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President Obama to CEOs: 'I Want to Dispel Any Notion We Want to Inhibit Your Success'

December 15, 2010 4:31 PM

"I want to dispel any notion we want to inhibit your success,” President Obama told 20 CEOs this morning, according to a source in the room. “We want to be boosters because when you do well, America does well."

The relationship between the president and the business community has been strained, with many executives complaining that the president too often uses big business as a whipping boy, or a scapegoat, while pursuing policies – health care legislation, Wall Street regulations – that they perceive as bad for business.

Today’s meeting didn’t result in any concrete achievements, but participants described it as constructive.

The president asked the CEOs for “specific recommendations" and said the "overarching theme will be competitiveness and growth. There is no reason we should not be aligned in that conversation. It is one the American people want to hear."

Of primary concern to the president is the $1.8 trillion in corporate wealth currently sitting in banks and equivalent places not being spent on job creation. The 20 companies in the room represent at least $200 billion in cash and equivalents as of the 3rd Quarter.

“How do I get companies sitting around the table to start investing in job-creating enterprises?" the president asked.

CEOs discussed the need to increase exports through trade deals with South Korea, Panama, and Colombia; regulations they find burdensome; and needing more certainty in taxes – wanting, for instance, the research & development tax credit to be made permanent.

“We’d like to have longer visibility,” UPS Chairman and CEO Scott Davis told ABC News after the meeting. “We’d like to be able to see out three, four, five years to what policy is, that would help spur investment…. I think understanding tax policy, you know, not just tax policy, general, all policy helps when you are making investments. We make investments for long term. We make investments for 5, 10, 20, 30 years. You like to have a better feeling as to what’s the environment going to be out 5 years.”

Davis said one of the key reasons for the cash being stored away “has been coming through the financial crisis…Corporations are starting to feel more confident than they did a year or two years ago. So I think we will start to see more investments as we move forward”

UPS had $3 billion on hand at the end of the third quarter, after having eliminated 18,000 jobs in 2009.

“We certainly create jobs where we can,” Davis said. “We adjust daily based on the number of packages coming into the system. So we have technology that gives us that visibility. This Christmas season we added over 50,000 jobs this Christmas season. So we add jobs when the work is there.”

Davis was asked: “Can you understand why a citizen at home who is unemployed sees a company like yours with $3 billion sitting in the bank having laid off thousands of workers last year, thinks ‘Put that money to work hiring people!”

“Absolutely,” he said. “And what we need to do is sort of the chicken and egg to move the economy to get it growing. So what we’ve got to do is figure out ways to get this economy growing. And I think one of the areas I’m working with the president on is growing exports. You know we set a goal to double exports within five years. That creates jobs. People don’t understand. They think trade is a bad four letter word. Trade is good. It creates a lot of jobs in this country. We need to do that.”

One of the topics the president and CEOs discussed, however, is the very nature of trade and global competition – are China and India our competitors, or are they markets in which the U.S. needs to be sending more goods?

Towards the end of the meeting the president, according to a source in the room, expressed frustration with the disconnect between the “productive and reasonable conversation” with CEOs and the comments and efforts of their lobbyists.

--Jake Tapper

December 15, 2010
in Current Affairs, Economy, health care, Jake Tapper, Political Punch, President Obama, Weblogs, White House
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President Obama spent much of Wednesday huddled with a group of business executives, an effort The New York Times said afterward "went a long way to reset the tone of the relationship between Mr. Obama and corporate America" in the eyes of the corporate chieftains who attended.

That's all well and good, if the problems with today's economy were rooted in a lack of warmth and fuzziness between President Obama and corporate CEOs. But they aren't. For decades, the interests of corporate lobbyists—the people acting on behalf of many of the executives at the White House meeting—have been at odds with the interests of working people. The White House "making peace" with corporate CEOs, to use The Washington Post's description of the meeting, is one thing. But Wall Street needs to make peace with those of us who have been forced, as a result of the conservative policies they promoted, to live through a decade of stagnant wages, unemployment and underemployment. Wall Street needs a reset with working America.

Unfortunately, it's not at all clear that this meeting delivered much for working-class people. The Post reported that "after the meeting, several chief executives said their conversation with the president was constructive and open as they discussed education, trade, taxes and jobs. But the executives and Obama remained vague about specific outcomes they expected from the meeting."

