this White House has maintained an open-door policy with business. She points in particular to the private luncheons Obama hosts with small groups of executives and similar dinners presided over by Treasury Secretary Timothy Geithner. “We have,” she says, “spent a great deal of time and energy reaching out broadly.”

None of this, however, seems to have satisfied the business community, which has spent the past few months locked in an increasingly public squabble with the administration. In June, the Business Roundtable (BRT)—an association of CEOs from some of America’s largest companies, and a group previously regarded as pro-Obama—joined its sister organization, the Business Council, in rolling out an exhaustive 54-page report on “government initiatives that will cause slower rather than faster growth.” (Taxes and regulation were, unsurprisingly, top concerns.) The next day, Verizon CEO Ivan Seidenberg, BRT chairman and frequent White House visitor, appeared before the Economic Club of Washington and groused that, “by reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses.” In July, the Chamber of Commerce—whose relations with this White House have been rocky—sponsored a “Jobs for America” summit devoted to slamming administration policies. Other executives, meanwhile, stepped up to decry the president’s vilification of business, pointing to his tough talk about Wall Street and health insurers. Even targeted comments, like Interior Secretary Ken Salazar’s pledge to “keep the boot on the neck of British Petroleum” and Obama’s assertion that “I know whose ass to kick” over the oil spill, were widely received as assaults on the broader community. “All of business is getting tarred with the same brush,” laments Honeywell CEO David Cote, a repeat invitee to Obama’s closed-door chats.

And so the Obama administration finds itself in a vexing position. Corporate America—having helped to spike cap-and-trade and water down the financial regulation and health care bills—is running around loudly charging that the White House is out to get the private sector. At the same time, hard-won compromises on key policy goals have convinced some of Obama’s liberal base that he is a corporation-coddling sellout. Alas, the president’s efforts to communicate with the public about economic matters seem to satisfy almost no one: Alternately sounding like an outraged populist and a free-market cheerleader, his balancing act serves mostly to confuse people. He is bashed simultaneously as a market-hating socialist and as a bloodless elitist, uninterested in the suffering of regular Americans. This betwixt-and-between stance may be in keeping with Obama’s trademark brand of thoughtful, noncommittal pragmatism, but, when it comes to the economy, it seems to be winning him the worst of both worlds.

As some see it, this summer’s go-round between the White House and the business community all started with the president’s May 4 address to the Business Council. It shouldn’t have been a formal address at all, really. The Business Council is a collegial, collaborative bunch, a self-described “educational and deliberative forum” composed of CEOs from some of America’s most formidable corporations. Their gatherings tend to be high-level bull sessions—no staff allowed—at which captains of industry sit around swapping insights on policy, politics, and the frequently fraught interplay between business and government.

With all the economic drama of late, Obama wanted to connect with council chieftains at their annual gathering in Washington. But rather than stroll into the Park Hyatt ready to rub elbows and talk strategy, the president came with a teleprompter and a prepared speech that was more lecture than invitation to engage. He said his piece, took no questions, and decamped with impolitic alacrity—leaving behind a roomful of disgruntled chief executives still anxious about the White House’s policy aims and unaccustomed to such high-handed treatment. Far from feeling courted, or even understood, some members felt they’d been used as props.

The grumbling was still going strong when Treasury Secretary Geithner made his appearance later that day. He solicited questions, indulged in some back-and-forth, and attempted to soothe some dander, but to no avail. Nor were dispositions sunnier when Peter Orszag, then chief of the Office of Management and Budget, showed up at dinner that evening. The mealtime chatter, recalls one attendee, was “very feisty.”

At some point, sitting down with Seidenberg, Orszag suggested that the BRT and Business Council put their concerns down on paper. What followed was the combative joint report—and it was all downhill from there. As the financial reform bill rumbled toward passage, simmering doubts about the administration’s grasp of, and attitude toward, business erupted in a flurry of critical speeches, letters, op-eds, and media appearances. Obama officials, in turn, suggested business was being overly sensitive, unrealistic in its demands, and more than a little ungrateful for all that government had done to stave off an economic apocalypse. News reports outlined various industries’ plans to punish Democrats by flooding Republican campaign coffers for the upcoming midterms. By mid-July, the media was awash in hand-wringing about the animosity between the White House and corporate America. For a president grappling with an unemployment rate near 10 percent, this was not a welcome storyline.

