In the words of one consultant: "Business would have a seat at the table, but business wouldn't be able to buy all the chairs"
On Sunday, Feb. 10, after he found out he'd won that day's Democratic Presidential caucuses in Maine, but before his appearance on CBS's 60 Minutes, Senator Barack Obama (D-Ill.) sat down at the keyboard of his computer to write an e-mail. Not to a media consultant or a delegate counter, but to banker Robert Wolf, CEO of UBS Americas (UBS). The two men exchanged notes about the Senate-passed economic stimulus package and that weekend's G-7 economic summit, Wolf says.
A banker as Obama's pen pal? Hard to believe, given the senator's liberal image. But in between rallies and airplane flights on the campaign trail, Obama has also taken time to consult on the economy with billionaire Warren Buffett, whose support of rolling back the Bush tax cuts Obama often cites in his stump speeches. Obama has also been in touch with former Federal Reserve Chairman Paul Volcker, who endorsed the freshman senator in January. "When I sat down with him, I found him to be unbelievably refreshing and smart and thoughtful," says Wolf, who first met Obama at the offices of financier George Soros. The UBS chief has gone on to raise more than $1 million for the Obama campaign.
The rest of Corporate America may not be persuaded as easily. After all, Obama is hardly a shoo-in for the C-suite set: He's got a scant three-year record on the national stage, and he wants to roll back the Bush tax cuts that benefit many of the people running big American companies. Plus, the U.S. Chamber of Commerce gives him the lowest rating of any of the three major contenders for the Presidency, behind Senator Hillary Clinton (D-N.Y.) and Senator John McCain (R-Ariz.). But Obama's sweep of the Feb. 12 "Potomac Primary" in Maryland, Virginia, and the District of Columbia makes him a very real contender for the Democratic Presidential nomination.
So what would an Obama Presidency look like for business? "It would be a pragmatic, center-left administration," says Democratic political strategist Steve McMahon, who is unaligned with a Presidential candidate this year. "He's been pretty clear that business would have a seat at the table, but business wouldn't be able to buy all the chairs."
Obama's record in the Senate is thin, but it does hold some indicators of where he might go as President. Obama has sponsored bills backing a host of traditional Democratic causes, from union labor to alternative fuel to the earned income tax credit. In one move that was unpopular among business executives, Obama sponsored a bill to give shareholders a nonbinding proxy vote on executive pay. Obama voted for a free-trade pact with Peru that contained provisos to protect the Peruvian environment and Peruvian labor. That's popular stuff with the American left, but hard to take if you're a U.S. business owner who wants costs to stay low in your new Peru operation. And in a reflection of the Democratic Party's drift away from pure free-trade positions, Obama says he would look to amend the NAFTA trade agreement to add similar protections to the Clinton-era pact.
After a tour of the Janesville (Wis.) General Motors Assembly Plant on Feb. 13, Obama plans to make a major speech laying out an economic agenda for the rest of the campaign, including details of his plan to restore "balance" to the economy and create millions of new jobs. Wisconsin holds its primary on Feb. 19.
"Less Confrontational" Style
But Obama has also taken several steps that aren't typical of his fellow liberal senators. He has stocked his Capitol Hill staff with employees whose résumés include McKinsey, the old Andersen Consulting, and other nonpartisan business advisory firms. He joined forces with conservatives on bills designed to improve ethics and transparency in Washington. He voted for a bill in 2005 that made life harder for trial lawyers—a traditional Democratic constituency—by allowing defendants to shift cases more easily to federal court, which can be less favorable to plaintiffs. And he pushed an outside-the-box proposal that would help Detroit automakers pay legacy health-care costs on the condition they reinvest the subsequent savings into hybrids and other fuel-efficient cars. "His whole style of governing is less confrontational," says Bob Shrum, a long-time Democratic Presidential campaign strategist who's unaligned in 2008.
During his earlier eight years in the Illinois state senate, Obama also posted a record leavened with both traditional Democratic solutions and more pro-business efforts. He backed long-touted programs like expanding the earned income tax credit for poor families and expanding enterprise zones to boost development in depressed areas. But he pushed for a technology development fund to recruit sophisticated companies to the state and for tax incentives to businesses. "He was as liberal as could be at times, but he still worked with us," says Jerry Roper, president and CEO of the Chicagoland Chamber of Commerce. "We'd talk on the phone, or I'd go see him. He's a good guy."
Some of the names that might fill in the org chart in an Obama Administration are also telling. Obama—whose own father was a Kenyan economist with a PhD from Harvard University—has cultivated a group of economic advisers. They're generally careful technocrats, and are led by University of Chicago professor Austan Goolsbee. Among the others: Jeffrey Liebman and David Cutler of Harvard and Christina and David Romer of the University of California, Berkeley. Goolsbee has shown a preference for making economic initiatives easier to understand and use, an effort Obama calls "iPod government."
On the campaign trail, Obama and Goolsbee have crafted proposals to streamline government programs like the Medicare Part D prescription drug benefit, which Goolsbee feels is too complicated. Same with student loan applications and tax forms. Goolsbee says the distinction with Clinton is most evident in the candidates' plans to increase the personal savings rate. Obama would create an automatic 3% savings withholding from every paycheck that employees could opt out of if they want to. Clinton, on the other hand, proposes a targeted tax break to incentivize savings. The Clinton plan, says Goolsbee, "is what the playbook says to do. But the research says tax credits won't induce very many people to actually open savings accounts."
A Good Business Partner?
Still, business has traditionally preferred Republicans in the White House. In its most recent Senate tally, the Chamber of Commerce gave likely GOP nominee McCain an 80% favorable rating, compared with Clinton at 67% and Obama at 55%. Even worse for the two main Democrats, the National Association of Manufacturers rated both a zero, while McCain garnered 100%.
Those grades haven't hurt Obama's fund-raising. As a candidate he has eschewed contributions from political action committees and federal lobbyists. Yet he's been able to rake in cash at a blistering pace of about $1 million per day from individual donors, largely over the Internet. That includes money from employees of old-line industries. According to the Center for Responsive Politics, top contributors to Obama in 2007 included donors from law firms, investment houses, and real estate companies. In total, the center's analysis shows that Clinton is somewhat more favored by business contributors than is Obama: Eighty-five percent of her donations came from donors affiliated with business, while only 80% of Obama's did.
Obama is not business' candidate, but he may yet prove to be business' partner.
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