If 2011 was defined by a debate over the national debt, 2012 looks to be focused more on fairness, which is just the way President Barack Obama wants it. The trick for him — the balance he was trying to strike in his State of the Union Address — is to come across as a pro-business populist.
That may sound like an oxymoron (and “progressive” is a more accurate description of Obama than “populist”), but it fits this president and these times. There’s nothing anti-capitalist about wanting to help businesses that help America and to penalize (through the tax code) those that hurt the country by not paying their fair share and by taking jobs overseas.
You wouldn’t know from some of the commentary that this was a pro-business address, with a theme (an economy “Built to Last”) lifted from a marketing campaign for General Motors (GM) Co. trucks. The slogan does double duty as a sign of Obama’s investment in education and other engines of middle-class growth and as a reminder that the despised automobile bailouts were a success, with GM now on top again as the world’s leading car company.
When “Engine Charlie” Wilson, a former GM chief executive officer serving as defense secretary, famously said at his confirmation hearings in 1953 that “what was good for the country was good for General Motors and vice versa,” he was savaged. Now it’s practically Obama’s policy. Congressional Republicans, by contrast, have been reduced to pillorying GM’s chairman over the Chevy Volt, a car wrongly stigmatized as unsafe.
The president, channeling John F. Kennedy’s famous inaugural address, framed it almost as a patriotism question: “Tonight, my message to business leaders is simple: Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed.”
The response to this is often: Who is the president to tell me where or how to run my business? But he’s not. He’s simply saying he’ll offer you tax advantages when your interests are aligned with the nation’s, and he won’t when they aren’t.
The most important new tax idea in the speech was for “minimum taxes” for those making more than $1 million a year and for companies leaving the U.S. to escape taxes. This idea isn’t so much wrong as complicated — another full-employment act for high-priced accountants. I wish Obama had championed dramatic tax simplification instead.
I understand why this president wanted to strike an optimistic tone. But was Master Lock Co., which is moving jobs back to Milwaukee from abroad, a hyped anecdote or an inspiring foreshadow? Probably some of both. I’m told the president and vice president were excited by the stories from 30 CEOs who appeared at a recent White House conference on “in-sourcing.” The CEOs explained how the rising cost of labor in China and a need to be closer to supply chains and customers were leading them to return factories and jobs to the U.S.
There has been a lot of talk since the speech about Obama’s return to (spit out the words now): “industrial policy.” But using the government to encourage manufacturing is hardly radical. Were Alexander Hamilton’s “Report on Manufactures” and Henry Clay’s “American System” socialist, too? The same goes for government subsidies for clean energy, which the president correctly noted have been used for the oil industry for more than a century.
I also liked the way Obama pushed back on regulation, now the all-purpose excuse offered by Republicans for why the economy isn’t recovering faster.
Training for Success
The facts are these: Court orders, not politicians, impose many of the most controversial regulations. The Environmental Protection Agency actually tried to delay the implementation of a court order on a new mercury standard, a costly regulation that originated years before Obama came to town. Meanwhile, a regulatory “look-back” supervised by the president’s old friend Cass Sunstein has eliminated hundreds of dopey regulations on the books (Obama made a “spilled milk” joke about one) and slowed the issuance of new regulations to a level lower than during the last two years of George W. Bush’s administration.
Arguably the most pro-business part of the speech came when Obama set a goal of training 2 million people by converting many community colleges into “community career centers” where corporations can customize the curriculum to their needs and fill hundreds of thousands of job vacancies.
All the fancy speechmaking isn’t meaningful if Congress doesn’t act. But signs are that it might. When House Republican freshmen went home for the holidays they found their constituents were — surprise, surprise — anxious for them to bring home something tangible. With approval ratings of the congressional GOP in the teens in some polls, the strategy of obstructionism may have run its course.
The failure of Republicans to get their way on the extension of the payroll tax holiday in December means that when it comes up again next month, there may be no fight. Obama was said to have poisoned the well on confirmation of his appointees by making recess appointments of Richard Cordray, the new director of the Consumer Financial Protection Bureau, and others. But some Republicans are signaling that some of the unconscionable delays on approving uncontroversial nominees may be over. Nancy Pelosi reported to the White House this week that the Federal Aviation Administration bill that was the subject of parliamentary games late last year is headed for passage.
Tax reform will be harder. To get it, the president has to get over his disdain for schmoozing and his distrust of Republicans. He needs to get Republican leaders Mitch McConnell, John Boehner and Eric Cantor in a room somewhere with the Democratic leadership and the chairs of the tax-writing committees (Senator Max Baucus and Representative Dave Camp), lock the door and come out with an agreement.
There’s no chance for a deal on personal rates any time soon. The election and the expiration of the Bush tax cuts on Dec. 31 mean that any deal would come in the lame duck session at the earliest. But I’m told by the White House that the circumstances might be right for a deal on corporate taxes this spring or summer.
None of this will placate those thin-skinned business leaders still smarting over the president saying more than two years ago on “60 Minutes” that he wasn’t elected to help out “a bunch of fat cat bankers on Wall Street.” But if they look at the president’s record and proposals with an open mind, they might be pleasantly surprised.