And one of the few specifics reported from the meeting is highly disturbing. Bloomberg reported that the CEOs had their hands out for yet another tax cut:

While Obama has called on the CEOs to spend the $2 trillion in cash their companies have accumulated on job creation, the executives said much of that is earnings from overseas sales that are retained abroad to avoid paying U.S. corporate income tax. U.S.-based multinational corporations pay corporate income tax on earnings when they are brought back to the U.S. If the revenue remains abroad, either in cash or investment in overseas facilities, the money isn’t taxed.

Obama said he would consider the issue and asked what the executives would be willing to give up in other corporate tax rates to make sure it remains revenue neutral.

Actually, in many cases the earnings involved are not necessarily from "overseas sales." Many multinational corporations have created elaborate schemes to ensure that domestic sales are credited as foreign ones in order to avoid paying corporate income tax. It's how Google avoids paying billions in corporate income taxes to the United States and the United Kingdom.

President Obama has rightly pledged to go after this tax dodge and sent some proposals to Congress last year that Citizens for Tax Justice said were "steps in the right direction." Businesses have countered with demands for a "tax holiday," The Financial Times reported in October. Again, at least until now, the Obama administration has resisted. One reason, as the FT notes, is that there is no guarantee that the money coaxed back into the U.S. will actually be used for investment and job creation.

We've been here before. In 2004 the Bush administration and the Republican Congress gave corporations a tax amnesty on profits sheltered overseas. The benefits for workers were negligible. Gannett News Service reported earlier this year in a story about Sen. Barbara Boxer's support for an offshore tax break:

A Congressional Research Service analysis published in January 2009 found that 10 of the top dozen companies that took advantage of the 2004 break cut jobs. Hewlett-Packard repatriated $14.5 billion and laid off 14,500. Pfizer repatriated $37 billion and cut 9,000 jobs in 2005.

California-based Oracle and Intel also repatriated foreign earnings. The money helped Oracle acquire two U.S. companies and helped Intel build a new factory

The Business Roundtable, a champion of the tax amnesty idea, says of the money that came back to the U.S. as a result of 2004 holiday, 25 percent went to capital investments and 23 percent to hiring and training new workers. Even that positive spin suggests the country doesn't get very much for coaxing businesses to do less than what they should be dong as corporate citizens.

Corporations succeed in the United States not simply because of what they do on their own. Their success depends on the quality of public schools that prepare their workers, transportation networks that move goods and people, agencies that help keep people healthy and safe, and efforts to ensure that each American is able to maintain at least a minimal standard of living. All of these are government functions that corporations undercut when they engage in schemes to avoid paying taxes, leaving the rest of us to struggle with the consequences.

The businesses that profit as a result of the public commons that We the People provide should not have to be given special inducements to pay their fair share toward supporting that commons. (As it stands now, contrary to conservative claims to the contrary, the truth is U.S. corporations pay some of the lowest tax rates of major industrial powers.) That is the starting point from which President Obama should begin in building a new tax framework in which businesses and Main Street can profit together in a new economy.

Even as corporations are seeking a tax holiday, these same corporations spent hundreds of millions of dollars electing congressional candidates opposed to government initiatives that would stimulate the economy and stoke the demand that would coax their hoarded cash off the sidelines. Instead of egging on, tacitly or otherwise, the anti-spending crowd, these CEOs could still choose to back a real economic stimulus—not just cross-your-fingers-and-hope-they-trickle-down tax cuts, but real investment in the economy's future.

Lew Prince, a small business owner in St. Louis, recently penned an op-ed that offered a more Main Street perspective on what businesses need to prosper:

We shouldn’t borrow billions more dollars from China and Saudi Arabia to give to the wealthy. Instead the wealthy should pay their fair share. We need adequate tax revenue to invest in our economy. More tax cuts at the top won’t create jobs. But we will create jobs and strengthen our economy by rebuilding our crumbling roads, bridges, public transit, levees and water and gas pipelines. We will save and create jobs by investing in education and clean energy research and manufacturing now growing much more rapidly in other countries.

Now that Obama has met with business executives, his next step should be a summit meeting with the unemployed. And then let's have a real debate in which business executives and their conservative benefactors are called to account on whether they are really interested in the fates of American workers or just in their own balance sheets.

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Sunday, December 19, 2010

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President Obama to CEOs: 'I Want to Dispel Any Notion We Want to Inhibit Your Success'

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