Magazine

Business vs. the White House


Obama's budget is spurring companies to protest everything from its planned health-care reform to curbs on emissions

EMISSIONS

What Obama Wants: To cut emissions that cause global warming, the Administration proposes a "cap and trade" system. This would require companies to pay $646 billion over eight years to buy the tradable rights to emit such pollutants. Much of the money would be returned to consumers.

What Business Thinks: Many companies do not oppose a price tag on carbon emissions, since it provides more certainty and boosts investments in efficiency and renewable energy. But they worry that selling all the permits from the start could impose a huge burden on the companies involved.

HEALTH CARE

What Obama Wants: Obama has provided $634 billion in the proposed budget to help pay for health-care reforms over the next 10years. Half that sum will come from tax hikes and half from cuts in Medicare payments to insurers, drug companies, and hospitals.

What Business Thinks: On the surface, business broadly backs health-care reform. But the cracks are starting to show: Insurers fear competition from government-backed rivals, hospitals worry costs will be squeezed, and drugmakers face far lower prices.

FOREIGN TAX

What Obama Wants: Multinationals currently can defer U.S. taxes on profits earned abroad until they bring the funds back home. The Administration says that encourages companies to ship jobs overseas. It plans to raise $210 billion by limiting the tax deferral and other overseas breaks.

What Business Thinks: Companies fear they'll be at a competitive disadvantage if they have to pay U.S. rates on foreign operations while their rivals pay lower local rates. Any loss of revenues overseas, they add, will result in U.S. jobs lost, not gained.

INCOME TAX

What Obama Wants: Obama would boost the top rates for families making more than $250,000 from 33% to 36%; those earning over $370,000 would go to 39.6%. Capital-gains and dividends rate would rise from 15% to 20%. Deductions for mortgage interest and charitable giving drops to 28%.

What Business Thinks: Fears that tax hikes will discourage the well-off from investing are shared by a host of businesses, from homebuilders and mortgage brokers desperate for a housing rebound to mutual fund companies and other investment managers struggling to keep investors in the market.

DRILLING

What Obama Wants: Converting the economy to cleaner energy has emerged as one of the Administration's top goals. If it has its way, that means an end to a host of tax breaks for oil and gas producers, including tax credits aimed at spurring domestic offshore drilling.

What Business Thinks: The oil industry plans to mount a fierce fight to keep its tax perks, arguing that Obama's plan puts jobs and energy security at risk. Plus, making drilling more expensive in the U.S. could encourage oil giants to shift even more investment in exploration abroad.

FARM SUBSIDIES

What Obama Wants: The President wants to end what he considers wasteful agricultural subsidies. He's counting on saving $9.8 billion over 10 years by capping payments at $250,000 annually to farmers whose gross sales don't exceed $500,000 a year.

What Business Thinks: The agriculture lobby, which spent $131 million in lobbying in 2008, is among the fiercest defenders of turf in Washington. It will argue that farmers can't stay in business, especially in a tough economy, without supports for cotton, rice, and other crops.

Data: Office of Management & Budget, BusinessWeek


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