Beyond any specific areas of disagreement, a broader problem, it seems, is that the White House cannot decide how it wants to deal with business—especially now that the relationship has hit a rough patch. On the one hand, the administration has lately been lavishing its corporate allies with even more attention than usual. Jarrett and other top players have sought input from favored CEOs such as Motorola’s Greg Brown and Honeywell’s Cote. Commerce Secretary Gary Locke invited a whole passel of executives to his office to discuss policy and politics. The Sage of Omaha, billionaire Warren Buffett, dropped by the White House for a tête-à-tête with Obama (much-publicized and complete with official photo). Geithner hit the chat shows (with deliberate attention to business-centric venues like CNBC) and jetted up to New York to personally address financial types; his deputies were dispatched to other financial hot spots such as Boston, Chicago, and Charlotte for similar talks. “I wouldn’t call it a charm offensive, but it was a deliberate effort to go out on taxes and say what we’re for,” explains an administration official. “It was mostly aimed at putting to rest concerns that there was some grand new wave of things coming.”

Meanwhile, the White House has sought to shift the spotlight onto trade—an area seen by both administration and business leaders as ripe for compromise. In a July 7 appearance, Obama reiterated his State of the Union commitment to doubling U.S. exports over the next five years, gave an update on his National Export Initiative, and announced that he was “re-launching” his export council—stacked with dazzling executive types, of course. Message: See, we really do get along.

Yet, amid all the efforts to cultivate goodwill, administration officials have continued to let their exasperation with business show through. “Rather than respond to atmospherics, they should look at policies where we have been supportive,” White House chief of staff Rahm Emanuel admonished in a July 8 interview with Politico. Despite all the woo being pitched at the export event, the president raised hackles when he asserted that, “in the absence of sound oversight, responsible businesses are forced to compete against unscrupulous and underhanded businesses, who are  unencumbered by any restrictions on activities that might harm the environment, or take advantage of middle-class families, or threaten to bring down the entire financial system.” An incensed Mort Zuckerman, real-estate mogul and owner of U.S. News & World Report, promptly churned out a column denouncing “this kind of gratuitous and overstated demonization of business.” Says a trade association lobbyist of the administration’s rhetoric, “It’s kind of one step forward and two steps back.” One White House adviser e-mailed me snippets from a 1993 press conference by the National Federation of Independent Business, predicting economic devastation if President Clinton’s tax plan passed. Message: See, these guys always whine about everything.

Even Jarrett, whose portfolio revolves around making sure the business community feels loved and listened to, can sound as though her patience is wearing thin. Noting that a key part of her job is educating business leaders about the tough choices the president and his economic team must make, she recounts how, when the White House has brought in executives to talk taxes and budget and deficits, many of them have wound up telling her, “Boy this is really hard. I see now why you have a huge challenge here.” She is quick to draw distinctions between helpful and unhelpful actors, stressing that those mouthing off do not speak for everyone. And she has not concealed her irritation with the Chamber of Commerce. A pointed July 14 letter she and Emanuel sent to the Chamber expressed how “surprised and disappointed” they were by some of the recent rhetoric and scolded that the “stakes are far too high for us to be working against one another.”

Ultimately, many key players in this administration, including Obama himself, may simply be of two minds when it comes to business. Despite the White House’s professed respect for the private sector as economic engine, there’s also a clear attitude among some officials that the business community is a bunch of demanding, slightly unruly teenagers who don’t appreciate the grown-up responsibilities of running a country. Multiple officials express variations on the theme that, while business leaders’ jobs are to advance the fortunes of their companies, the president must safeguard the interests of the entire nation. There is, in the words of one Democratic strategist, “a cultural dissonance” at work here.

Complicating matters, the politics don’t suggest any obvious way for the administration to unmuddle its stance. Obama can’t drift too far into populist territory without lending credence to the idea, flogged by Republicans, that he is some kind of radical socialist. But neither can he be perceived as scurrying to make peace with corporate fat cats—a move that would both infuriate his base and send a more general signal of weakness. “We are not reactionary,” one insider stressed to me, emphatically and repeatedly. “We are not changing outreach plans due to this recent flare-up.” “Once you start down the road of making business the bogeyman, it’s hard to walk back from that,” says the trade association lobbyist. “But as a Democrat trying to  keep together his coalition, maybe that’s a good place to be.”

Now, with the midterms just two months away, some people are questioning whether the White House should bother putting any effort into this dysfunctional relationship at all. “I don’t think anything will honestly happen before the election to change the dynamic,” says one administration official. “The business community by and large is sitting and waiting and hoping that we learn a lesson in the election.” With polls foretelling a grim outcome for the Democrats, business is clearly hoping the lesson will be: Stop splitting the difference and defer to us—or there’s more where that came from.

Michelle Cottle is a senior editor of The New Republic. This article ran in the September 23, 2010 issue of the magazine.

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