Obama: What Business Thinks

Top U.S. executives say President Obama has been accessible and willing to listen, but they wonder whether he is heeding their advice

By Jane Sasseen

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It was 4 p.m. on Mar. 23 when the e-mail from the White House went out to a handful of prominent executives, including CEOs Jeffrey Immelt of General Electric (GE), David Cote of Honeywell International (HON), Robert McDonald of Procter & Gamble (PG), and Antonio Perez of Kodak (EK). Two weeks earlier, at an occasionally testy meeting with the Business Roundtable, IBM (IBM) Chief Executive Sam Palmisano and others had told President Barack Obama and his advisers that they had big problems with his proposal to raise more than $200 billion, in part by curtailing multinationals' ability to defer U.S. tax payments on overseas profits. Now, Valerie Jarrett, the top White House adviser responsible for relations with the business community, wanted to follow up. Would they care to join her, Chief Economic Adviser Lawrence H. Summers, and Treasury Secretary Timothy Geithner on a conference call at 2 p.m. the next day to talk about the Administration's proposal?

In the hour-long conversation that resulted, the corporate executives gave Obama's economic policymakers an earful. On the campaign trail, the President had used populist language to demand an end to what he called loopholes that encourage companies to ship jobs overseas. The executives feared that meant he wanted to eliminate deferral altogether.

One by one, the bosses warned that the Administration's move would gravely damage U.S. companies' ability to compete overseas. "It was a broad-based reaction that said, 'Look, we understand there's a problem and a need for revenue,' " Cote says. " 'The thing we don't want you to do is put us at such a disadvantage to our worldwide competitors that we just can't get anywhere.' "

Message received. By the time the Administration released a more detailed proposal in May, it had ratcheted back to a more limited position on deferral, combined with an end to other more questionable international tax breaks. Pressured as well by congressional opposition—much of it spurred by intense corporate lobbying—the White House team soon moved the plan to the back burner. Administration sources now say the measure will likely return only as part of a comprehensive overhaul of corporate taxes, as the executives sought. "We expressed substantial concerns, and they were very responsive," says another CEO who was on the call.

The truce reached on tax deferral has helped defuse some of the tensions between the Obama Administration and business, but not all. Case by case, the President and his team impress CEOs with their accessibility, knowledge, and willingness to listen. Many corporate chiefs, though, remain unsure of what to make of Obama, and many can't tell how well he understands the challenges they face. That wariness has only been accentuated by the antibusiness tone many felt the new President and his advisers took as they moved to stem the financial crisis in the winter. "I think there's a fair amount of trepidation in the business community," says Robert Greifeld, CEO of Nasdaq OMX Group (NDAQ).

To Obama and his economic staff, such anxiety—and even hostility—are more than a little baffling. Many of those "who think we're antibusiness seem to forget that it was just three or four months ago, when, at great political expense, we yanked them out of the fire," Obama told BusinessWeek in an interview on July 27. Later, he added: "My working assumption has always been, if the market could do it better, have the market do it."

As Summers is quick to point out, much of the Administration's long-term program—reducing dependence on foreign oil, cutting the crippling growth in health-care costs, and bolstering the skills of America's workforce—is designed to address longstanding business complaints. "We are very mindful that you can't have employees without employers," he says.

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