Commentary

Obama and the Chamber Start Over


(Corrects spelling of Tom Donohue's name in subheading.)

The U.S. Chamber of Commerce's headquarters in Washington, D.C., is just across Lafayette Park from the White House. President Barack Obama, however, has only been there twice since he was elected. He had good reason to stay away. During Obama's first two years in office, the trade association's president, Thomas J. Donohue, a 72-year-old as pugnacious as Jimmy Cagney, did everything in his power to derail the President's agenda.

He warned that the White House-backed health-care bill would impose "a burdensome mandate on employers." He compared the Dodd-Frank financial reforms to Pandora's box. And he didn't just bark; he bit. The Chamber, which represents businesses big and small, spent more than $32 million before the midterm elections on "issue ads" primarily targeting Democratic lawmakers who voted for such legislation. Donohue liked to say none of this was intended to antagonize the President. It was just business.

As part of his larger overture to private sector, Obama is determined to put these bad memories behind him. On Feb. 7 he will visit Donohue's fortress and deliver a speech about jobs and the economy. "We are looking forward to the President's visit, but do not have any details about the event yet," said Blair Latoff, a Chamber spokesman, in an e-mail. You can be sure Obama's business-friendly message will be parsed almost as closely as the one in his State of the Union speech.

The President is likely to repeat many of the themes of the earlier speech, including calls for increasing investment in infrastructure and education, lowering corporate taxes, and freezing discretionary spending to pare down the deficit. "We have to make America the best place on earth to do business," Obama said in his Jan. 25 address.

At least one important listener seemed to get the message: Donohue. In a response posted on the Chamber's website, the lobbyist singled out pro-business highlights and said it was time for the White House, Congress, and the private sector to pull together and get them done. It wasn't an overwhelming endorsement, but given the Chamber's prior critiques, it was probably the best the Administration could expect. Presumably, the good feelings will survive for at least a week. If the antagonists find it in their interests to extend the detente, this could turn into an affair to remember.

Obama's overtures have everything to do with his effort to reboot his Presidency after his Nov. 2 "shellacking" at the polls. Within weeks of that debacle, the President put the finishing touches on a trade agreement with South Korea. He negotiated an extension of the Bush tax cuts with congressional Republicans. He ordered a review of federal regulations to see if any might impede economic growth. He appointed William Daley, a former banker for JPMorgan Chase (JPM), as his chief of staff, and named General Electric (GE) CEO Jeffery Immelt as the head of his outside panel of economic advisers.

Obama has kept the Chamber busy responding to this fusillade of valentines. Donohue called Daley "a strong appointment." He referred to the selection of Immelt as "a promising step." And in his recent State of American Business 2011 speech, he lauded "a new tone coming out of the White House." Administration officials are pleased. "I think the President's approach is, he doesn't have to agree with you on every matter," says Valerie B. Jarrett, a White House senior adviser. "By praising us for the steps we have recently taken, the Chamber has demonstrated their willingness to work with us, too."

If Donohue is skeptical about the President's newly conciliatory stance, he isn't about to say so yet. Some of his allies are less circumspect. "There are all sorts of steps that this Administration has taken that clearly suggest they have a fresh and refreshing attitude about their relationship with the business community—at least stylistically," says Dirk Van Dongen, president of the National Association of Wholesaler-Distributors. Similarly, some of Obama's liberal supporters, who won't forgive Donohue for helping to thwart Obama's agenda, have been quick to react. "It's weirdly counterproductive or terribly craven," says Cenk Uygur, an MSNBC contributor and host of The Young Turks, a liberal Web talk show. "I don't know whether the President understands this is his political opponent. Donohue is doing everything he can to destroy his Presidency and his party."

The overtures to business, however, aren't just optics. They have a specific goal. Obama knows as well as anybody that the biggest obstacle to his reelection is the nation's unemployment rate, still hovering north of 9 percent. With the Republican Party in control of the House of Representatives, the President has no chance of passing another big stimulus bill to get Americans back to work.

There is, however, $2 trillion lying around that could work similar wonders. This is the record mountain of cash that U.S. corporations have amassed while waiting to see how the economic recovery unfolds. "The reason they have been reluctant to spend is their general lack of confidence," says Mark Zandi, chief economist at Moody's Analytics (MCO). "They have just been through the nightmare of the Great Recession. They were also shaken by the vitriol that accompanies some of the recent policy debates. It just created all this uncertainty."

For Obama, the goal is to get the nation's businesses to invest some of this money and accelerate the hiring process. Jonathan Cowan, president of Third Way, a centrist Democrat group, says that the White House's outreach to the Chamber will certainly help persuade businesses to open their wallets. "The Administration was getting a lot of pressure from the left to take a very anti-business populist point of view," he says. "There was a widespread belief in that as the right thing both substantively and politically. It came to realize that didn't work. It deeply alienated the private sector."

Although the White House always denied it was sending anti-business signals before, it is certainly sending pro-business ones now. This is surely smart politics—Obama's version of the triangulation theme that his Democratic predecessor Bill Clinton deployed so successfully after he took a shellacking of his own in 1994. Clinton adopted traditionally conservative issues like welfare reform, making it harder for Republicans to portray him as an out-of-control liberal. He went after them on their ideological turf. Obama may try something similar now. And Donohue might even give him a hand.

The Republican Party today is an uneasy alliance of corporate conservatives who are comfortable working with government and Tea Party supporters who virulently oppose such tactics. By allying itself with the Chamber on specific issues, the White House may drive a wedge between the two and forge a centrist coalition that—unlikely as it may seem—could actually get something done.

The Chamber, for example, is strongly in favor of increased spending on infrastructure and continued support for education. The White House has enthusiastically embraced this as well. Many congressional Republicans, intent on deficit reduction, aren't so sure. When they unveiled plans that could lead to cuts in the Highway Trust Fund, Donohue reprimanded them. "I don't think that's such a good idea," he said. At the same time, Donohue has distanced himself from Senate Minority Leader Mitch McConnell's talk of spending the next two years laying the groundwork for Obama's defeat. "It's not our intention to weaken the President in any way," he said after the midterm election. "We are ready to walk across this park and work with the Administration on any issue."

Still, any Obama-Donohue alliance will be purely situational. The two will fight at least as often as they make common cause. In his State of American Business address, Donohue continued to blast the health-care bill, the President's signature achievement, calling for its repeal. But who knows: Maybe Obama will invite Donohue over to the White House to catch a Chicago Bulls game on the tube. Maybe they can agree to disagree on health care. They do have more in common these days. And with enemies like this, the President may be wondering, who needs friends?

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Leonard is a staff writer for Bloomberg Businessweek in New York.

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